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WFOE Insider Information

This China WFOE Insider Information page was last updated on May 9, 2012


Get some invaluable WFOE Insider Information


What else can you tell me, such as answers to the questions I have not asked?

At Chinabiz21 we pride ourselves for our work ethic and transparency.
We will only tell you the full picture, nothing hidden or left-out. What our competitors may fail to mention is grouped below for your ease of reference:

General Tax Information


Since January 2008, China’s new tier of corporate tax rates were introduced with a range from 15% to 25%. (The rate depends on the location where the company is registered, and the industrial sector that the company operates within).


Please check with Chinabiz21 China Taxation Law experts on the latest Corporate Income Tax Law of China together with all other related tax issues. The very least you would like to do is avoid the tough approach from Chinese authorities on tax evaders.


All enterprises are required to report to the Tax Administration Department monthly, quarterly and annually. The China Corporate tax law is changing vast. To keep up with, Chinabiz21 provides high quality and reliable accounting services for all our clients and to every industry; please contact us for more information.

Annual Audit Report


Under the current China Corporate Tax Law, all limited companies registered in China must summit an annual audit report to the relevant authorities. The cost for the annual audit report submit is about RMB +/-6,000.00 for an average company size. The company will be subject be to a fine should it fail to submit their Annual Audit Report in a timely and professional manner.


To comply with China’s definition of "timely and professional" we advise to neither prepare nor to submit your annual report documents on your own but consult a professional accounting team which is also authorized and licensed to carry out the task. For more information on yoour annual report, please contact your Chinabiz21 team.

NOTE:

Though Hong Kong is part of the Greater China, Hong Kong also falls under the one country - two systems agreement, which means that Hong Kong has to be treated completely different. Everything, from the Company Ordinance to the labour law is different. Please refer to our Hong Kong Company Registration section for details.

Profit Repatriation


China Government allows Wholly Foreign Owned Enterprises to remit their profits out of the country and such remittances do not require the prior approval of the State Administration of Foreign Exchange (SAFE). Dividends cannot be distributed and repatriated overseas if losses for previous year(s) have not been covered: whilst dividends, not having been distributed in previous years, may be distributed together with those of the current year.


Please always consult your Chinabiz21 business and tax advisor first before attempting to distributing any Dividends.


Repatriating the registered capital to home countries is forbidden during the term of business operation.

Terms of Operation


In China, company operations of 15 to 30 years are typical for a manufacturing WFOE (Although some may operate on a longer term). It is also possible to obtain extensions to the WFOE’s duration.


For projects in which the amount of investment is rather large, or the construction period is long and the return on investment low, projects producing sophisticated products using advanced or key technology provided by the foreign partner, or for projects producing internationally competitive products; the term of WFOE may be extended to 50 years.


With the assistance of Chinabiz21’s solid expertise and ’Guang-Xi’ foundation, you may be able to achieve special approval from the State Council, to extend your WFOE operation term surpassing the hard to crack 50 years span.

De-Registration | Termination


To close or de-register a WFOE in China would be much more complicated than to establish a New WFOE. By experience, companies in critical situation get easy stuck with the company closure if the local tax authorities can’t (Or won’t) approve the Liquidation Report. Thereafter, the investor has to spend a great a amount of time on the closure of a WFOE. Contact your Chinabiz21 personal business advisor to receive the necessary "in-depth-WFOE-review" of your corporation and to be able to make the right moves for a less complicated (less expensive) company closure.


A WFOE may be terminated under certain conditions. For example: The inability to operate due to heavy losses, or in the occurrence of an event such as force majeure; etc. Chinabiz21 strongly suggest to establish your "Risk Management Plan" for your WFOE, which should actually already exist within your "exit plan".


If you have any company de-registration needs or questions, please contact your Chinabiz21 business consultant

Social Security in China


A new rule concerning foreign employees’ social security status came into effect on the 15th October 2011:


It is stated that where a company hires a foreign employee(s), the company must then register that employee with the local Social Security authority within 30 days after the employee(s) having received their Z visa (work permit).


To comply with WTO, China has also and continues to do so, stepped up their local employee social and health welfare system. A range of commonly unknown factors need to be taken into consideration and cared for in more professional and accountable manners. Unfortunately, implementation of new social welfare laws stay rather unknown to many and it is more the duty of any firm’s management to acquaint themselves with the new regulation.


Fortunately, with Chinabiz21 responsible and dedicated business consultants, you will be covered to receive any updates and further professional support to assist you comply with all sensitive and critical laws in China

  • To sum everything up:
  • Wholly Foreign Owned Enterprise is a very flexible way to successfully establish your business in China within a few months. Chinabiz21 can deliver any of the different flavors, thus allowing you to tune the operation for your corporate business needs.


I appreciate all your information and am happy to proceed. What’s my next step?


Chinabiz21 will conference with you to determine your Company Needs and your best WFOE Formation Option. Upon completed consultation Chinabiz21 will immediately begin with your WFOE registration process on your behalf. You will be assigned a dedicated business team whose consultants will follow all the minor details of your Company formation to assure successful registration completion.


After your WFOE was successfully established, your assigned a dedicated business advisory team will remain at your service once you are up and running and to continue supporting your ongoing operation with ongoing services shall you request Chinabiz21 to do so.

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