China-WFOE


China is one of the most ancient civilizations in the world which has a 5-thousand year history. Throughout centuries the power in China transferred from one dynasty to another, moreover, sometimes China became a part of a foreign state (e.g. Yuan and Qing dynasty). The territory of China was invaded on a regular basis, however, most of the invaders were Sinicized eventually and assimilated into Chinese ethnos, and the territories became Chinese. The period of the Tang and Song Dynasties in the 7th – 14th centuries is called the Golden Age of China due to the majority of scientific discoveries and cultural achievements. The last dynasty was Qing, which was overthrown by the revolution of 1911. The result of the revolution was establishment of the Republic of China in 1912 led by Sun Yatsen, the leader of the Chinese Nationalist Party “Guomindang” who was promulgated the President. In 1928 Guomindang under the command of Chiang Kai-shek managed to unite the country. A lot of efforts to build Chinese state were made during 1937-1945 Sino-Japanese War. Increased disruption between Guomindang and Communist Party of China made the unification impossible and caused the next round of civil war in China. The war ended in splitting of China into two parts: the People’s Republic of China and the Republic of China (Taiwan). In the meantime, most countries do not recognize Taiwan as a sovereign state and tend to support China’s position that Taiwan is one of the provinces of PRC.

Service packages

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Service item Express Standard Optimum
Company registration
Legal address per year
Secretarial services for the first year
Fees and duties for the first year
Apostilled bound set of incorporation documents
Compliance fee
Nominee service per year
Bank Account Pre-approval
Price

12 500 USD

12 500 USD

13 000 USD

I want to order «»

Contact method: and / or

Core Services

12 500 USD

— Incorporation

including incorporation tax, state registry fee, including Compliance fee

1 300 USD

— Annual government fees

Stamp Duty and Administration for Industry and Commerce incorporation fee

1 500 USD

— Corporate legal services

including registered address and registered agent, NOT including Compliance fee

150 USD

—Delivery of documents by courier mail

DHL or TNT, at cost of a Courier Service

500 USD

— Apostilled set of Statutory documents

Optional services

Nominee Director

Paid-up “nominee director” set includes the following documents

Nominee Shareholder

Paid-up “nominee shareholder” set includes the following documents

Related services

Tax Exemption Certificate

Company’s tax residence certificate for access to double tax treaties network

Tax Certificate / 税务登记证

Document issued by a tax authority after incorporation.

Certificate of Incumbency / 存续证明书

Compliance fee

Compliance fee is payable in the cases of: renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, change of director / shareholder / BO (except the change to a nominee director / shareholder)

250 USD

Basic

simple company structure with only 1 physical person

50 USD

For legal entity in structure under GSL administration

additional compliance fee for legal entity in structure under GSL administration (per 1 entity)

100 USD

For legal entity in structure not under GSL administration

additional compliance fee for legal entity in structure NOT under GSL administration (per 1 entity)

350 USD

For client with high risk Status

Cost of incorporation, including first year servicing 12500
Cost of annual service, starting from the second year 1500
Open account in 26855
Incorporation timescale for a turnkey company 60-90 days
Government tax 1300
Country 26709

General information shortly

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Total area Population Capital Unemployment Corruption perceptions index rank
9.596.960 sq.km 1.349.585.838 (2013) Beijing 4.1% (2012) 80
Location Eastern Asia
National currency Renminbi
Conditional reduction of currency CNY
Against USD 6.12
Climate, average max and min t° extremely diverse; from tropical in the south to subarctic in the north; in the north and northwest avg. winter t (January) is -25°С; avg. summer t (July) is +22°С; in the central part avg. summer temperature (July) is +20°; avg. winter temperature (January) is -5°; in the south avg. summer temperature (July) is +28°; avg. winter temperature (January) is +18°
Time difference from Moscow + 5 hours
Dialing code +86
State language Chinese
Ethnic groups 92% are ethnic Chinese, the rest 8% are 55 ethnic groups among which the most populous are Zhuang, Hui, Uigur, Yi, Miao, Tibetans, Mongols, etc.
Literacy rate 91%
Credit rating A+
Government type socialist state
Executive branch Head of government: Premier; Government: State Council, formed by the National People’s Congress
Legislative branch National People’s Congres (unicameral body, 2.987 members), elected for 5 years
Judicial branch Supreme People’s Court, local people’s courts, special people’s courts
GDP per capita rank 87 (2012)

