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China Tax & Accounting Services

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China Accounting Service & Company Management Solution

We take care of all your accounting and reporting needs

We are your China Back Office so no need hire accounting staff

Accounting Reports

  • Set up the accounting system
  • Bills and receipts audit
  • Compile the accounting documents
  • Design and implement an accounting system
  • Account items recording
  • Financial report & Balance Sheet
  • Statement of income and loss
  • Financial advisory

Taxation Service

  • Apply for General VAT Payer (if required)
  • VAT (Value Added Tax) Report
  • Tax Filing in Tax Authorities
  • Applying for E-tax filing
  • Applying for VAT Invoices and Invoices IC card
  • Opening bank account for the tax authorities

Bookkeeping Service

  • Initial finance/accounting system setup
  • Preparing monthly accounting reports
  • Bookkeeping report
  • Financial statements
  • Reconciliation services (if required)
  • Print and bind voucher and book account

Opening VAT Invoice

  • Authentication of offset VAT counterfoil
  • Transcribe the taxation to related authorities
  • Filing monthly financial statements
  • Calculation and filing monthly VAT and VAT additional tax and fees
  • Calculation and filing quarterly enterprise income tax
  • Calculation and filing stamp duty

Accounting Advisory

  • Unified planning of taxation control system
  • Financial management system
  • Cash income, claims for payment, and reimbursement
  • Sales management, inventory and assets management advisory
  • Internal control and audit
  • Management of foreign funds and loans
  • Salary and welfares

Annual Inspection

  • Compile the annual report
  • Audit for annual report
  • Audit for foreign exchange
  • Annual income tax collection
  • Separate annual inspection

Introduction to China Tax & Accounting

Tax & Accounting in China

Corporation China’s accountants have a deep understanding of China’s complex accounting system. We strive to align your company’s accounting practices with the rapidly evolving accounting system, allowing you to focus on your company’s business technology.
All companies registered in China need to follow a series of annual requirements. The annual compliance requirements commence after the end of the fiscal year and take place until the end of June.

The China annual compliance requirements are divided into three steps:

  1. The statutory annual audit should be done by a certified public accounting firm in China.
  2. The Annual tax filing: the second step is to have the reconciliation of corporate income tax.
  3. The Annual reporting procedures are: the last step is to have various filings to local government departments.

China Annual audit

According to company law of China, a limited liability company shall commission a qualified, certified public accountant company to conduct an annual audit of the previous year’s company’s financial reports, which is a requirement by China company law.

The main purpose of this annual audit is to ensure that the company’s financial statements are in line with the Chinese GAAP (Generally Accepted Accounting Principles) standards while showing the accurate financial position of the Chinese company.

This also ensures good governance as it is one of the main duties of the legal representative to send a financial statement to shareholders. The annual audit report is also needed to distribute profits.

Standard reports include a balance sheet, cash flow statements, company income statements, changes in equity, financial statements, and taxable income documents. The annual corporate income tax filing is in May, so the audit reports should be completed before the end of April.

China Annual tax filing

Following the audit report is the annual corporate income tax (CIT) filing. The standard rate of CIT is 25% on profits, depending on the size of the company and the industry.CIT has to be paid on a quarterly basis, and the annual CIT reconciliation ensures that the tax has been fully paid. The deadline to submit yearly tax reconciliation is the end of May.

China Annual reporting process

After the annual audit report and CIT reconciliation are done, the company needs to proceed with submitting information to the different government authorities as to the State Administration for Market Regulation of Industry and Commerce (SAMR), Ministry of Commerce (MOFCOM), the State of Foreign Exchange (SAFE) and for trading companies also to the Finance Authority and Customs Authority.

The deadline to submit the annual report is the end of June.Failing to carry out the annual compliance procedures may result in penalties, blacklisting, or a negative effect on the company’s and the directors’ social credit score

Seamless back office management, designed for your company type

Tax & Accounting Services

  • Cashier Service
  • Bookkeeping Service
  • Compliation of Financial Statement
  • Tax Registration & Declaration
  • Tax Filling
  • VAT Tax Return
  • Tax Risk Management

Treasury Management & Invoicing Services

  • Monthly Bank Statement Reconciliation 
  • Employee Reimbursement 
  • Interface between Bank and Tax Bureau
  • Bank Transaction Filling
  • Traditional & e-banking Processing
  • Signatory & Approval Services
  • Commercial Invoices Processing
  • Issurance of VAT Fapiao

Financial Reviews & General Services

  • GAAP Review & Annual Inspection
  • Audit Assistance
  • Financial Advisory
  • Financial Due Diligence 
  • Internal Managemen Review
  •  Monthly Maintenance of Office Address 
  •  HR Services 

Let’s get started!

Focus on growing your business while we handle everything else.
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Accounting Department
Our Team is experienced are in China Tax & Accounting 

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Learn more about Tax & Accounting in China

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What is a WFOE?

