Along with China enters WTO , China has an enthusiastic market , more and more foreign investors are interesting in China. Inter Area has service offices ,such as Beijing /  Shanghai / Shenzhen / Taiwan etc. Besides,we provide the latest local policies and information for our clients hence they can judge what would be the best options for them.

Stipulations of Registered Capital

According to the “Company Law”,in relation to cancel the minimum registered capital  requirement in each industries. Subject to the minimum registered capital stipulation, there are 2 types of Chinese registered companies , includes Company Limited and Share Company Limited. Company Limited’s minimum registered capital is RMB500,000; and the minimum Share Company Limited ’s registered capital is RMB5,000,000. Subject to the “Company Law” in relation to Company Limited’s shareholders have to pay 20% of registered capital at the first place ,whist it could not lower than registered capital’s requirement. 

Ways of Investing in China 

1. Wholly Foreign Owned Enterprise (WOFE) : Refers to 100% foreign investment to incorporate a company in China. Nowadays, it is a common way for foreigner entity or other associations to set up a company in China.

(1)All assets are owned by foreign investor.

(2)Normally, WOFE is about company limited , however, it could be other type of company if get permit from government.

2. Joint Venture : Chinese-Foreign Joint Venture refers to foreign entity or individual cooperate with Chinese entity to set up company.

(1)Joint Venture has to have Chinese and foreign parties. Foreign side can be individual or entity, but Chinese should be Entity only.

(2)Ratio of Joint Venture : Foreign side is more than 25% （NUL)

3. Chinese-Foreign Joint Venture refers to foreign entity or individual cooperate with Chinese Individual or entity to set up a company or doing business with an Agreement.

(1)Normally foreign side of Chinese-Foreign Joint Venture have more than 25% shares.

(2)Chinese-Foreign Joint Venture could be a company , or each parties signed by an Agreement . Both of them are needed to apply for permits.

(3)Foreign side cannot quit if the company hasn't loss; All facilities belong to China side in the future.

(4)Foreign side have operating right, besides, some limited projects ( Chinese runs only ) can operation in this way. 

Typical types of Chinese Company 

Trading Company : Trading companies are allowing to wholesale / retail / import & Export ; for some certain businesses like Liquor / Food / Cosmetic / Medicine Machine etc . are needed extra permits by government.

Service Company :  The main business is Service , For instance , Consulting / Application Developing / promoting / agency / F&B management etc .  Other Special business likesRestaurant / Travel Agency etc . are needed to apply for permits.

Representative Office (R.O.) :  R.O. which is not allow to have transactions in China.

Branch :  Refers to a branch of subsidiary . However the accounting job should handle by subsidiary. 

Requirements of Setting up Chinese Company 

Legalising Investor’s files

Chinese Company Name 

Chinese Company ’s Registered Address with Leasing Agreement

Chinese Company’s Legal Representative and Supervisor Identity Certifications 

Chinese Company’s Registered Capital

Chinese Company’s Business scopes and operating time 

Credibility Letter of Bank of Investor 

Processes of Setting up Chinese Company

Pre-Company’s Name Approval

Certificate of Approval :  Application of foreign investment establishes in China 

Business License : Applying for company registration

Company Chops Remarked: Applying for making company’s chops 

Company Code Certification: Applying for company code, which is key step of applying for further stuffs

Tax Registration and Foreign Exchange Registration : Company is required to register Tax ; Remitting foreign currency is needed to applying exchange permits 

Company Bank Account :  Basic Company Bank Account with Chinese Currency is required ; and other currency bank account if needed

Custom Registration: Import and Export businesses are required to apply for permits

內資企業地址變更

一、     內資企業定義

所謂內資企業是指以國有資產、集體資產、國內個人資產投資創辦的企業。包括國有企業、集體企業、私營企業、聯營企業和股份企業等五類。

二、大陸政府相關法規

1、 公司變更登記事項，應當向原公司登記機關申請變更登記。

未經核准變更登記，公司不得擅自改變登記事項。

2、公司申請變更登記，應當向公司登記機關提交下列文件：

（1）公可法定代表人簽署的變更登記申請書；

（2）依照《公司法》作出的變更決議或者決定；

（3）公司登記機關要求提交的其他檔。

公司變更登記事項涉及修改公司章程的，應當提交修改後的公司章程或者公司章程修正案。

三、內資企業位址變更申辦流程

1、申請營業執照變更（遷入地工商局）；

2、領取新營業執照（遷入地工商局）；

3、代碼證變更

4、變更稅務登記證；

外資企業地址變更

一、外資企業定義：

外資企業是一個獨立的經濟實體，獨立經營，獨立核算，獨立承擔法律責任。在組織形式上，外資企業可以是法人，也可以是非法人實體，具備法人條件的外資企業，依法取得法人資格，其組織形式一般為有限責任公司，外國投資者對企業的責任以其認繳的出資額為限。