Corporate info

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Shelf companies permitted Legal system Incorporation timescale for a turnkey company Cyrillic alphabet permitted in company name Local registered office
No civil law with socialist characteristics 60-90 days No Yes
Types of entity Equity Joint Venture (EJV), Co-operative Joint Venture (CJV), Wholly Foreign-Owned Enterprise (WFOE), Representative Office (RO)
Incorporation timescale for a new company 5 days
Company suffix 有限公司 (Limited in Chinese)
Sensitive words foreign words; names of foreign countries (regions), international organizations, parties, government bodies; words causing damage to state security of China and misleading people
Local registered agent No
Information to be kept at the registered office certificate of incroporation, resolutions of board of directors, accounts
Seal required, type of seal company seal: oval, diameter= 4.5 cm, red ink used, unlike Chinese companies without 5-point star in the middle, with logotip engraving possible; account seal, legal representative seal
Redomiciliation (to, from) permitted not permitted

Director and secretary

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Minimum number of directors Residency requirements for directors Corporate directors permitted Disclosure to local agent Disclosure to public
1 director + 1 supervisor No No Yes No
Directors’ meetings/frequency/location No requirements
Company secretary required Yes
Residency requirements for a secretary No
Qualified secretary required No
Corporate secretary permitted No

Shareholder and beneficiary

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Minimum number of shareholders Residency requirements for shareholders Corporate shareholder permitted Disclosure to local agent Disclosure to public
1 No requirements Yes Yes No
Meetings/frequency/location Yes / according to articles of association / no requirements
Beneficiary info disclosure to No

Shares and share capital

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Minimum authorized share capital Minimum issued share capital Minimum paid share capital Authorized capital payment deadlines Bearer shares permitted
30000 No requirements 30000 20% (but not less than minumum) before registration, the rest - within 2 years or the term set by competent authorities No
Issued capital payment deadlines No requirements
Standard currency Yuan
Standard authorized share capital 1000000
Standard par value of shares 1
Shares with no par value permitted Yes

Taxes

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Min. rate for corporate tax Capital gains tax VAT Withholding tax Exchange control
25% Regular rate 13% 10%/10%/10% Yes
Personal tax 3-45%
Corporate tax (in detail) The standard income tax rate is 25%. There are preferential tax rates for companies from certain industries (in particular, high-tech), regions / zones and small businesses
VAT. Details The standard VAT rate is 13%. For some goods and services, rates of 9% and 6% apply. The tax rate for small VAT payers is 3%
Other taxes Social contributions, Real estate taxes
Government fee Yes
Stamp duty 0,005-0,1%

Accounts

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Requirement to file accounts Publicly accessible accounts Audit required Requirement to file Annual Return Publicly accessible Annual Return
Yes No Yes Yes No
Requirement to prepare accounts Yes
Double tax treaties network 103
Tax Exchange Information Agreement network 10
OECD member No
Offshore/onshore status according to the RF laws No

GENERAL INFORMATION

General info

China (officially the People's Republic of China) is a sovereign state located in East Asia with total area of 9 596 960 sq. km (the 3d after Russia and Canada). Population if China is 1 349 585 838 чел (2013), making the world's most populous country. As for its ethnic composition 92% of China’s population are ethnic Chinese, the rest 8% are 55 ethnic groups among which the most populous are Zhuang, Hui, Uigur, Yi, Miao, Tibetans, Mongols, etc. The official language is Chinese.
The capital of China is Beijing. National currency is Renminbi (CNY). There is about 6.1 CNY in one US dollar, and 8.2 CNY in one euro.
Climate is extremely diverse; tropical in the southeast to extremely continental in the northwest. Despite the fact the most part of the country is in the mild climate zone, wide range of latitude, longitude and height in China cause extremely different temperatures conditions in various regions. In Beijing which is in the north climate is extremely continental. The summer is hot and humid with average temperature of +28 -30 °C. The winter is cold and dry. The average temperature in January is -7°C. In the southern part of China average temperature varies from -10°C in January to +28°C in July.
Time difference with Moscow is +4 hours.
Human development index (2013) is 0,699 (ranks 101st in the world).
Calling code is +86.

