【EXPENSE】How are expenses handled in China?


Horizons are handling all employee's expense with the established procedures which is designed to ensure that all client EE are promptly reimbursed for all compliant business expenses authorised in accordance with the Invoice Management Measures of the People's Republic of China中华人民共和国发票管理办法》, and  Corporate Income Tax Law《中华人民共和国企业所得税法》.

Question :What's the general process?

Answer: After Employee claiming the expenses through Horizons Platform, the client rep will review in generally following Y/N critierias

  • Whether the expenses are claimed in accordance with client delegation and authorities matrix or not.
  • Whether the expense are claimed with voucher at adequate amount or not.
  • Whether the expense are claimed with adequate rationality from client business prospective

Once they are approved by client, Horizons China team will conduct pre-accounting review initial puting forward to payout process. It takes 5-10 working days in general to verify all expense and relevant vouchers online. 

  • The amount of the original voucher is consistent with or greater than the amounts claimed. 
  • Compliance degree of the voucher:
  • buyer's information, such as the company's head and tax number, is correct
  • the content, price and other information is consistent with the expense description of the reimbursement form.
  • The documents of voucher are verified, legible and unaltered.
  • The nature of cost is relevant to the business activities

Question:  Why Horizons team must do pre-accounting review before reimbursment being proceed?

Answer:  As the expense will be taken into Horizons' accounting book in China. After client review and approved from Client’s business prospective, Horizons reviewer must check with all vouchers on the compliance level to the related law and regulation in China Taxes and Accounting practice, otherwise it will enhance the unnecessary taxes burden to not only Horizons but to client as well.  

Questions:  Shall I collect the original copy of reimbursment documents to Horizons local office?

Answer:  Yes, if there's no 电子发票(Qualfied E-Invoice, not scan copy)

 f there is any original copies: employee ensure that it is sent to Horizons before 15th of the following(next) month. If the original copies is missing or the invoice is not in compliance as verified. The relevant amount of income will be included in the pre-tax income of the employee in the latest tax declaration cycle, and we will withhold the corresponding individual income tax in the next month. 

Relevant Readings

Horizons China - Expense Review Mechanism

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