‘Fapiao’ Explained: China’s Plan to Tax the E-Commerce Industry

China’s first-ever e-commerce fapiao, for a copy of the book China Dream.

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Late last week, Jingdong (formerly 360Buy) started putting a new kind of receipt into some orders as a kind of test. These official receipts — called fapiao in Chinese — have been part of the offline retail market for years, but until now, they haven’t been available for online purchases. For now, the Jingdong fapiao system is limited and it’s still in the testing phases, but it seems inevitable that sooner or later, the system will be rolled out in earnest. So what the heck is a fapiao and what does it mean for Chinese e-commerce?

What’s a fapiao?

A fapiao is a kind of official receipt. Generally speaking, if you want to get reimbursed for any kind of purchase in China, you’re going to need a fapiao, and you often need one to return a purchase or access other possible after-sales services. But fapiao are special because they’re actually issued by the government, and retailers have to buy them (they cannot print their own fapiao and issue them that way). In reality, then, a fapiao is a form of taxation; a way of making sure that retailers are paying some tax on their sales. In fact, they’re pre-paying their taxes, because fapiao have to be purchased from the government in bulk.

Needless to say, its great for consumers because they don’t — at least knowingly — pay any taxes, having fapiao often enables them to write off expenses for work they otherwise couldn’t, and some fapiao even come with a scratch-off lottery draw that they can win a little money from if they’re lucky. There are different kinds of fapiao for different kinds of services, so we don’t know yet what the e-commerce fapiao will look like, or if there will be multiple kinds. Right now, Jingdong’s fapiao are just part of a test program so they may or may not change when the whole system goes live nationwide.

What does this mean for the e-commerce industry?

It’s possible that once the system is implemented more broadly, prices will go up as e-tailers look to compensate for the money they have to spend buying paying for the fapiao. But that’s likely to be a small bump, and for many consumers it will probably be offset by the advantages that come with getting an official fapiao with your purchase, which often include easier returns and (of course) being able to write off some of your online shopping as an official work expense (especially since fapiao often aren’t itemized).

In short, the new fapiao system may not be great for your favorite e-commerce platform but it’s probably good for you in the long run. Whether it’s good or not, though, it seems like it’s definitely happening: China’s government says e-commerce companies have evaded billions in taxes, so a fix was inevitable.