A WFOE is short for Wholly Foreign-Owned Enterprise. A WFOE is a 100% foreign-owned (individual or corporate) limited liability company able to generate profit, invoice clients, and hire local/foreign employees in China.

Can a WFOE in China send funds overseas?

Any operating profit made in China can be converted to foreign currency for transfer to an overseas parent company.

Is there a minimum registered capital required to set up a WFOE in China?

Although there is now (since changes in 2016) no fixed minimum requirement, in practice most WFOEs will still require capital injection. The planned amount is reviewed by local authorities during application and it makes business/tax sense to get the level right from the start.

The amount will vary greatly for different types of business – naturally, a small consulting company requires much less than a complex manufacturer. As a guide, sufficient funding is needed to cover the WFOE’s financial obligations before the company is self-supporting (often set as 1 year). Note that there is now much more flexibility than in the past regarding the time period over which capital should be injected.

It is important to set the capital level appropriately during formation. If it is set too low, any additional funding must be taxed as income (further capital injection is possible but there is a very time-consuming approval process). Set it too high, and of course, funds may be tied up that could be used elsewhere (and these will be hard to release).

What are the advantages of registering a WFOE in China?

A WFOE registration is the most complete and flexible option for opening a company in China. It has many advantages over a Representative Office or a Joint Venture operation. Here are some of the key advantages we see in WFOE formation.

Can be formed without a Chinese partner

A WFOE is independent, able to manage its own operations, funding, and business development. Without a parent, it does not need to share profits, strategies, or Intellectual Property.

Can make profits in China

A WFOE can fully carry out business in China, in line with its agreed business scope. It can issue local currency invoices to domestic customers and make profits from its activities.

Able to send funds overseas

Any operating profit made in China can be converted to foreign currency for transfer to an overseas parent company.

Able to hire staff directly

A WFOE can manage its own human resources (without using an agency), and hire staff both locally and from overseas.

The best option to protect IPR in China

The WFOE structure provides some level of protection under Chinese law.

Do I need to do tax and accounting if I register a representative office in China?

Yes, even though representative offices are not permitted to generate profit, they are required to submit monthly tax and accounting reports with salaries and expenses.

What is the procedure of setting up a WFOE in China?
  1. Apply for name approval and registration

The first step in registering a WFOE in China is to choose a company name and get it approved.

The name choice must follow rules set up in Chinese company registration laws. The company name must include the company industry or brand, operating region of the business, and a suffix of “Company Limited.”

The following will be checked during name approval:

  • Availability of the requested name. Corporation China has the ability to check out for you.
  • Inclusion of restricted words, such as “China”, “State” or “National”
  • Inclusion of foreign characters or symbols
  • Whether the name is confusing or misleading

Don’t forget the importance of naming strategy and branding. Just as overseas, your company’s name is the first impression of your company. It should clearly reflect the company's role and image. Consideration should also be made of the characteristics of the Chinese characters. Many words or characters have similar meanings or sounds which can strongly influence the impact of the chosen name (both positively and negatively!)

Note that the name registration can be done early whilst you prepare further, and to aid trademark registration. It is not necessary to immediately submit company filing to MOFCOM after the name is approved. Note also that it is common to submit more than one name for consideration.

  1. Registered Address as necessary

Before submission for WFOE incorporation, it is necessary to have a lease for company space in the city of registration. The contract for this needs to be valid for a year from the registration date. It is advisable to include a condition in the leasing contract to cancel the lease in case of registration refusal or difficulties. As with any contract in China, steps should be taken to minimize future problems – such as checking the owner’s details and land rights certificate for the property being leased. Corporation China offers Virtual Addresses that could be used for Company Registration in China.

  1. Carry out environmental impact assessment – Only for a manufacturing WFOE

If registering a manufacturing WFOE, an environmental impact assessment will need to be carried out by a registered agency. This is done in order to obtain an approval certificate from the local environmental protection authority.

The procedure and required approval varies with the scale of the manufacturing operation and its potential impact and will include consideration of material used, produced, and disposed of, machinery to be used, as well as any existing plans for environmental protection.

  1. Online registration via MOFCOM

The registration process has been significantly simplified in recent years, and now makes use of an online filing submission. This is much faster than the previous methods, but still requires a lot of documentation! It should be noted that there is a somewhat greater burden with online submissions to have all details correct and finalized. The process of “blind submission” does not allow for discussion with authorities during submission.  If rejected, the application will need to be revised and resubmitted.

  1. Apply for a “5 in 1” business license from local AIC

Following approval from MOFCOM, the application for a business license with the local Administration of Industry and Commerce (AIC) needs to be made. This is another process that has been greatly simplified and quickened in the past couple of years. An application is now made for a so-called “5 in 1” business license, which covers all the major licenses required for a new company. Previously each of these required separate applications and naturally, this was much more time-consuming.

Again, this is now an electronic submission, accompanied by significant documentation (see the section on documents required). Once submitted the AIC will share documentation with other relevant authorities to issue licenses – a major time improvement!

