China: Crowdsourced tax enforcement(bunniestudios.com)
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China: Crowdsourced tax enforcement
http://www.bunniestudios.com/blog/?p=2269
9 comments
As for (c), it depends on the city and even restaurant. Many places can't afford fapiao printing machines, and so the government is more lax and lets them use preprinted anonymous fapiaos. These are being phased out, but if you leave the big cities you'll still see a lot of that, and even in Beijing we get fapiao tickets at some lower end places.
>>China’s clever solution is to make every fapiao a lottery ticket.
That's not "China's clever solution" but quite common. They had that in Mexico already more than 10 years ago when I lived there (the cash register in stores whould print out these "lottery numbers" onto the receipt).
The fapiao in the picture is from Guangdong, elsewhere I have seen only 100 kuai with scratch off fields, not ten kuai.
That's not "China's clever solution" but quite common. They had that in Mexico already more than 10 years ago when I lived there (the cash register in stores whould print out these "lottery numbers" onto the receipt).
The fapiao in the picture is from Guangdong, elsewhere I have seen only 100 kuai with scratch off fields, not ten kuai.
you are supposed to receive a stack of fapiao of equivalent face value.
In the past 9 months I've never received more than one of these fapiao, if they even gave it to me at all. Also, the prizes are pretty small, enough that there isn't that much of an incentive to ask for these "lottery tickets". The largest "prize" i heard about (because i've never seen anyone win) was about the equivalent of $6 USD.
In the past 9 months I've never received more than one of these fapiao, if they even gave it to me at all. Also, the prizes are pretty small, enough that there isn't that much of an incentive to ask for these "lottery tickets". The largest "prize" i heard about (because i've never seen anyone win) was about the equivalent of $6 USD.
It used to be more common in the past: you buy something, and the fapiao (certified tax receipt) would include some sort of scratch off thing that was like a lottery; so you had some incentive to collect your fapiao and preventing the department store from low balling their taxes.
Store owners are not supposed to recycle unclaimed fapiaos, that is definitely illegal, and many companies who follow the law to the letter (like Starbucks) make it very convenient for you to exchange your xiaopiaos (normal receipts) for one fat fapiao in bulk, since they are not gaining anything by not issuing a fapiao.
Likewise, Microsoft (my employer, an American company) doesn't require us to play the fapiao game for most of our benefits. However, we need fapiaos for any expenses that occur in China, while there are a few benefits that require fapiaos (a travel and gym benefit) that are easy to get and one foreigner-only benefit where we can get back our tax on rent if only we could ever get our landlord to issue a fapiao (unlikely, they would just jack up the rent for the taxes they weren't dodging).
And let's not get started on getting the name right for the fapiao. It must be in Chinese and it must be the official name of our company. I think for Microsoft China its something like Microsoft (China) Limited, but all in Chinese characters, and its bad if you can't write that down exactly right.
[Edit] Let me describe the fapiao game: your company (usually a Chinese one) low balls your salary (say 2 or 3K RMB a month) but allows you to claim lots of personal expensive as business expenses. Even more fun: some require you to collect fapiaos but don't reimburse you for your expenses (universities do this a lot!). Fapiaos now require the name of the company that will be claiming the tax benefit so you can't just exchange them with your friends, meaning you need to be diligent about collecting fapiaos. Taxi fapiaos are the easiest, as they don't require names (so you can collect them and exchange them with friends if you want).
Store owners are not supposed to recycle unclaimed fapiaos, that is definitely illegal, and many companies who follow the law to the letter (like Starbucks) make it very convenient for you to exchange your xiaopiaos (normal receipts) for one fat fapiao in bulk, since they are not gaining anything by not issuing a fapiao.
Likewise, Microsoft (my employer, an American company) doesn't require us to play the fapiao game for most of our benefits. However, we need fapiaos for any expenses that occur in China, while there are a few benefits that require fapiaos (a travel and gym benefit) that are easy to get and one foreigner-only benefit where we can get back our tax on rent if only we could ever get our landlord to issue a fapiao (unlikely, they would just jack up the rent for the taxes they weren't dodging).
And let's not get started on getting the name right for the fapiao. It must be in Chinese and it must be the official name of our company. I think for Microsoft China its something like Microsoft (China) Limited, but all in Chinese characters, and its bad if you can't write that down exactly right.
[Edit] Let me describe the fapiao game: your company (usually a Chinese one) low balls your salary (say 2 or 3K RMB a month) but allows you to claim lots of personal expensive as business expenses. Even more fun: some require you to collect fapiaos but don't reimburse you for your expenses (universities do this a lot!). Fapiaos now require the name of the company that will be claiming the tax benefit so you can't just exchange them with your friends, meaning you need to be diligent about collecting fapiaos. Taxi fapiaos are the easiest, as they don't require names (so you can collect them and exchange them with friends if you want).
If you're getting only 2 or 3K RMB per month, I think that's seriously robbery, even if you do have the ability to claim expenses on everything else. That's what only new graduates get, and low-level Chinese university new grads at that. I have a friend who just moved from IBM to Microsoft recently (we're both in China). Microsoft definitely pays more than that. I have no idea where you're getting this 2 or 3K number?
To the gp, I usually don't get fapiao if I don't ask for it, but it sometimes comes. I always get it if I ask for it, or they offer me a Pepsi on the house or something to avoid giving me fapiao. So it's always in play, as far as I can see.
To the gp, I usually don't get fapiao if I don't ask for it, but it sometimes comes. I always get it if I ask for it, or they offer me a Pepsi on the house or something to avoid giving me fapiao. So it's always in play, as far as I can see.
