An Uncensored Interview with Our Accounting Team CEO (Who's Seen It All)

We sat down with the CEO of our accounting team — let's call him "Lao Wang" because he actually responds to it — in the Shanghai office on a rainy Tuesday. There was tea, compliance forms stacked everywhere, a whiteboard covered in entity structure diagrams, and one man who clearly has zero patience for the phrase "but my friend said it's tax-free."

Running an international business from China sounds glamorous until reality hits:

Someone says: "Can you send me the invoice?"
Then someone else asks: "Where is the fapiao?"
Then the bank sends an email: "Please explain this payment, the contract, the supplier, the customer, the goods, the shipping route, the reason for the transfer, your business model, and possibly your childhood dreams."

This is where good accounting and banking support becomes extremely valuable — and where most people realize that "just open a Hong Kong company" is not actually a business strategy.

The conversation that followed was practical, direct, occasionally painful, and refreshingly honest. Because international banking is definitely not as simple as opening an app and pressing "receive money."

"So… How Does Tax Actually Work in China?"

Interviewer: Let's start with the thing everyone asks about: Chinese taxes. People seem terrified.

CEO: Look, when it comes to tax and accounting in China, people freak out for no reason. They've heard horror stories, read a blog post from 2009, talked to someone who knew someone whose company got fined, and suddenly they think China is this tax black hole where the government takes 90% of everything you make.

It's not.

There are different tax treatments depending on the company, the business activity, the location, the revenue, and whether the company qualifies for a preferential policy. Small companies can sometimes be at 1%, sometimes 2%… but most companies operating here are under about 6% effective income tax, which is honestly not that much.

Interviewer: Wait, 6%? That seems low.

CEO: For some qualifying small businesses, yes. But — and this is important — people hear "1% tax in China" in a WeChat group and build their entire business plan around it.

The standard Corporate Income Tax rate is 25% of taxable profit. Qualifying small enterprises, high-tech companies, and certain encouraged industries may get reduced rates or incentives. But "qualifying" is the key word.

We always tell clients:

Do not build your business plan around a tax percentage you found in a chat group.

Tax treatment must be checked against your company's actual circumstances and the current rules — not what your friend's cousin's business partner said in 2018.

Interviewer: So the magic word is "qualifying"?

CEO: Exactly. "Small company" does not automatically mean "1% tax." The tax bureau may have a very different definition of small enterprise than your accountant, your business partner, or your cousin who once registered a company in Shenzhen and never actually did anything with it.

On Profit Tax and the Dream of Taking Money Out

Interviewer: Okay, so let's say the company makes a profit. Can the owner just… take the money?

CEO: (laughs) No. God, no.

This is where most people get confused. A China company's money belongs to the company. It is not automatically the personal piggy bank of the shareholder.

Before profits can normally be distributed, the company may need to:

1. Complete its accounting records
2. File and pay the relevant taxes
3. Complete the annual compliance process
4. Cover outstanding debts and obligations
5. Allocate statutory reserves where required
6. Prepare shareholder and corporate resolutions
7. Arrange the appropriate bank and foreign-exchange documentation

And here's the real trade-off with profit tax: once the company actually makes money, you start thinking about how to send it back to whoever owns the company — the main shareholder, right? That's when things get interesting.

Profit distributions, service fees, royalties, salaries, loans, reimbursements — these are all different types of transactions. They should not be creatively mixed together and labeled "consulting fee" when they're clearly a dividend.

Interviewer: What happens when a director just… takes company money anyway?

CEO: (sighs) The accounting system becomes very creative. The bank statement says "personal transfer," the contract says "consulting services," and the tax file says absolutely nothing at all.

That is not a strategy. That is an invitation to future questions — questions you will not enjoy answering.

The correct method depends on the transaction. A company can pay a properly documented salary, service fee, or dividend, but each one has different tax, foreign-exchange, and reporting consequences. You can't just pick whichever sounds cheapest that day.

Why Your Overseas Client Shouldn't Pay Your China Company Directly

CEO: Here's where most foreigners mess up. They're selling goods overseas — exporting stuff, importing components, whatever.

If you're exporting goods, people are normally paying you overseas, right?

So why would you force that money into a Chinese bank account, lose margin on forex conversion, drown in paperwork, and then cry about it later?

Interviewer: So what's the better way?

CEO: You open a digital bank account at Sterling Neo — it's a BaaS fintech platform empowered by EQIBANK (eqibank.com). It's easy to set up, the fees are quite low, and you're not begging some relationship manager to approve your third document upload.

Or — and this is the smart move — we set up a Hong Kong company or a Singapore company. You use that entity to open the bank account. You don't need to fly to Hong Kong, you don't need to rent an office or attend a bank interview in a suit. You send us a copy of your passport and company docs, we handle it. Done.