一、大陸政府相關法規

1、中外合作者在合作期限內協商同意對合作企業合同作重大變更的，應當報審查批准機關批准；變更內容涉及法定工商登記專案、稅務登記專案的，應當向工商行政管理機關、稅務機關辦理變更登記手續。

2、外資企業分立、合併或者其他重要事項變更，應當報審查批准機關批准，並向工商行政管理機關辦理變更登記手續。

3、企業法人改變名稱、住所、經營場所、法定代表人、經濟性質、經營範圍、經營方式、註冊資金、經營期限，以及增設或者撤銷分支機搆，應當申請辦理變更登記。

4、企業法人分立、合併、遷移，應當在主管部門或者審批機關批准後三十日內，向登記主管機關申請辦理變更登記、開業登記或者註銷登記。

二、外資企業位址變更申辦流程  

1、申請營業執照變更（遷入地工商局/市監局）；

2、申請變更批准證書（遷入地商務委/經促局）；

3、變更組織機構代碼證；

4、變更稅務登記證；

5、變更外匯登記證；

6、變更財政登記證；

7、變更海關登記證。

Equity Transfer

Chinese-foreign Equity Joint Ventures, Chinese-Foreign Contractual Joint Ventures, Wholly Foreign Owned Enterprise (hereinafter referred to as three types of foreign-funded enterprises), after registered and established according to the law in China, original registered capital or investors investment ratio may change due to various reasons, resulting in changes of investor share. The place of offshore company registration that Taiwanese Businessman often choose, procedures of ownership change are simple and fast. The final object of equity transfer after all is China entities enterprises, whether listed in Taiwan, foreign quoted share, introduce a strategic investor or equity restructuring carried out by the shareholders, can’t avoid need for group investment reorganization occurred the case of the territory of China corporate equity indirect transfer. Introduction of No. 698 and follow-up throughout collection practices cases let companies need to re-examine and assess the practice for years in the past to bring tax risk of the enterprise. Therefore, before making such an equity transfer transaction, you should understand or consult professionals about the latest laws and local tax authorities from carrying out practices and efforts to make the decision after careful assessment, in order to avoid inadvertently increasing business risk.

A. The company go through the relevant change specification

When foreign-invested enterprises subject to mergers and acquisitions, and equity transactions selected to implement mergers and acquisitions, often face domestic transactions and export transactions the two options. Due to the changes offshore company shareholders and person in charge occurs and the transferee as a new shareholder of Chinese companies need to separate the legal representative and appoint directors and supervisors and other personnel, who must apply for change of registration or filing location of the company to China's relevant departments. It should be noted that, due to the corresponding change of the person in charge investors, many local approval authorities will ask for the new person in charge of offshore companies on public authentication certificate and other relevant documents.

Ⅰ. For domestic transactions, especially attention to the payment of share particular. Under the State Administration of Foreign Exchange, after the buyer obtaining the approval documents of foreign exchange to the payment of the shares to the seller, and the payment of share should be paid off at one time.

Ⅱ. While offshore transaction, the payment of share between buyers and sellers without getting prior approval or approval of any China official sector, buyers and sellers can have more time and space for a freely negotiated way of the payment of share.

B. Domestic / Offshore trading for equity trading taxation issue

Ⅰ. Transfer of Remitted (offshore) Stock Income Tax

When domestic and offshore direct dealing, in accordance with equity transfer income (equity transfer income minus the equity transfer costs) Samoa A need to transfer of shares multiplied by 10% paid by non-residents corporate income tax. Equity transfer income generally agreed equity transfer price by buyers and sellers, generally the price can't less than the transfer base date of the book net assets of Chinese A, if tax authorities required assess the value of the equity, can be real estate appreciation, leading to equity assess price is greater than the book net assets, at this time, tax authorities will assess the price of the equity income recognized equity transfer. Indirect offshore transactions, in accordance with the provisions of No. 698, should report to the tax authorities of China A from the date of signing of the share transfer contract in 30 days; after approval of SAT, can be regarded as the direct transfer of China A equity to taxation.

