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Comment by jefftk | Hacker News Reader

Minor, but:

Once I accompanied a domestic delegation to visit the United States. After dinner, we asked the waiter for an invoice, but the waiter did not know what an invoice was, so we talked to the boss and explained to him that we need an invoice so that we can be reimbursed back in China. The restaurant boss listened to us with great bewilderment. He asked, “Aren't you eating for yourselves, so why are you having the government pay for it?”

When travelling on business, asking for a receipt to be reimbursed is very normal. Perhaps the problem was asking for an "invoice" instead of a "receipt"?

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They probably asked (conceptually) for a "fapiao", which is a very formal invoice in China but required for reimbursement [0] and is a government-acknowledged piece of paper declaring that a sales transaction really happened. Asking for one there would require the restaurant to log revenue live with the tax bureau. I discovered this by mistakenly asking for one in China, thinking it was just a receipt. I was led to the office of the restaurant, where they printed it onto half an A4 paper with carbon copies, e-verification serial number, and QR code. There are even more fascinating patterns that emerge from the incentives here--business don't like declaring revenue, so these sometimes have scratch-to-win lottery tickets built in, so to encourage everyone to request one (thus preventing tax evasion) [1].

The less formal option is a "shouju" but doesn't work for official business reimbursement.

0: https://www.thebeijinger.com/blog/2019/08/29/what-is-a-fapia...

1: https://www.globalfromasia.com/fapiao/

This reminded me of an interesting scheme I encountered in North Macedonia last year. The government now allows citizens to claim a 15% refund on VAT up to a cap of about 500 USD per year[1].

The only way to get this refund is to ensure that you are issued a 'fiscal receipt'[2] for your purchases. These have a little QR code which you can scan into an app on your phone.

Of course, the whole point of the system is to ensure that retailers actually declare revenue and therefore pay tax on it. I wonder if similar systems exist in more countries?

[1] http://www.xinhuanet.com/english/2019-07/02/c_138190143.htm

[2] https://www.geneko.rs/en/products/fiscal-products-and-soluti...

In Croatia, where the VAT is 25%, the solution was: every customer has to be given a receipt without asking for one and the customer has to take the receipt and carry it out of the store.

Stores who don't comply get massive fines.

I visited Taiwan and noticed a similar setup. [1]

To be honest, I really liked the idea as I feel like it could help the average person with personal budgeting.

[1] https://guidetotaipei.com/article/taiwan-receipt-lottery-統一發...

The second link makes for interesting reading and is an in-depth example of the law of unintended consequences. I was particularly surprised to learn that fapiao (essentially tax receipts) are a way people and companies seek to manage their taxation, that this has led to companies imposing quotas on their staff for collecting fapiao (from any transactions at all), and that this drives demand in a gray market in discounted fapiao.

There are Western businesses that really do want an invoice, not a receipt. But since most governments don't go to the length China does to make an invoice functionally better than a receipt I don't see the point in this.

What is the difference between an invoice and a receipt? I thought a receipt is just an invoice with the payment method and amount resulting in a zero balance.

What was described to me was that accounting at that specific business wanted a longer form A4 paper description of the incurred costs for reimbursement instead of merely a receipt. How this differed in any important way is beyond me.

It is a case of lost in translation. Chinese use "invoice" for "receipt" because they use the same official form for actual invoices, I think, as a way of cracking down on tax avoidance. China has one of the highest sales tax at the retail level, including VAT and various fees; so high in fact the actual rate is a state secret. You can imagine the pressure on retailers, particularly, small shop owners, to avoid paying it. The government therefore introduced a system of official invoices that everybody including all retailers must use, and from carbon copy of invoices tax collectors can calculate sales amount and thereby tax owed.

That is my understanding, anyway. I have been out of the country for so long, it must have changed a lot. Most of it must be electronic now, I imagine. I still remember a shop owner's audible complaints when I asked for an invoice around the time the system was initially introduced.

How can one accurately charge sales tax if it is a state secret?

At least in the US those kinds of taxes are declared on receipts themselves.

State secrets in China are not same as classified information in the West. State secrets mean: do not broadcast to average Chinese. It is a censorship tool, it is meant to protect the government from its citizens.

You gave an excellent example. Tax rates are NOT on receipts in China. That would put pressure on the government to lower tax.