I'm sure you can find some online services that claim to do this too, but we've done it 1,500+ times, so… you know. We've seen what works and what ends in frozen accounts.

The Lie That Is the Traditional Hong Kong Bank Account

Interviewer: But I thought getting a Hong Kong bank account was easy?

CEO: (laughs bitterly) Everyone says "just open a Hong Kong company and get a HK bank account."

Not true. It's nearly impossible now. You'll work months to open one — if you're lucky. Months!

And if you somehow do get approved? It's often going to be one of the digital-only accounts. And here's the thing — some of them are practically useless. If anyone sends you real money, they'll block it. Then you get hit with steep transfer fees, compliance reviews, and requests for documentation you don't even have.

And under Hong Kong law, it's still taxable anyway if the profit is Hong Kong-sourced, so you're not even saving much. Great, right?

Interviewer: So traditional HK banking is dead?

CEO: For small companies and new trading businesses? Basically, yes. The banks don't want the risk, the compliance load is huge, and unless you're moving $50 million a year or have an existing relationship, good luck.

That's why digital solutions like Sterling Neo powered by EQIBANK make sense now.

Enter: The Offshore Play (EQIBANK and Sterling Neo)

Interviewer: Okay, so what's the actual solution?

CEO: This is where it gets good.

EQIBANK and Sterling Neo — they're offshore, they're fast, and they're built for international businesses. Clients pay you in Singapore, Dominica, wherever the bank's licensed.

The difference is: it's totally offshore. The money sits clean. You can put in a million, you can put in 20, 30 million — no problem. Handle oil and gas trading, solar panels, machinery exports, whatever your business is.

And here's the beautiful part: that Hong Kong company, which we set up and help you manage, can receive payments from your international clients. The client pays the Hong Kong company. If structured correctly and the Hong Kong company has real substance and isn't just a shell, the offshore profit may be tax-free or very low tax.

Now, before anyone gets excited — this is not automatic. Hong Kong has a territorial tax system, but that doesn't mean "everything is tax-free because I incorporated in Hong Kong."

If the business is actually being run from mainland China, if all decisions are made in Shanghai, if there's no real office or staff in Hong Kong, then the profit might still be taxable in China. This is where proper structuring and documentation matter.

But when done correctly, with genuine commercial substance, it's a very effective tool.

Interviewer: What about currencies?

CEO: They accept over 100 different currencies. Not everyone's in New York or London — some of your clients are in Africa, South America, Eastern Europe, places where the local bank can't even spell "SWIFT" correctly.

Sterling Neo handles multi-currency. Crypto, too. Tether actually banks with EQIBANK, by the way. So if you're into stablecoins or need to receive USDT for some reason, there you go.

But — huge warning here — crypto is heavily restricted in mainland China. You cannot use a China company to trade crypto. If you're doing anything crypto-related, it needs to be through the offshore entity, fully compliant with the laws of that jurisdiction, and you need to understand the tax treatment. Crypto is not invisible money. It's just slower, more volatile money that still gets reported.

Do Chinese Companies Need an Overseas Bank Account?

Interviewer: Can a China company receive international payments directly?

CEO: Yes, a China company can receive international payments through an eligible mainland corporate bank account, subject to banking, foreign-exchange, and trade-document requirements.

But it's a pain. Chinese banks will ask for:

• The contract
• The invoice
• The fapiao
• Customs declaration
• Shipping documents
• Proof the goods actually left China (or entered, if importing)
• An explanation of the business relationship
• Possibly a notarized letter from your grandmother confirming you are, in fact, in the import/export business

For some companies, this works fine. For others, it's a nightmare — especially if you're doing consulting, digital services, software, IP licensing, or anything intangible.

That's why many businesses use an overseas entity — Hong Kong or Singapore company — as the contracting and invoicing party. But that entity must have a genuine commercial purpose and proper accounting.

The Nine Questions Your Bank (and Tax Bureau) Will Eventually Ask

CEO: If the customer pays an offshore company, but the China company does all the actual work, tax authorities and banks may reasonably ask:

1. Who signed the sales contract?
2. Who owns the goods?
3. Who invoices the customer?
4. Who bears the commercial risk?
5. Who pays the factory?
6. Where is the profit actually generated?
7. Which company is responsible for delivery?
8. Where are the goods shipped from?
9. Are your taxes and customs documents consistent?

If the answers to all of those are "the China company," but the money goes to a Hong Kong shell with no employees, no office, and no actual activity… yeah, that's a problem.

Watch: Why Would You Need a Lawyer in China?

Thinking about structuring your China and offshore setup properly? Speak to our accounting and tax experts — before the bank asks you the nine questions.