Ⅱ. Profit distribution Income Tax

After domestic transaction, China enterprises no need to levy tax from distribution of profits of China A; but China enterprises will eventually distribute profits to individual shareholders, domestic individual must pay 20% of personal income tax, foreign individual no need to pay the tax; after offshore transaction acquiring offshore company the need to pay 10% of the income tax on non-tax-resident enterprises from distribution of profits of China A(with tax convention and eligible can use conventional tariff).

Ⅲ. Attention

Purchase shares of foreign invested enterprises, it should be based on the assets, financial situation and the specific circumstances of the buyers and sellers of the target company, planning transactions, not just consider the tax factor. According to the provisions of Circular 698, if there really have the equity transfer income tax, offshore indirect transaction can't risk tax exemption.

C. The basic files to prepare for change of equity transfer

Equity transfer agreement between the corporate investors need agree by other investors parties, its affiliates or equity transfer of other assignee, the assignor and assignee shall sign agreement of equity transfer, the main contents should include: The name, address, legal representative of the name, position, nationality of the assignor and assignee; share and price of equity transfer; contange day and manner of equity transfer; assignee enjoy the right and commitment according to  enterprise contract and articles of associationed; responsibility breach of contract; applicable law and dispute settlement; come into force and termination of the agreement; time and place of agreements. With particular attention to the applicable law and dispute settlement, the law must apply to the China.

D. Latest Practice Case

From 10 December 2009 through offshore company indirect transfer of shares China residents enterprise will be taxed, the SAT issued Guoshuihan No. 698 "Strengthening the Management of Enterprise Income Tax Collection of Proceeds from Equity Transfers by Non-resident Enterprises"

[Equity transfer transaction reporting norms]

Case instructions:

The biggest impact of No. 689 on enterprises is that the tax authorities will be strengthen to equity transfers by non-resident enterprises. In the past most of the foreign enterprises set up several offshore companies to indirectly invest in China; and subsequent increases joint venture partners or equity transfer, often through transfer offshore company equity to indirect achieve the effect of transfer China companies equity. After release Guoshuihan No. 698, for the preceding transaction has been clearly declare of norm, and its related provisions as follows:

1. Nonresident enterprises shall file and pay the enterprise income tax to the competent tax authority supervising the Chinese resident enterprises whose equity interests are transferred (i.e., the tax authority in charge of collecting enterprise income tax of such resident enterprise) within seven days after the equity transfer date as agreed in the contracts or agreements (or after the date when the proceeds are actually obtained, if the transferors receive the proceeds of equity transfers in advance). If non-resident enterprises fail to file timely and accurately, the relevant provisions in the Tax Collection and Management Law of the People’s Republic of China shall apply.
2. When the offshore investor (actual controlling party) indirectly transfers the equity interests in a Chinese resident enterprise, if the actual tax burden in the jurisdiction of the offshore holding company being transferred is less than 12.5%, or if such jurisdiction exempts income tax on foreign-sourced income for its tax residents, the following documents should be provided to the tax authority supervising the Chinese resident enterprise whose equity interests are transferred, within 30 days after signing the equity transfer agreement:
   1. Equity transfer agreement/contract;
   2. The relationship between the offshore investor and the offshore holding company being transferred in terms of capital, operation, sales and purchase etc.;
   3. Introduction of operation, employees, bookkeeping, and assets of the offshore holding company being transferred by the offshore investor;
   4. The relationship between the offshore holding company being transferred by the offshore investor and the Chinese resident enterprise, in terms of capital, operation, sales and purchases;
   5. Explanation of the reasonable business purpose with respect to the offshore holding enterprise being transferred by the offshore investor;
   6. Other materials requested by the tax authority.
3. If the offshore investor (actual controlling party) indirectly transfers the equity interests in a Chinese resident enterprise via abuse of organization forms and certain enterprise income tax obligations are avoided without a reasonable business purpose, after being reported to higher authorities and reviewed by the State Administration of Taxation, the supervising tax authority can decide the nature of the transaction of such equity transfer according to its business substance and deny the existence of the offshore holding company which is used for tax planning purposes.
4. If the capital gain derived from an equity transfer by a non-resident enterprise is qualified for special tax treatment provided by Caishui [2009] No. 59 and such non-resident enterprise chooses the special restructuring method, written documentations should be submitted to the supervising tax authority to prove such qualification, subject to approval from the provincial tax authority. 

In summary, the current commonly used foreign investment in China offshore holding company registration, such as: the British Virgin Islands, Cayman Islands, Samoa, Hong Kong and other places, are in compliance with the aforementioned offshore holding companies where the country (region) actual tax burden negative less than 12.5% or its residents foreign income do not levy income tax provision, therefore the transfer of offshore companies equity have a duty to record the tax authorities. In practice China tax authorities has identified as long as non-entities offshore companies equity transfer, this behavior, will regarded as the direct equity transfer of China companies.