> If you're getting only 2 or 3K RMB per month, I think that's seriously robbery
Agreed. Even english teachers get 8k minimum, AND they often have the majority of their expenses (rent, utilities, food allowances, etc) covered.
Agreed. Even english teachers get 8k minimum, AND they often have the majority of their expenses (rent, utilities, food allowances, etc) covered.
I'm employed by a western company that doesn't play fapiao games, and I get a lot more than that (how much is confidential, but I make just a bit less than I would in the states for a comparable position). Many of my friends get fairly low salaries (2/3K may be outdated, its probably more like 4/5K now), but get a lot of "benefits" that I don't; especially if they work for SOEs (state owned companies); i.e., many have nice cars (provided) but not enough money to really park them (not provided).
If you skim read like me then you might not have understood how this works:
1. Companies pre-pay tax by buying vouchers called `fapiao` which the article states, costs 10-20% of the kuay (Chinese yuan) value. (I assume rates differ depending on overall income of the business).
2. A transaction takes place and the customer pays the business in yuan and receives one of these fapiao tickets as a receipt. Incentives to get this ticket is that is acts as a lottery ticket also, with modest prizes.
3. The tax enforcement is therefore 'crowdsourced' because if any customer doesn't receive this ticket then they can report the business.
4. Any fapiao tickets leftover can be used for tax rebates.
The biggest problem I see is that businesses have to prepay tax which is 'estimated'. If this was too high then it could cause problems for the business's balance-sheet.
Other problems the article details:
- Not much incentive for people to collect their fapiao tickets
- Bribes, fraud and stealing by the business due to their incentive to keep tickets
1. Companies pre-pay tax by buying vouchers called `fapiao` which the article states, costs 10-20% of the kuay (Chinese yuan) value. (I assume rates differ depending on overall income of the business).
2. A transaction takes place and the customer pays the business in yuan and receives one of these fapiao tickets as a receipt. Incentives to get this ticket is that is acts as a lottery ticket also, with modest prizes.
3. The tax enforcement is therefore 'crowdsourced' because if any customer doesn't receive this ticket then they can report the business.
4. Any fapiao tickets leftover can be used for tax rebates.
The biggest problem I see is that businesses have to prepay tax which is 'estimated'. If this was too high then it could cause problems for the business's balance-sheet.
Other problems the article details:
- Not much incentive for people to collect their fapiao tickets
- Bribes, fraud and stealing by the business due to their incentive to keep tickets
In Greece they crowdsource the tax enforcement by requiring everyone to submit a stack (to a certain amount of euros) of purchase receipts with their tax filing. This is to ensure that customers always ask for receipts, so that stores always enter everything into the register (which goes into the store's tax filing).
> This is to ensure that customers always ask for receipts, so that stores always enter everything into the register (which goes into the store's tax filing).
It's fairly easy for a store to use a register that has nothing to do with the store's tax filing.
Receipt matching would defeat that, but only if stores submitted their receipts.
However, you can use customer receipts to estimate a store's revenue, but that has nothing to do with whether or not a register is involved.
It's fairly easy for a store to use a register that has nothing to do with the store's tax filing.
Receipt matching would defeat that, but only if stores submitted their receipts.
However, you can use customer receipts to estimate a store's revenue, but that has nothing to do with whether or not a register is involved.
It's a stupid measure since they never reward the desired behavior.
Also: are you always required to fill your taxes? That's stupid. Why would you do that if you have a normal job with a wage - they already have all the necessary information, why make you do extra work?
Also: are you always required to fill your taxes? That's stupid. Why would you do that if you have a normal job with a wage - they already have all the necessary information, why make you do extra work?
Interesting. Is this a recent measure to counter tax evasion? If not, it seems to have failed to have a significant impact.
With small tweaks i think all of the shortcomings mentioned here can be taken care of. e.g. provide much larger tax rebates as lottery instead of actual money. These rebates are much more beneficial to the rich who spend the most and are the ones who evade taxes the most.
Then most of the ordinary consumers(people) will confuse and lose the motivation to ask for this receipt. Because a lot of Chinese people don't, don't need and don't know how to fill tax return.
The government don't want to do that as well, because if then they are indirectly educate people there is a concept of tax return exists, which is most people don't aware of. That is a big chunk of money government steal away from people every year.
The government don't want to do that as well, because if then they are indirectly educate people there is a concept of tax return exists, which is most people don't aware of. That is a big chunk of money government steal away from people every year.
The lottery aspect of it makes me think of a human-powered, authoritarian bitcoin.
Fascinating! In the US lottery is a tax collection, but in China tax collection is a lottery.
Small Chinese correction: 元 is yuan2. Kuai4 is 块. Kuai4 is just a measure word for Qian2 (钱).
a) I have some relationship with my employer whereby I need fapiaos to essentially reduce my income tax (i.e. count my personal expenditures as business expenses). Thus, I will ask for a fapiao.
b) I don't need a fapiao to write off income tax. Now, we play a simple numbers game: Say there is a 10% chance of me winning some small percent of money by receiving the fapiao. But there is a 100% chance that if I ask for the fapiao the business will need to pay tax. So, we strike a win-win deal. The business gives me a discount, that is, say, 50% of what the tax is. I pay less. They make more. Everyone but the government wins.
Other notes:
a) The lottery on fapiao has been around for a while. Its not new.
b) The above deal is less and less common in big cities as more people use UnionPay (debit cards) and businesses essentially assume that people will ask for fapiao.
c) There are a few factual errors in the article. Some restaurants, yes, provide a "stack" of pre-printed fapiaos. Most have a printer that is essentially connected to the tax collection offices computer and can print at the bill's value.