History

China is one of the most ancient civilizations in the world which has a 5-thousand year history. Throughout centuries the power in China transferred from one dynasty to another, moreover, sometimes China became a part of a foreign state (e.g. Yuan and Qing dynasty). The territory of China was invaded on a regular basis, however, most of the invader were Sinicized eventually and assimilated into Chinese ethnos, and the territories became Chinese. The period of the Tang and Song Dynasties in the 7th – 14th centuries is called the Golden Age of China due to the majority of scientific discoveries and cultural achievements. The last dynasty was Qing, which was overthrown by the revolution of 1911. The result of the revolution was establishment of the Republic of China in 1912 led by Sun Yatsen, the leader of the Chinese Nationalist Party “Guomindang” who was promulgated the President. In 1928 Guomindang under the command of Chiang Kai-shek managed to unite the country. A lot of efforts to build Chinese state were made during 1937-1945 Sino-Japanese War. Increased disruption between Guomindang and Communist Party of China made the unification impossible and caused the next round of civil war in China. The war ended in splitting of China into two parts: the People’s Republic of China and the Republic of China (Taiwan). In the meantime, most countries do not recognize Taiwan as a sovereign state and tend to support China’s position that Taiwan is one of the provinces of PRC.

Government Type

Government type of the PRS is based on a principle that according to Constitution “the People's Republic of China is a socialist state of democratic dictatorship of people, led by the working class (through the Communist Party of China) and based on the union of workers and peasants. The government system is socialistic. All the power belongs to people. People exercise their state power through National People’s Congress and local congresses of people of different levels.
The legislative branch in China is represented by National People’s Congress (NPC). Local congresses are subject to PNC.
The head of state, chairman of the PRC, jointly with the Standing Committee of PNC exercise their supreme state power in the country. On the basis of resolutions by PNC and its Standing committee he publishes laws, appoints officials in the State Council, issues orders, etc.
The executive bodies are the State Council and local people’s governments of different level.
The judicial branch is represented by people’s courts and people’s procuratorates. People’s courts include Supreme People’s Court, local people’s courts, special people’s courts (military courts, etc.). People’s procuratorate is a state body of monitoring law-abidingness and includes Supreme People’s Procuratorate, local people’s procuratorates, special people’s procuratorates.
Beside, among supreme state bodies is Central military council, which controls all the armed forces in the PRC.

Economy

In 1978 China set a course for socialist market-oriented economy which began to combine two systems: planned economy and market economy. The main features of such economy are attraction of investments, economic independence of enterprises, family contract in the rural area, reduction of public sector share in the economy, opening of free economic zones, poverty alleviation, science and technology development.
Since 1980 Chinese economy grew 15% annually, by the end of 1990s rate of economic growth reduced to 8% a tear, but since joining WTO in 2001 inflow of direct investments and expansion of export caused new acceleration. At present China is the world's second largest economy by nominal GDP (8.23 trillion US dollar) and by purchasing power parity after the United States. According to different estimates, by 2020 China should catch up with the US and become three times larger by 2040.
Free economic zones play a very important role in China’s development. Today there are 4 economic zones in China: Shenzhen, Zhuhai, Shantou, Xiamen, 14 free-trade zones, 53 high-tech zones (including large modern Silicon Valley), more than 70 science and technology parks for experts graduated from foreign universities, 38 export-oriented processing production zones.

CORPORATE INFORMATION

Legal system

Legal system of PRC is of mixed nature. It is a combination of ancient legal traditions and modern law based on the conception of “socialism with Chinese characteristics” and some principles of civil law.
Over the centuries Chinese legal system was influenced by Buddhism, Confucianism and Taoism. Only since the latter half of the 19th century a tradition similar to Western one began to arise. However, this process was disrupted after establishment of PRC in 1949, when the country began to borrow socialistic law.
Since 1979 within the course of liberalization legitimacy system and law protection activity began to restore, basic branches of law were codified again or for the first time in history of PRC (e.g. the first Criminal codex and Criminal procedure code were adopted in 1979, General Provisions of Civil Law were adopted in 1986, labor law was codified in 1994).
As a result of reforms which lasted for about 20 years a new legislation system combining socialist (Soviet) law and some elements of civil law (in economic field) was formed.
The basic sources of law in PRC are laws and other legal acts. Hierarchy is formed by Constitution, legal acts, resolutions by Standing Committee of People’s National Congress, resolutions by State Council, by-laws by other state and local bodies.