Notice of the State Administration of Taxation on Strengthening the Management of Enterprise Income Tax Collection of Proceeds from Equity Transfers by Non-resident Enterprises

Guoshuihan [2009] No. 698

The administrations of state taxes and administrations of local taxes of all provinces, autonomous regions, municipalities directly under the Central Government, and cities under separate State planning:

To standardize and strengthen the enterprise income tax collection and management of proceeds from equity transfers by non-resident enterprises, in accordance with the Enterprise Income Tax Law of the People’s Republic of China and its Implementing Rules, the Tax Collection and Management Law of the People’s Republic of China and its Implementing Rules, the Notice of the State Administration of Taxation on Printing and Distribution of Provisional Administrative Measures on Enterprise Income Tax Withholding at Source for Non-resident Enterprises (Guoshuifa [2009] No. 3), as well as Circular of the Ministry of Finance and the State Administration of Taxation on Several Issues on Corporate Income Tax Treatment of Corporate Restructuring Transactions (Caishui [2009] No. 59) relevant issues are hereby clarified as follows:

1. Proceeds from an equity transfer as referred to in this circular represents proceeds from the alienation of the equity interests in Chinese resident enterprises (excluding the purchase and sale of the stock of Chinese resident enterprises on public securities markets) by non-resident enterprises;
2. Where the withholding agent fails or is unable to fulfill its withholding obligations, nonresident enterprises shall file and pay the enterprise income tax to the competent tax authority supervising the Chinese resident enterprises whose equity interests are transferred (i.e., the tax authority in charge of collecting enterprise income tax of such resident enterprise) within seven days after the equity transfer date as agreed in the contracts or agreements (or after the date when the proceeds are actually obtained, if the transferors receive the proceeds of equity transfers in advance). If non-resident enterprises fail to file timely and accurately, the relevant provisions in the Tax Collection and Management Law of the People’s Republic of China shall apply.
3. Proceeds from equity transfer refers to the difference between the consideration of the equity transfer minus the cost of the equity interest; Consideration of the equity transfer represents the total amount received by the transferor in the form of cash, non-monetary assets or interests with respect to the equity transfer; if the investee enterprises have retained earnings or after-tax reserves and such retained earnings and after-tax reserves are transferred to the transferee along with the equity interests being alienated, such amount of retained earnings and after-tax reserves shall not be deducted from the consideration of the equity transfer; Cost of the equity interest represents the capital contribution actually paid to the Chinese resident enterprises when the transferor made such investment, or the consideration actually paid to the prior transferor when the equity interests were purchased;
4. In calculating the proceeds from equity transfers, the currency used by non-resident enterprises to make investments into Chinese resident enterprises whose equity interests are transferred, or the currency used to purchase such equity interests from the former investors shall be used to calculate the consideration of the equity transfer and cost of the equity interest. If a non-resident enterprise made investments for more than one time, the currency it used for the first investment shall be used to calculate the consideration of the equity transfer and cost of the equity interest, and a weighted average method shall be adopted to calculate the cost of the equity interest. Where different currencies were used in making the investments, the then-prevailing exchange rate on the date when the capital was injected shall be used to convert the currency into the one used for the first investment;
5. When the offshore investor (actual controlling party) indirectly transfers the equity interests in a Chinese resident enterprise, if the actual tax burden in the jurisdiction of the offshore holding company being transferred is less than 12.5%, or if such jurisdiction exempts income tax on foreign-sourced income for its tax residents, the following documents should be provided to the tax authority supervising the Chinese resident enterprise whose equity interests are transferred, within 30 days after signing the equity transfer agreement:
   1. Equity transfer agreement/contract;
   2. The relationship between the offshore investor and the offshore holding company being transferred in terms of capital, operation, sales and purchase etc.;
   3. Introduction of operation, employees, bookkeeping, and assets of the offshore holding company being transferred by the offshore investor;
   4. The relationship between the offshore holding company being transferred by the offshore investor and the Chinese resident enterprise, in terms of capital, operation, sales and purchases;
   5. Explanation of the reasonable business purpose with respect to the offshore holding enterprise being transferred by the offshore investor;
   6. Other materials requested by the tax authority.
6. If the offshore investor (actual controlling party) indirectly transfers the equity interests in a Chinese resident enterprise via abuse of organization forms and certain enterprise income tax obligations are avoided without a reasonable business purpose, after being reported to higher authorities and reviewed by the State Administration of Taxation, the supervising tax authority can decide the nature of the transaction of such equity transfer according to its business substance and deny the existence of the offshore holding company which is used for tax planning purposes.
7. The tax authority can adjust the taxable income using reasonable methods, provided that the income is reduced as a result of an equity transfer of Chinese resident enterprise by a non-resident enterprise to its related parties not applying the arm’s length principle.
8. If the offshore investor (actual controlling party) transfers its equity interests in several onshore and offshore holding companies simultaneously, the Chinese resident enterprises being transferred should provide the supervising tax authority with the agreements regarding the whole transaction and the agreement with respect to itself. If there is no separate agreement for the Chinese resident enterprise, it should provide to the supervising tax authority detailed information with respect to each of the holding companies being transferred, for the purpose of allocation of transfer amounts with respect to the domestic entity. The tax authority has the discretion to adjust the transfer amount if it cannot be allocated precisely.
9. If the capital gain derived from an equity transfer by a non-resident enterprise is qualified for special tax treatment provided by Caishui [2009] No. 59 and such non-resident enterprise chooses the special restructuring method, written documentations should be submitted to the supervising tax authority to prove such qualification, subject to approval from the provincial tax authority.
10. This Notice is effective from January 1, 2008. Issues in implementation of the Notice should be reported to the International Taxation Department of the State Administration of Taxation in a timely manner.

