A few weeks ago I was at a duck restaurant and the time came to pay the bill. At just under 100RMB, I knew that asking for an official receipt (发票 fapiao) would give me a chance to win some money. When I approached the register though, I was given a choice between an official receipt and a can of Sprite.
If you’re scratching your head at this point, don’t worry, so was my mother-in-law.
In an effort to boost tax compliance, I’m not sure when exactly, China enacted a policy that tied tax payments with official receipts. So for example, if the tax is 10% than a 50RMB receipt costs the restaurant 5RMB (or cab company or local handyman, etc.). Since these are required by companies for reimbursement, there is a good reason for many people to ask for these receipts.
Casual diners however, don’t actually need an official receipt. So the gov’t came up with a plan to encourage this behavior. On practically every official receipt there is a “prize” section that functions something like a scratch ticket. From what I’ve seen, prizes range from 5-50RMB, which is enough incentive for most people to ask for the receipt.
The restaurant I happened to be at that evening did the math though, and decided to pay taxes in a similar fashion to Deal or No Deal; you can either take the guaranteed prize of a can of Sprite (worth ~2RMB) or you can risk it all on the chance at a bigger cash prize. My wife and I realized that we were better off with the can of Sprite and went on our way. The restaurant was pleased to be saving close to 8RMB after subtracting the cost of the beverage, and we were happy to have a free Sprite.
These kinds of dodges are fairly common throughout China. I first experienced this in Guangxi when a repairman offered his services for 42RMB without the official receipt (he did offer an unofficial receipt or 收据 shouju) or 45RMB with the official receipt. Since I needed to be reimbursed I took the official receipt, but was surprised at how bold the dodge was.
The school later told me that the shouju would have been just fine, they too were swayed by 3RMB.
While it might be less than ethical to help restaurants dodge taxes, I’ve also seen that my local gov’t offices have both a ping pong room and a billiards room. I’m guessing that many others are using similar reasoning for avoiding taxes.
Official receipts though, also provide the opportunity for scamming companies as well as the gov’t. The old woman who stands at the end of the line where bus-cards are recharged, collects unwanted receipts and then later sells them to those who might walk or ride their bikes to work. This allows less scrupulous employees to scam 3-5 yuan from their companies each day (taxi receipts can be far more valuable). Given the number of elderly women mumbling “发票, 发票, 发票” outside of my nearby subway station, it seems like this would be a fairly common practice.
While China’s tax system manages to introduce clear incentives for customers to get businesses to pay their taxes, there is still so little oversight of the businesses that loopholes abound. Additionally, the system allows employees to cheat their employers by creating additional paperwork that is difficult to trace.