Types of entity

PRC legislation allows incorporation of various types of entity, including limited company (with special requirements to one person limited companies and state-owned enterprises) and company limited by shares (divided into public companies and non-public companies).
However, for foreign investors companies with foreign investment are more suitable. They include the following types:
Joint Venture – JV, which can be of two types:
- Sino-foreign equity joint ventures - EJV;
- Sino-foreign co-operative joint ventures - CJV
EJV and CJV are similar in a lot of aspects (authority approval procedure, management structure, etc.). But there are still some differences:
1. Unlike EJV, CJV can not have a status of independent legal entity. If it is not an independent legal entity, expenses are much lower, but the participants have a higher liability.
2. In EJV liability is limited to the extent of capital contribution. Profit is distributed in proportion with the number of shares belonging to a shareholder. In CJV control, profit and risk are distributed according to the contract.
CJV has a major disadvantage. Since it is compulsory to agree upon the conditions of the contract, establishment of such a company can take a lot of time and money. Besides, there is always a risk that the partners will not reach an agreement.
Joint Venture can be incorporated by one Chinese and one foreign investor. Such type of entity is usually used to hire Chinese labors and apply foreign technologies and know-how.
Wholly foreign owned enterprise
After China joined WTO and Chinese government had to weaken regulation towards investments, foreign investors tend to incorporate wholly foreign owned enterprise(WFOE). Such business entities comprised about 67% of all direct investments in China in 2004.
WFOE is a limited company owned by foreign investors. Although liability is limited, a legal representative of such a company should be appointed, his liability is unlimited.
Representative office – RO
At present representative office is the cheapest and simplest way to represent a foreign company in China. The goal of a representative office is to arrange contacts with Chinese businessmen and consumers in the name of a company. Therefore, representative office is like an agent between a foreign company and Chinese partners. RO cannot carry on direct business. Its scope of business only covers market studying, promotion action arrangement, exhibition participation, contract conclusion, but only in the name of head office. However, if scope of business is not connected with production, but consulting, RO can provide consulting services.

Advantages and disadvantages of JV, WFOE and RO

Type of entity Advantages Disadvantages
JV 1. An ability to conclude any kind of contract, carry on business of full value; 2. Application of Chinese labor and equipment; 3. Intellectual property rights of JV are protected by law. 1. Deficit of information on a future Chinese partner; 2. Feasibility study and negotiations with a Chinese partner take a lot of time; 3. Necessity to share profit with a partner.
WFOE 1. Wholly owned means independence from Chinese partner, full control over business and management; 2. An ability to operate officially and get profit in RMB, not just represent the interests of a head office; 3. An ability to convert RMB to US dollar during transaction abroad; 4. Intellectual property rights protection. 1. A foreign company may be short of knowledge and connections of a Chinese partner; 2. Registration is a very complicated procedure, which may take up to 6 months.
RO Comparatively simple and inexpensive procedure of registration. The whole process may take about 1 month. 1. Legal capacity of RO is limited; 2. Although RO does not have an income, it still has to pay taxes. Ro is considered to get income for covering its expenses in Chine, this income is taxable.

Depending on a form of activity the most suitable types of business entities to carry on business in China are WHOE and RO.

REGISTRATION

Registration of WFOE

WFOE is usually established as a limited company. Generally, the procedure is as follows:
1. Submit a business plan to a local people’s government for approval (30 days);
2. Apply for preliminary approval of a company name in administration for industry and commerce;
3. Apply for company incorporation approval in the local office of Ministry of Commerce
Required documents:
  • Application form (including application form, list of foreign investors, registration form of legal representatives, certificate of appointment of members of Board of directors and supervisors, certificate of registered address, etc.);
  • Articles of association;
  • Copy of company incorporation approval;
  • Documents confirming legal status of investors (copies of passports or legal entity registration certificate, notarized in the host country and certified at the Chinese Embassy or Consulate);
  • Preliminary approval of a company name note;
  • Power of attorney;
  • Registration form of a secretary (contact person ) of a company;
  • Power of attorney for legal documents delivery and a copy of a passport of an authorized person or a copy of legal entity registration certificate;
  • Other required documents.

