Can an employee claim reimbursements for items purchased with Public Subsidies in China?

In China, employees sometimes purchase items using “country public subsidies”, which offer discounted prices for personal use. While these purchases may support work-related tasks, there are important restrictions when it comes to claiming reimbursements.


Why These Purchases Are Not Reimbursable

Even if the item is used for business purposes, it cannot be reimbursed if:

  • The discount was obtained through a public subsidy intended for personal use.

  • The Fapiao (official invoice) can only be issued under the individual’s name, not the company's.

For an expense to be reimbursable, Chinese financial regulations require a Fapiao issued to the company. Since that’s not possible in this case, the purchase does not meet the criteria for standard reimbursement.


What Can Be Done Instead?

If your line manager still wishes to cover the cost:

  • They can approve it as a non-recurring (variable) income payment.

  • This amount would be added to your payroll and is subject to Individual Income Tax (IIT).

While this ensures you’re compensated, note that the net amount will be reduced by applicable taxes, and the payment will appear on your payslip.

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