China Factory

Wholly foreign owned enterprise indicates foreign company, enterprise, something economic organizations or individual to establish all capital by foreign investor who invests the enterprise in China with law. According to the rules of foreign enterprises operation law,establishing foreign enterprises have to elevate economic development and comply with as following one condition that adopting international advanced technology and equipment and export of all or most products.

Foreign enterprises are Limited Liability Company, also called one person limited liability company, but not including foreign companies, enterprises and something economic organizations set up in the branch institution, such as branch companies, offices and representative offices. Foreign owned enterprise reflects that can engage activities of business scope in China and possess import or export rights. Next, it can release stock to improving the development of stock market in China. Foreign investment enterprises are based on the way of investment, allocation, risk, return investment, responsibility and liquidation that divide into Chinese-foreign Equity Joint Ventures, Chinese-Foreign contractual joint ventures. Foreign enterprises also called foreign owned enterprise and foreign investment incorporated limited. Foreign owned enterprise is the one way of foreign enterprises that set up in China according to the laws which capital is invested by foreign investor.

1.Expect land, 100% investment foreign-invested enterprises by private investors, and not Chinese investors to shares. A business can be owned by one foreign investor, it may also be a number of foreign investors or joint venture.

2.Independent management without Chinese investor to operate it. Enterprise in the light of approved memorandum and articles of association to make business management activities which never interference.

3.Responsibility for one's own profits and losses. In addition to operating income after provisions relating to Chinese tax revenue, wholly owned by investor-owned and controlled. Finish the enterprise should be notice in time and make liquidation by legal procedures.

The rules of laws of People's Republic of China on Foreign Capital Enterprises, the basic policy and principle that establish foreign owned enterprise is:

1. For enlarge outside economy cooperation and technology exchange to improve the development for China economy. China allows foreign enterprise and other economic organizations or individual to set up foreign enterprises that protect legal rights.

2. Must upgrade the development China economy which set up foreign enterprise and adopt advanced technology and equipment or export of all or most products. China prohibits or has limitation to set up foreign enterprise in some business including military industry, postage cable business and culture enterprise.

3. Foreign investor gets the profits and other legitimate rights and interests acquired, protected by Chinese laws. Foreign enterprise must comply with laws of China, cannot damage society public advantages. Foreign enterprise law has a rule that cannot implement nationalization and expropriation, in exceptional circumstances, in accordance with the needs of social public interests, to expropriate foreign enterprise according to law programs, appropriate compensation.

4. Establish to foreign enterprise application approved by foreign economic and trade department of the State Council of the People's Republic of China or authorized organization by the State Council of the People's Republic of China. Foreign enterprise has to invest during approval deadline; if out of time, the Industry and Commerce Administration institution has rights to revoke the business license. The situation of foreign enterprise are inspected and supervised by the Industry and Commerce Administration institution.

5. The production business program of foreign enterprise should be making a statement by administration.

6. Foreign enterprise must set up account books to making independent accountability that submit financial statements in accordance with the provisions and accept supervision by the financial and tax authorities. If refuse to set up the account book, can be fined, stop to operate or revoke the business license by organization.