All the documents shall be submitted in Chinese.
The competent authority should make a decision on approval of application within 90 days since receipt.
4. A foreign investor should within 30 days after receipt of approval certificate apply for registration in the administration for industry and commerce and obtain Registration certificate. The date of issue is the date of establishment;
5. Post registration procedures, including registration with a tax authority, police, quality control administration, statistics administration, currency control authority, labor and social protection authority, as well as seal production, opening of bank accounts, application for work permit and residence permit in PRC for foreign employees.

Restriction of activities

Unlike in Russia where profit organizations can carry on any form of business activities and make any necessary business transactions, in China registration of legal entity means registration of form of its business activity, which is indicated in the major registration document. Going above the registered activity is considered administrative violation. It means that companies cannot carry on any form of business activities.
Scope of business may include ordinary forms of activities and licensed forms. Ordinary forms are included at will, licensed forms – only after obtaining a license.
Some forms of activity are forbidden for foreign investment companies. Nowadays, there is a “List of fields for foreign investments” (2011). It includes allowed, restricted and forbidden forms of activities for foreign investors in PRC. Those forms which are not in the list are considered allowed for foreign business men to invest.

Company name

Company name should meet requirements of Chinese law: a company can have only one name; the name registered in accordance with established procedure is protected by law. Company name should not contain information or words which:
  • cause damage to state and social interests;
  • can mislead population or cause misunderstanding;
  • are the names of foreign countries (regions), international organizations;
  • the names of parties, departments of parties, government or military organs, people’s organizations;
  • contain letters of Chinese transcription “pinyin” (except form those that are used in foreign names), digitals.

Local registered office

Chinese law requires to register a local office for companies with foreign capital. Therefore, every company should have a registered address in China.

Seal

Having obtained a Business Registration Certificate, company should be registered at the police where it gets its seals:
  • company seal (oval-shaped, with 5 cm diameter, without 5-point star unlike Chinese companies, with logo engraving possible and red ink compulsory to use);
  • account seal;
  • contract seal;
  • legal representative seal.

Redomicile

Chinese law does not allow companies to redomicile.

Prolongation

All companies with foreign capital are established for a definite term (most often for 15-30 years), which is indicated in the application for company incorporation. This term can be prolonged up to 50 years for projects with large investments, in case of production of complex products which can be competitive at the international market, as well as some other cases. Application for prolongation should be submitted 180day s beforehand the end of the term. The competent authorities should make decision on prolongation within 30 days after application receipt.

COMPANY STRUCTURE

Directors

WFOE should at least have one director who can be a foreigner and a corporate, and one supervisor.

Board of directors

Board of Directors should consist of 3 to 30 members elected for 3 years. If the company is very small, instead of board of directors a company can appoint an executive director.
The chairman of the Board or executive director normally functions as a legal representative of a company.

Secretary

Secretary is not required.

Shareholders

WFOE can be incorporated by one shareholder. The highest body of limited WFOE is Shareholder meeting (or Shareholder if there is only one of them). Shareholder meetings are divided into regular and interim meetings. Regular meetings are held according to the Articles of Association. Shareholder meeting decides on all major issued of the company, including profit distribution, merger, acquisition, etc.

Beneficiary

The information on beneficiary is not disclosed.

Share capital

Share capital is nominated in RMB. It can be issued and distributed only among foreign investors.
Minimum capital for limited companies is 30 000 RMB. In the meantime, registration rules require for proportionality of share capital with business scale. It means that registration authorities have wide powers to determine the right amount of capital for legal entity. For example, in Beijing for a trade company with foreign capital minimum share capital is 300 000 RMB, for consulting company is 200 000 RMB.
Capital amount may vary depending on form of activity of a company and its place of incorporation. Capital must be paid in full at China’s Bank and after incorporation can be used for equipment purchase, lease payment and other business expenses.
WFOE must pay investments within a term set by a competent authority. In case of expiration administration for industry and commerce may withdraw Registration certificate.

Confidentiality and public access to information

There is no open roster of companies in China yet.
Data on all registered companies are kept in administrations for industry and commerce and access to them is limited. In order to obtain these data you will need help of local agent. The volume of information obtained will depend on the policy of specific administration.

TAXES

Personal tax

All companies registered in China are tax agents for their employees and pay personal tax for them.
Personal tax is paid by:
  • Individuals, who are tax residents in PRC, for income obtained in PRC and from abroad;
  • Individuals, who are not tax residents in PRC, for income obtained in PRC.