An average Chinese citizen is only aware of income tax, they don’t realize that they are paying taxes and fees for something say when buying a bag of sugar or salt.

[I am mistaken]

These pesky hidden taxes that are regular headline news (e.g. when things are (proposed to be) reclassified) and legally required to be listed on each receipt and invoice are indeed so well-hidden from the unsuspecting populace...

How hard could it be to find? Can't you ask your friend who's a business owner to tell you the rate?

Sure, but will you?

Well it certainly is not a state secret. Just google 'China business tax reform' It was a hot topic back 2, 3 years ago because businesses complained about the high tax rate.

Average Chinese may not think about paying tax for each sale because it's not printed on the receipt. But the price they pay do include all the taxes incurred to the business.

It's been a while, I remember that the receipts I got from IKEA and 711 do print the exact tax applied to this sale.

> Average Chinese may not think about paying tax for each sale because it's not printed on the receipt. But the price they pay do include all the taxes incurred to the business.

Sure, if you're shopping at IKEA or 7-11 (notably, large-scale foreign businesses).

If you're shopping at the local corner store or restaurant, they're not declaring sales unless you specifically ask for a fapiao (and even then, half of them will lie and say their machine is broken).

JD used to include fapiao in the delivery too. Now It's using E-Fapiao.

> If you're shopping at the local corner store or restaurant, they're not declaring sales unless you specifically ask for a fapiao (and even then, half of them will lie and say their machine is broken).

Yeah. I agree. Though it's bit extreme to say `half of them`.

> China has one of the highest sales tax at the retail level, including VAT and various fees; so high in fact the actual rate is a state secret.

How do the private companies know how much taxes to pay then? Or all shops state-run?

Many people know the precise rates; it is just that common people do not, which is the whole point. VAT rate is public and I think uniform across the country. Local governments impose various fees and they are not widely known to the public. Relevant accountants and officials know all about the rates but they are not supposed to broadcast it.

I saw a clip of Chinese news broadcast giving shocking rates on Youtube, like a quarter to a third, but unfortunately I cannot find it now. There is little public information about effective sales tax rate. However, people do realize it. High taxes is one reason Chinese tourists buy a lot when overseas; they could see the price difference.

> I saw a clip of Chinese news broadcast giving shocking rates on Youtube, like a quarter to a third,

20-25% VAT is pretty common in Europe, so while that's high I wouldn't go so far as shocking.

Sorry, I wasn't very clear. I meant as the rate of final price.

It has been a while so it is a little fuzzy, but I recall the broadcaster said up to 50% of pre-tax price. The official VAT rate is like 17% now, I think (just googled it). So it is other fees imposed by local governments that are onerous.

Actually it's 13% now, adjusted from 16% which is previously 17%. And it's the basic rate which means it's the highest level rate and there're several levels smaller than 13%. Seems that you have leaved China for at least 10 years.

There are high taxes for luxury products, a sports car can have import tax of 100%. Tax is complicated, there is VAT 17%, import tax varies depending on goods. I believe where you are at will have variable import tax on goods as well, you just never need to learn. If Chinese tourists don't know about the high import tax, why would they buy them overseas. It would be a common knowledge to be honest.

I understood this to mean that they did not pay and asked for a bill to be paid later by mail by their party office. Restaurants expect immediate payment, and he was accustomed to being billed later, not reimbursements on out-of-pocket expenses.

In China, you still pay out of pocket and receive a receipt to be reimbursed later. No restaurant that I know of accept payment by mail.

That makes sense, but the confusion is understandable because "invoice" is usually a pre-payment document quoting the amount owed for the services rendered, and a receipt is a post-payment document acknowledging the amount paid.

Likely a translation error. In Chinese, you ask for a 发票, which would be a “receipt”.

However, I just tried Google translate, and it gave me “invoice”. Well, I think we’ve found the culprit.

I also found that part baffling: the US government routinely reimburses for travel expenses including food.

Which someone that travels for a business would know but perhaps a local restaurant manager might not be aware of.

I decline to even try to imagine anyone in any role in any service industry that hasn't heard of expense accounts. Come on.

Most should, when I've asked for an itemized receipt I've almost always been asked if I want the alcohol separate and a few times have been offered to replace the alcohol items with appetizers/sides on the receipt because they know lots of places won't reimburse alcohol.

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