7. Foreign enterprise can enjoy the reduce tax, duty-free by Law of the People's Republic of China on Income Tax of Enterprises with Foreign Investment and Foreign Enterprises. The profit after tax of reinvestment in China, you can apply for a refund part of the income tax already paid on the reinvested portion.

The important problem is the scope of business with foreign-owned enterprise. The scope of businesses are strictly and precisely in China. Foreign-owned enterprise can only operate business activities in the allowed scope of business. The scope will be indicated in the business license, if need to modify, please offer the application and get the approval.

1. Business Ranges

Apart from some special business ranges ,such as food/medical/chemical etc, are needed to apply for Special Permit, trading company allows operating likes wholesale /trading /import & export /agency / consulting and other relevant businesses.

2. Import & Export Management 

Foreign owned trading companies are allow to apply for Import & Export rights for operating general transactions. General Trading which means the company is doing singly import businesses or singly export business. Chinese custom will offer loan allowance accordingly, includes import-processing materials, domestic processing and export , self-purchasing and export , import foods,  domestic-made fuel/ materials/components for foreign vessel and airplane,etc. 

3. Foreign Exchange Management 

China has a specific system for foreign exchange,includes settlement,currency selling and import&export payment verification. Generally, company’s foreign currency income shall be sold by certain bank, and outcome shall be purchased in the certain bank.  Wholly Foreign owned company can open a foreign account and save a certain amount as normal income.

Since August 2007, Chinese Government cancelled settlement systems mandatorily. State Foreign Exchange Bureau amends “ Foreign Exchange Management Ordinances”,in relation to cancel all oversea’s income have to be transferred to domestic, and suggest domestic organisation and individual can leave in overseas or transfer back to domestic. Regarding to the specific saving conditions and terms depends on the stipulation of Foreign Exchange Management.

December 31th 2010, State Foreign Exchange Bureau issued “ Regarding to storage of Import&Export “ . New ordinance has been operated since January 1st ,2011.  Generally , Company imports and exports goods can pay to the certain bank by virtue of Agreement. Company exports goods also needed to comply with settlement verification. 

Remarks:Since July1st 2004, all capable international manufacturers have right to refund or free tax; regarding to trading companies whom export goods also have right to refund or free tax; regarding to Small Scale Tax Payer’s trading companies whom export goods are duty free.  

4. Main Taxes for WOFE or Foreigner 

✦Company Income Tax: 
Chinese Company’s income tax is 25% 

✦Value Added Tax (VAT) :
Chinese VAT is 17% in relation to manufacturing, circulation of various aspects of the new value, or value-added goods. Where in China engaged in selling or importing,processing,repairing,and replacement serving are required to pay VAT. Chinese tax bureau subject to the companies’ accounting systems to recognise whether they are General Tax Payer or Small Scale Tax Payer. Small Scale Tax refers annual turnover lower than standard with unwell accounting system. The standard is engaging to manufacturing , providing tax payable services , retails and wholesales whom annual VAT tax fee lower than RMB50million or other annual tax fee lower than RMB80million. General taxpayer refers annual taxable sales higher than Small Scale Tax payer with standard accounting system. However, regarding to those individual,non-entity organisation those whom annual taxable amount higher than small scale tax standard are recognising to Small Scale Tax payer.

✦Tariffs:
Import tariffs have ordinary and favourable, no favourable tax agreement with China are required to pay ordinary tariff;with favourable tax agreement with China are required to pay favourable tax.

✦Business Tax:
It depends on each industries and difference business. Normally there 4 types of it,includes (1) transportation, construction, telecommunications, culture and sports tariff rate of 3%; (2) finance and insurance 5% (adjusted to 8% in 1997, 2001 was reduced to 7 %, reduced to 6% in 2002, 2003 and later reduced to 5%)(3) services, transfer of intangible assets, real estate sales three tariff rate of 5%; (4) tariff rate for the entertainment industry 5-20%, the specific applicable tax rate is determined by the provincial government.

✦Land Tax:
Land Taxi in relation to transfer of land (fixed) rights whom gain the profits .

5. Company Registration Process

Q & A of Setting Up Chinese Trading Company 

Q : How Taiwan investment incorporates in China?

A : Normally, Taiwan individual or entity invest in China directly, however, entity has to provide Business License or individual has to provide Identity Certification. All files are needed to notarise by Straits Exchange Foundation / Association for Relations Across the Taiwan Straits , afterwards, get permits from Chinese government. Nowadays,  more and more investors will set up a company via Offshore company, the good sides are simplified legislation and flexible.