In China personal tax is levied at progressive rate from 5% to 45%, while income no more than 2000 RMB a month for residents and 4800 RMB for non-residents is not taxable. For Chinese employees company should also pay social contribution, the amount of which is about 40% from the official salary.

Corporate tax

All companies registered in China are taxpayers of corporate tax.
In Chinese tax law there are two kinds of taxpayers:
  • Resident companies: companies incorporated in PRC and abroad which are managed in PRC pay corporate tax on the total amount of income obtained from sources in PRC and abroad;
  • Non-resident companies: pay tax on income which refers to the activity of their representative office in PRC and income from sources in PRC such as dividends, interests, and royalty.

Corporate tax rate is 25%.
For the so-called low-profit companies tax rate is 20%, and for companies engaged in high-tech and encouraged by government tax rate is 15%.

Capital gains tax

Capital gains are not taxable in China, but there is a securities transaction tax, which is levied unilaterally in case of securities sales at a rate of 0.1%.

VAT

Companies selling products in PRC are taxpayers of VAT.
Standard rate is 17%; for taxpayers who are engaged in sales of some preferential products (grains and edible vegetable oils; tap water and heating water; coal gas, liquid gas and natural gas, marsh gas, black coal and charcoal for domestic use; books and magazines; forage, chemical fertilizers, agricultural chemicals and machines) – 13%; for taxpayers with с small scale of business – 3%. Export products are not taxable, unless otherwise provided in regulation of Chinese government.

Withholding tax

Withholding tax in China is levied as a corporate tax on non-resident companies income from dividends, interests and royalty at rate of 25%.

Other taxes

Social insurance contribution Pension insurance (company: 20% of total amount of salaries, employee: 8%); unemployment insurance (company: 2% of total amount of salaries, employee: 1%); medical insurance (c company: 6% of total amount of salaries, employee: 3%); employment injury insurance (about 1% of total amount of salaries); pregnancy and child birth insurance (not more than 1% of total amount of salaries). To be paid till 15th of each month in local tax authority.
Consumption tax paid by corporate and individuals who: 1) produce consumption (excisable) products; 2) import consumption product into PRC, or 3) sell consumption products. Tax rate differs.
Real estate tax paid by owners of the buildings and constructions located in the cities and used for business. Tax base is price of real estate reduce by 10-30% (depending on region).
Vehicle tax paid by owners of vehicles. Tax rate depends on type of vehicle.
Vehicle license plate tax paid on purchase of a new vehicle. Tax rate is 10% of price.
Land appreciation tax levied on transfer of land use right of state-owned land by organization or individual. Tax rate is 30% -60%.
Urban and township land use tax imposed on individuals who obtained rights to use land in the urban area. Tax rate is 0,6 to 30 RMB for square meter..
Resource tax paid by organizations and individuals, extracting resources in PRC (including sea territory).
Property transfer tax imposed on individuals gaining rights to use land or building ownership rights. Tax rate is 3% to 5%.
City Maintenance and Construction Tax levied upon paid in VAT and consumption tax. Tax rate depends on location of taxpayer and amounts 7% in the urban area, 5% - in district centers and 1% - in the rural area.
Tobacco tax imposed on individuals purchasing tobacco leaf. Tax rate is 20% of tobacco price.,
Agricultural land occupation tax imposed on agricultural lands used for construction. Rate depends on average land resource supply in the region and amounts 5 to 5o RMB for square meter.
Additional educational duties levied upon paid in VAT and consumption tax. National duty is 3%, local duty is 2%.

Exchange control

Like in Russia, in China exchange control system is imposed. It is prohibited in PRC to fulfill payments in foreign currency, but corporates and individuals can have foreign currency accounts, carry out operations in currency, transfer foreign currency abroad and receive payments in foreign currency from foreign partners, however, all these operations have to be validated by contract or invoice.

Annual Fee

There is no annual fee in China, but one is obliged to pay registration fee on incorporation of company. For example, registration fee for RO is 600 RMB, prolongation is 300 RMB, registration changes (including change of representatives) is 100 RMB.

Stamp Duty

Stamp duty in China is imposed on contracts, certificates and other documents. Duty rate depends on a type of document or nature of a contract.

