Integrating Oracle ERP Cloud with China’s Golden Tax Rule

Since China implemented the “Golden Tax”, compliance with the policy has been essential for any business that wants to operate in the country. For companies that rely on Oracle ERP Cloud solutions, one of the biggest hurdles has been how to effectively satisfy Golden Tax requirements with your Enterprise Resource Planning (ERP).

By integrating your ERP with the Golden Tax, you will experience numerous benefits.

What is the Golden Tax?

The Golden Tax system is a nationwide value-added tax (VAT) monitoring system that all businesses operating in mainland China are required to use. This system is centralized and invoices can only be issued using government-approved printers and software.

All VAT invoices must be approved and the government controls their issuance. These approved invoices are called “fapiaos” and they allow China to track VAT payments and compliance, while also providing a proof-of-purchase for goods and services.

There are two types of fapiaos:

General VAT Fapiao

This is issued as evidence of payment. This invoice type does not allow for VAT deduction and is typically used for business to consumer (B2C), sales that involve end-user consumers, and tax-free transactions. Since the general VAT invoice is simpler than the special VAT invoice (below), this process for electronic issuance has been available for several years.

Special VAT Fapiao

This type of fapiao, on the other hand, is issued by general taxpayers to customers who are selling commodities or providing taxable services. This includes transactions like sales to manufacturers or to distributors who will resell the product.

How Does Integration Work with Oracle ERP Cloud?

When we integrate your ERP with Golden Tax, we will take your output from Oracle and then programmatically supplement it with key information that Oracle does not collect, but is required by China. From there, we import it back into Oracle and run a standard Oracle process to export it to an authorized Golden Tax service provider, such as Aisino. The service provider processes it further and sends back a file with validated VAT assessments for the AR invoices. This file is then put into Oracle and reconciled with what was originally generated.

Since Oracle does not capture either type of fapiao in its AR systems, this determines taxability for you. This is critical for your business because failing to produce a fapiao when requested is considered an illegal act in China. In other words, you have no choice but to do this if you wish to conduct business in China. The question is whether you do it manually or automatically and that is usually determined by the volume of transactions. 

Adopting This Functionality Saves You Time, Money, and Headaches

Although Golden Tax can be difficult to grapple with at first, proper ERP integration will pay off for you in the long run. This is perhaps most evident in the fact that manually processing this information is extremely time-consuming and can result in costly errors. For companies that need to handle huge volumes of transactions, this is doubly true.

By properly integrating your ERP with Golden Tax, you will drastically cut down on the amount of manpower needed to properly conduct business in China, saving you money while sparing you from the potential ramifications of not adhering to Chinese regulations.

This post was originally published by CTR. CTR was acquired by AST in January 2023.