China: Crowdsourced tax enforcement
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China: Crowdsourced tax enforcement
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Re: China: Crowdsourced tax enforcement
#2you 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.
Re: China: Crowdsourced tax enforcement
#3you 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.
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).
Re: China: Crowdsourced tax enforcement
#4>>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.
Re: China: Crowdsourced tax enforcement
#5In theory that's how it works - but it over-looks a price optimization that everyone uses. Essentially, when I walk into a restaurant/business to buy something, I'm in one of two situations:
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.
Re: China: Crowdsourced tax enforcement
#6In theory that's how it works - but it over-looks a price optimization that everyone uses. Essentially, when I walk into a restaurant/business to buy something, I'm in one of two situations: 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…
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.
Re: China: Crowdsourced tax enforcement
#7If 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
Re: China: Crowdsourced tax enforcement
#8In 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).
Re: China: Crowdsourced tax enforcement
#9The lottery aspect of it makes me think of a human-powered, authoritarian bitcoin.
Re: China: Crowdsourced tax enforcement
#10In 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).
Interesting. Is this a recent measure to counter tax evasion? If not, it seems to have failed to have a significant impact.