China

Company Formation in China

China is ideally located to cater to the fast growing market with a large population in Asia. YourGlobalPro can assist in China for Company Formation, Secretarial Compliance, Tax Registration, VAT Reclaim and Document Retrieval.

About the Country

The People’s Republic of China (PRC) is a unitary sovereign state in East Asia and a major regional power within Asia. China is as one of the world’s earliest civilizations in the fertile basin of the Yellow River. China’s landscape is vast and diverse, ranging from the Gobi and Taklamakan Deserts in the arid north to subtropical forests in the wetter south and is one of 17 megadiverse countries. The below content will explain you in detail about the requirements for the company formation in China, know more about the process of Trademark registration in China and understand the China Legal Compliance requirements.

China

Doing Business Introduction

Many big companies in automotive original-equipment manufacture sectors are now moving to China.  And also, the Country is home to world’s largest, most successful, and innovative Internet-based companies.

As per Doing business report of The World Bank –China ranks 78 for 2017 survey. YourGlobalPro professionals is able to assist its client with any type of company formation in China, trademark registration in China and other recurring services for your business in China.

Incorporation - Types of Business Entities

The various types of entity that can be incorporated in China are as mentioned below:

  • Wholly Foreign Owned Enterprise (WFOE)
  • Representative Office (RO)
  • Joint Venture (JV)
  • Partnership Enterprise (PE)
  • Hong Kong Company

Time Frame for the Company formation in China varies from depending on the type of entity selected. Each business type has its own advantages and disadvantages. The time required for the process of company formation in China can be completed in 28-30 working days.

Benefits of Registration of a Company

Below are the advantages of company formation in China:

  • No import or export licenses required
  • It is top twenty trading economies and the world’s third largest financial centre and world’s fastest growing economies
  • Lower tax rates
  • No currency control restrictions
  • No restrictions on capital transfer in / out
  • Easy to change the structure of a company
  • Low labour costs, low production cost
  • Company Law provides a modern, flexible approach

Tax Registration and Filing

China enacted the new China Enterprise Income Tax Law (the New Law) in 2007 which is applicable yo all business operations in China. Below is some important point in relation to taxation in China:

Corporate Income Tax Rate 25%
Capital Gains Tax Rate 25%
Branch Tax Rate 25%
Value-added tax (VAT) 17%
Dividends 10%
Interest 10%
Royalties from Patents, Know-how 10%
Branch Remittance Tax 0%
  • Tax year ends on December 31 [calendar year].
  • Corporate residents of China are taxed on their worldwide income with allowance of foreign tax credit for income taxes paid in other countries. However Nonresident companies are taxed on China-source income only.
  • For companies’ date for submitting an annual report and arranging payments is up until May 31
  • Foreign companies in China are obligated to submit an interim report every three months
  • China has introduced transfer-pricing rules as per which transaction between related parties must be on arm length standard.
  • Consolidated returns of enterprises are not allowed, and all companies must file separate tax returns.
  • An annual corporate income tax return, together with audited financial statements issued by a certified public accountant registered in China is to be filed within five months after the end of the tax year

Double Tax Treaty

China has double taxation treaties with over 80 countries.

Trademark registration

The China Trade Mark Office’s (CTMO) office regulates the process of trademark registration in China. A China Trademark Registration is valid for 10 years from the registration date and can be renewed for further 15 years within the 6 month before expiration date. It is recommended commence the trademark registration in China as soon as possible ensure adequate protection.

YourGlobalPro professionals can assist you with the process of trademark registration in China for your business. For assistance or advise in the matter of the trademark registration in China or intellectual property – please feel free to write or contact us.

Secretarial Compliance

  • All companies Must have registered office
  • Need to inform the MOF of the identity of the business partners
  • Maintain proper accounting records in Chinese at the registered office of the Company
  • Proper maintenance of statutory registers and records
  • Company will have to file an annual audit report to the State Administration of Tax Bureau and business licensing bureau.
  • Annual audit, annual tax reconciliation, annual reporting to the Administration of Industry and Commerce (AIC)

Accounting Services

Accounting rules are not hard and fast and differs from city to city. For accounting, Chinese Accounting Standards (CAS) also referred as Accounting Standards for Business Enterprises” (ASBEs) are followed and is 90% the same as international accounting standards. All the foreign currency transactions of the Company are to be converted into Renminbi (RMB) using the Government specified rates when financial statements are prepared and submitted. Also, the Accounting records are required to be prepared in Chinese language according to tax bureau’s requirements.

YourGlobalPro professionals can assist you with the entire bookkeeping and accounting services to your China Business Set up as per your business needs including implementation of financial accounting software, accounting records preparation and time to time preparation of budgets, forecasts.

Auditing service

The annual China accounting audit where a certified public accountant assesses the Company accounts compliance and report back to the local Ministry of Finance (MOF) authorities. Before repatriating profits annual China accounting audit needs to be undertaken and Corporate Income tax to be paid.

Based on the size of the business – the companies are required to prepare and file financial statements with the Authority. YourGlobalPro professionals provide auditing services for your business as required by your business.

Banking

The documentation requirement differs from Bank to Bank and need to be complied for the Bank account opening. All banks are stable, reliable and offer the same level of services.

YourGlobalPro professionals can facilitates all the paper work in relation to banking need and can assist you in opening bank account for your business plan in China.

Legal and Compliance

Below are the various China legal and compliance requirements to be followed by incorporated entities:

  • Companies must file their financial statements and business tax returns monthly and in Chinese
  • corporate income tax (CIT) must be filed quarterly
  • All employee must have a written, signed, and stamped contract in Chinese
  • staff and management need to pay individual income tax
  • Companies are required to deal directly with the Ministry of Finance (MOF) when submitting accounts in China
  • All companies are required to conduct a statutory annual audit report, consisting of a balance sheet, an income statement, and a cash flow statement
  • As a part of annual reporting a combinative report is to be done with the Ministry of Commerce, the Ministry of Finance, and the National Bureau of Statistics

HR and Employment Law and Immigration / VISA

The Labour Contract Law of the People’s Republic of China effective from January 1, 2008 regulates the labor related matter in China. Below are some of the important points in relation to HR & employment law in China:

  • Employer is obligated to submit a monthly report on his employees’ wages and to pay the tax deducted within 7 days of the end of the previous month.
  • Chinese diplomatic mission or consulate issues the visa to the foreign individual who want to leave and wok in the Country. Also, foreign national may obtain residence permits from the local Public Security Bureau valid for one to five years.
  • Employee need to be at least 18 years old, and in good health
  • Should not have any criminal record
  • Should have required professional skills
  • Must possess valid passport or other travel document in lieu of a passport.
  • Foreigners not having residence permits must have special permission from the Chinese Ministry of Human Resources and Social Security
  • Foreign Individual will need special permission to hold jobs
  • Not be discriminated based on country of origin, race or gender.
  • A written employment contract to be entered into
  • Work week is to be no more than 44 hours long

Country Statistics

Capital Beijing
Largest City Shanghai
Area Total 9,596,961 Sq. Km.
Population 1,373,541,278
Density 145/ Sq. Km.
Currency Renminbi (yuan), (CNY)
Government Unitary one-party socialist republic
Official Language Chinese
Religion 52.2% Irreligious
21.9% Folk Religions
18.2% Buddhists
5.1% Christians 1.8%
Muslims <0.1%
Hindus <0.1%
Jews 0.7% Other
Business Hours 09:00 to 17:00 with a one-hour lunch (Mon to Fri)
Banks and Exchange Houses Hours 09:00 to 17:00 with a one-hour lunch (Mon to Fri)

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