China operates a centralized invoicing system, known as the Golden Tax System, which restricts companies to issuing invoices on government certified software, pre-numbered invoices and printers.

The issuance of approved VAT invoices in China is strictly controlled by the tax authorities. Pre-approved paper invoices, fapiao’s, are provided by the Golden Tax System. It enables the government to track VAT payments and compliance, and it provides proof of the purchase of goods or services. fapiao’s are produced and distributed by the Chinese State Administration of Tax (SAT) and may be purchased by taxable businesses for use.

The tax authorities will determine in advance how many fapiao’s a company is entitled to order, and their total value. Companies must produce the approved fapiao’s on government supplied printers which are electronically linked to the tax system. This provides the government with a live feed of invoices produced. The tax due on fapiao’s must be paid to the tax authorities at month end irrespective of whether the customer has settled the invoices.