Q : How Foreign Investment incorporates in China ?
A :  Minimum registered capital is RMB500,000. There is at least 1 director and a supervisor , the registered address has to located in office building. Leasing Agreement is required . If the company needs to apply for VAT, the office size is one of applying condition. It is necessary to apply extra Import&Export rights if the company wants to import and export goods.

Q : Does the registered capital is needed to full paid ?

A : So far, 20% of registered capital is needed to pay at the first place , the balance has to be paid within 2 years. However, it has changed , some cities are accepted pay accordingly.

Q : How long to set up a WOFE (trading company) well ?

A : Normally it takes approximately 1month. However, if client wants to apply for issuing VAT and IMP&EXP rights, it might take approximately 3 months, it depends on the real status.

Q : Any favorable tax for trading company?

A : Along with many foreign investment in China, the government has changed and amended tax rates, especially for certain import and export products. Besides, China builded up Shanghai Free Trade Zone, which means international trading is getting easier to run in China. 

China Branch Office

China branch office is belong to branch organization, it don’t have Independent Legal Entities qualifications. The branch organization governed by head office in the business, financial, personnel and other aspects. Economically and legally lack of independence. Thus there’s no requirement of registered fully funded. The branch tax returns can be independent accounting or non-independent accounting. Its business scope may not exceed the business scope of head office.

First, the main characteristics of the branch :

1. The branch is legally established by the affiliated companies, and affiliated companies is unified accounting in the economy, its liabilities in the business activities is responsible for the affiliated companies. Its actual possession and use of the property is part of the head office property in the balance sheet of the the Corporation.

2. Establishment of the branch is not the same with company, it can be established as long as the performance of a simple registration and business formalities. Not independently bear civil liability, without article of incorporation, no board of directors of company making decision and business execution office.

3. The branch has no independent name, as long as name branch after the Corporation.

Second, the branch should have the conditions:

Branch refers to the company established outside the residence to engage in business activities, the branch is not qualification of enterprise legal person. Set up branches shall have the following conditions:

1. Article 47 of the China registration regulations branch registration items include: name, place of business, in charge person and business scope. Names should comply with the relevant provisions of the Country:Name of the branch  must be full name.

2. The operating range must comply with the relevant provisions of the Country: Branch shall not exceed the scope of the company's business scope;

3. Have a fixed place of business and necessary conditions for production and operation: the company can not operating in the same place with branch.

Third, benefits of the branch  :

1. Branch is facilitate to the management, requirements of financial accounting system are relatively simple;

2. The branch is not a independent legal entities, then paid in location of the turnover tax, profits paid by the Corporation consolidated tax. In the beginning of the companies are often take a loss, but losses may be used to offset profits of the Corporation, to reduce the tax burden;

3. The branch profits delivered to the Corporation generally not subject to  provision for income tax;

4. The capital transfer between branch and the Corporation, no need to burden of tax, because there's no involve of the ownership changes, there is a big difference between corporation tax benefit and the branch, companies business strategy highly enhance operational flexibility.

Service-type Company

Service-type companies are engaged in services industries are subject to prescribed business activities of enterprises, including product development, design, manufacture, sale, installation, maintenance, and provision of system solutions. Service-type refers to the manufacturing process of industrial structure dominated shift to service-oriented changes. From the stage of development, economic structure, especially the big trend in the evolution of industrial structure and the new emerging view of the current situation, China has already begun in the mid-to late industrialization shift to manufacturing-oriented industrial structure has begun to service industrial Structure Evolution industry-led, service-oriented economic structure optimization and upgrading of China's economy is an important task and a new main direction. China opening up of service to promote the rapid development of trade in services has formed a comprehensive, multi-level pattern of opening up services. Among them, the export trade in services has been ranked 28th in the world, rose to eighth place, imported by the first forty world ranking rose to seventh place.

With the improvement of the level of consumption structure of national income while evolving upgrade, but is bound to promote the evolution of consumption structure adjustment and upgrading of industrial structure, which is the consumption structure and industrial structure change objective law. China's per capita GDP now exceeds USD6, 000; the world's middle-income level has been reached. At this stage of development, the service sector has become the main growth point and pillar industries, the development of new services in the Chinese economy, can greatly promote economic growth, increase effective supply, and better meet consumer demand, improve people's livelihood, improve quality of life. Column such as: Agreement on Trade in Services (General Agreement on Trade in Service, GATS): international trading partners to negotiate for services cross-border services, topics include MFN import tax and duty exemptions, etc., regulate trade patterns can be divided into Cross-border supply, consumption abroad, commercial presence and presence of natural persons and other four categories, service trade agreement with the elimination of trade barriers and discriminatory norms function.