The 5 licenses issued by the AIC are:

  • The business license
  • Tax registration certificate
  • Organization code certificate
  • Social security registration certificate
  • Statistical registration certificate

The company now exists and is licensed to do business in China, and the remaining set-up steps can be considered “post-licensing” tasks. We would expect to reach this point in 2-3 months.

  1. Carving chops for the new company

To Chinese business newcomers, the importance of chops is often a surprise! Every company requires a set of chops, or seals, to be used as a representation for signing official documents.  These hold the final say, above individual signatures.

Chops can be applied for through the Public Security Bureau (PSB) following company set up. Several additional chops are needed for different business areas (e.g. financial, invoice sealing, and customs if appropriate). Each will have the company name in Chinese and English if required.

  1. Opening bank accounts

Once chops are obtained, they can be used to open the WFOE's Chinese bank accounts. A WFOE should have at least two accounts, preferably with the same institution (Chinese or foreign banking institutions are equally acceptable depending on company preference).

  • A local currency RMB standard company account. This can be used for payments and receipts in RMB, as well as for company tax payments and day-to-day operating costs.
  • A separate capital contribution account, designated in foreign currency. This is the official account through which capital can be injected from overseas.
  1. VAT registration

WFOEs must be registered for VAT payments with the local tax bureau. There are two different categories for VAT registration for all companies – “general” and “small scale” (with low sales volume).  A new WFOE which qualifies for small scale may choose to register under either category.

In general, a lower VAT rate is paid for companies that qualify as small scale, but there are some potential advantages in registration for general status (such as the ability to deduct input VAT). Discussion of the individual situations with a tax expert is advisable here.

  1. Customs and import-exit registration – for trading WFOEs only

For trading WFOEs involved in import-export, there are several additional registrations required, which are not automatic under the AIC business license application. These must be made separately following company incorporation and the exact requirements depend on the company operation area, but will likely include the following:

  • Import-export license
  • Customs registration certificate
  • Registration with Entry-Exit Inspection and Quarantine Bureau (for quality inspection)
  1. Issue contracts and complete necessary registration for employees

Whilst this is not formally necessary before the company starts trading, it is best at this stage to ensure everything is set up correctly. Formal contracts need to be issued from the new WFOE for all local employees. Also, registration will need to be made for employee tax and social benefits accounts.

Companies may well already have local employees working for them, often through a previous representative office structure or employed on their behalf by a Chinese agency. The new WFOE can now employ them directly.

Can a WFOE hire staff directly in China?

A WFOE can manage its own human resources (without using an agency), and hire staff both locally and from overseas.

Which party is legally responsible for employees when using payroll services?

Corporation China can either administer the payroll and taxes on behalf of a Chinese registered company (but the company remains the employer and is legally responsible for employees) or we can combine with our employer of record services and fully manage the recruitment and employment of staff as well as their payroll and tax.

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Can a WFOE generate profit in China?

Yes, a WFOE can fully carry out business in China in line with its agreed business scope. It can issue local currency invoices to domestic customers and make profits from its activities.

How many work visas can a WFOE issue?

The government will take into account a few factors for work visa issuance such as: how long has the company been registered, how much tax history does the company have and how many local employees does the company have. This does not apply to shareholders of a new company, as these individuals (local or foreign) will always receive a work visa. 

How much does it cost to set up a foreign-owned company in China?

The Company registration cost depends on the company type, the business scale, and the business industries. Therefore, if you want to set up a company in China, justcontact us directly. We’ll analyze your company situation and then provide the most cost-saving proposal.

Can I file corporate taxes in China by myself?

No! Only an accredited Chinese accountant is eligible to file corporate tax and accounting reports in China.

Do I need to do tax and accouuntinng if my company (WFOE) is not generating any profit?

Yes, even if the company is new and has no transactions, the tax and accounting report must be submitted to the government.

Is a WFOE protected against copyright infringement & IPR in China?

A WFOE is the best option to protect your IP rights in China. There is no need to share business information with a partner, and the WFOE structure provides some level of protection under Chinese law.

Can a WFOE be registered without a Chinese partner?

A WFOE is independent, able to manage its own operations, funding, and business development. Without a parent, it does not need to share profits, strategies, or Intellectual Property.

What the advantages of outsourcing payroll and tax?

There are many advantages to using Corporation China’s payroll and tax solutions:

  • We will manage all payroll and employee tax on your behalf, leaving you free to focus on other businesses.
  • Save yourself the cost and complexity of establishing an internal HR payroll team.
  • We are fully up to date with the latest laws and regulations. The fiscal and taxation environment in China changes often and it is vital to stay current.
  • Corporation China has strong relations with local tax authorities and can assist with inquiries where necessary.
  • Flexibility to tailor services to any size of business and payroll, and to include employer of record services.
  • We can help you plan and structure salary packages for both locals and overseas.
  • Corporation China has a mature system to proceed and protect your payroll data.
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