ACCOUNTS

Annual Return

According to Chinese law every enterprise, including Representative office, in the period from March,1 to June,30 has to submit annual return, which is composed of the following documents:
  • annual return form;
  • annual audit report, issued by audit company;
  • copy of registration certificate with official seal;
  • other documents, required by State administration for industry and commerce.

The said documents should first be filed in electronic version to local administration for industry and commerce. After electronic version is checked by competent authorities, it should be printed out and sent to these authorities.
If company fails to submit the documents in time, it should apply for prolongation, which is not more than 30 days. In case company fails to submit annual return in time, registration authorities send a warning. If within 60 days after warning was issued, the company still fails to submit annual return, its registration certificate is to be withdrawn.

Audit

Companies with foreign investment are obliged to keep accounting books in Chinese, carry on its business calculations, submit required audit reports and accept examination from financial and tax authorities.
WFOE is obliged to submit audit report annually according to requirements of competent authorities. Report made in foreign currency should be accompanied by report in RMB.
To check and obtain respective report a company should hire CPA and pay for his/her services.
If a company with foreign investment refuses to keep accounting books, financial and tax authorities can impose a fine, and administration for industry and commerce can issue a warning about business activity termination or withdraw Registration certificate.

Tax Return

WFOE should file tax return to tax authorities on a regular basis:
  • VAT tax return - monthly;
  • Corporate tax return - quarterly.

International law relations

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Party to the Hague Convention (Apostille) Legal system Double tax treaties network OECD member Offshore/onshore status according to the RF laws
No civil law with socialist characteristics 103 No No

Public authorities and legal acts

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List of laws and regulations
Act name Scope of law
Companies Law of the PRC limited companies, companies limited by shares
Law of the PRC on foreign capital enterprises wholly foreign-owned enterprises
Law of the PRC on sino-foreign equity joint ventures equity joint ventures
Law of the PRC on sino-foreign cooperative joint ventures cooperative joint ventures
Law of the PRC on corporate tax corporate tax
Law of the PRC on foreign capital enterprises and foreign enterpreises profit tax foreign enterpreises corporate tax
Law of the PRC on personal tax personal tax
Regulations on registration of representative offices of foreign companies registration of RO of foreign companies
Regulations on registration of companies company registration
Catalogue of industires fo foreign investment in PRC insdustries permitted for foreign investment
Tax treaties entered Albania, Algeria, Armenia, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Bosnia and Herzegovina, Botswana, Brazil, Brunei Darussalam, Bulgaria, Cambodia, Canada, Croatia, Cuba, Cyprus, Czech Republic, Denmark, Ecuador, Ecuador, Egypt, Estonia, Ethiopia, Finland, Former Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Hong Kongn (China), Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea (Republic of), Kuwait, Kyrgyzstan, Lao People's Democratic Republic, Latvia, Liechtenstein, Lithuania, Luxembourg, Macao (China), Malaysia, Malta, Mauritius, Mexico, Moldova (Republic of), Mongolia, Morocco, Nepal, Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Papua New Guinea, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syrian Arab Republic, Tajikistan, Thailand, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Viet nam, Zambia, Zimbabwe
Tax Exchange Information Agreement (TEIA) Argentina, Bahamas, Bermuda, Cayman Islands, Guernsey, Isle of Man, Jersey, Liechtenstein, San Marino, Virgin Islands (British)
List of state regulatory authorities
PRC State Administration for Industry and Commerce http://www.saic.gov.cn/english/index.html
Enterprise Registration Bureau http://qyj.saic.gov.cn/
Beijing Administration for Industry and Commerce http://www.hd315.gov.cn/
Shanghai Administration for Industry and Commerce https://www.sgs.gov.cn/shaic/sgsEn!getSgsEnMain.action
PRC State Tax Administration http://www.chinatax.gov.cn/eng/
PRC Customs Administration http://english.customs.gov.cn/
State Currency Control Administration http://www.safe.gov.cn/wps/portal/english/Home
Bank of China http://www.pbc.gov.cn/english/130437/index.html
China Courts http://en.chinacourt.org

    Legal Partner of Review:

    Zhong YIn Lawyer

    Established in 1993, Zhong Yin Law Firm is one of the first and largest law firms specialized in finance securities law service and legal risk management services in China and ranks one of the top ten law firms in China.

    Zhong YIn Lawyer

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