There are Several Main scopes of Services industries :

1.    Agency:its scope is handling the entrusted matters of business, including purchasing and selling goods, import agents, introduction services. Shopping consignment which is entrusted with the purchase of goods or real sale of goods purchased by the amount of actual sales or liquidation and charges a fee business. Agent import refers to goods or services entrusted to handle import and export business. Introduction Service refers intermediaries introduce their discussion of business transactions or other matters.

2.    Hospitality: providing accommodation services.

3.    Food and Beverage: providing food and beverage services.

4.    Tourism: arranging trips/accommodations/transportations and guide services.

5.    Storage: using storage to provide space for clients to security their goods.

6.    Leasing: providing spaces/houses/goods/facilities for others in certain period.

7.    Consulting: providing suggestions for clients.

營業執照延期簡介及功能

凡在中華人民共和國境內註冊的公司，無論是內資公司、外資公司還是外資代表處，他們要經營一定的業務，就必須辦理營業執照，而營業執照都有一定的經營期限，一般來說，內資公司的營業執照有效期大都為10年，2012年起深圳內資公司經營範圍可為永續經營。外資企業營業執照有效期一般為20年-50年，外資代表處有效期為1年。當公司的經營期限到期後就需要辦理延期手續。公司只有在辦理了營業執照的延期手續，公司名下所經營的業務才能繼續正常的合法運營，經營過程中所享有的合法權益才能得到法律保障。

匯致公司提供的服務內容：

1.協助客戶準備所有法律、行政法規規定應報經審批的檔

2.代寫公司營業執照變更登記申請書

3. 代為提交公司相關人員的工作證或身份證影本，以及營業執照正副本等其他相關材料；

4.提供客戶執照延期申辦的諮詢服務。

5.個人和公司檔齊備情形下，保證為客戶申辦好延期手續。

分銷權簡介及功能

分銷權，指商品批發或零售的經營權，以及輔助分銷和服務的經營權，包括存貨管理、整批拆另、包裝送貨、商品促銷以及店內廣告、促銷、行銷和廣告、安裝及包括維修和培訓服務在內的售後服務等。增加分銷權後企業可以獲得如下的功能 ：

1.         企業獲得分銷權之後，改變了貿易代理為主的格局。可以直接與區外企業進行貿易，而無須通過代理公司進行；

2.         企業獲得分銷權之後，可以以自己的名義自行報關、通關； 　　

3.         企業獲得分銷權之後，與區外企業進行交易獲得的人民幣可以自行兌換成外幣，從而對外支付； 　　

4.         企業獲得分銷權之後，可以在區外設立經營性分支機搆。而未獲得分銷權的企業，在區外只能設立非經營性分支機搆。 　　

5.         有一個發展趨勢是，企業獲得分銷權之後，在獲得一般納稅人資格的前提下，可以自行開具增值稅發票，而無須通過交易市場進行。

增加分銷權滿足的條件 　　

1.         註冊資金全部到位 　　

2.         現有資本與經營規模相一致（有可能需要增加註冊資金，根據常規，增加的註冊資金應當在拿到批文後30日內到位20%） 　　

3.         特殊商品需要前置審批； 　　

4.         增加國內分銷權和進出口權後，在可行性報告中，應體現5年內實現盈利。

董事的定義

董事（Member of. the Board, Director）是指由公司股東會選舉或委派產生的具有實際權力和權威的管理公司事務的人員，是公司內部治理的主要力量，對內管理公司事務，對外代表公司進行經濟活動。佔據董事職位的人一般為自然人，也可以是法人。但法人充當公司董事時，應指定一名有行為能力的自然人為代理人。

關於董事變更的法規

公司法定代表人依照公司章程的規定，由董事長、執行董事或者經理擔任，並依法登記。公司法定代表人變更，應當辦理變更登記。董事會成員至少3名以上。股份公司董事會成員為5名以上。董事每屆任期三年，經繼續委派可以連任。

董事變更的原因

1.         董事受到調任導致職位變動的，需要辦理董事變更手續。

2.         董事任期屆滿改選董事的之後需要辦理變更登記手續。

3.         董事在任期內辭職導致董事會成員低於法定人數的，需要辦理變更登記手續

4.         新增加董事成員的需要辦理董事變更手續。

5.         因其他違反法律法規導致董事離職的原因，需要辦理董事變更手續。

6.         執行董事、董事會人選的更換，應書面通知股東並向公司登記機關備案。