PathToChina.com

Translated  by Vincent Cheung from www.pathtochina.com

For registered capital of less than 10 million YUAN, 0.08% of total registered capital will be charged.  For registered capital of more than 10 million YUAN, 0.04% of the excess will be charged. For registered capital of more than 100 million YUAN, no  charge for the excess. 300 yuan will be charged for the registration of branch. When the enterprise needs to apply for the duplicate of enterprise legal person business license, 10 yuan cost fee will be charged for each copy.

600 yuan will be charged for the registration of establishment of representative office; 100 yuan will charged for the registration of the alteration of representative office, 300 Yuan  will be charged for the extension of registration.  

In cases of  registered capital re-injection,if the re-injected capital plus the original registered capital is less than 10 million YUAN, 0.08% of the increased portion will be charged for  registration fee. If the total capital exceeds 10 million YUAN, 0.04% of

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By Vincent Cheung from www.pathtochina.com  

 Not surprisingly, closing down a representative office in China is a lot more complicated process than its establishment, especially when your representative office hires a lot of staff and expend a big sum of money. It can be an intolerably lengthy process if not handled in a proper way. Usually, it takes several months to shut down a representative, or it can take forever. The first and also the most critical step to take is tax clearance. You are gonna in big trouble if you cannot prove that you are not evading tax. The tax bureau is exceedingly serious about it.  First, you need to contact the revenue officer, who was designated to manage your rep office’s taxation affairs in the process of the establishment of your rep office. A cancellation form will be sent to you from the revenue officer.

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 From www.fdi.gov.cnArticle 1 These provisions are formulated hereby pursuant to the Company Law of the People’s Republic of China, the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, the Law of the People’s Republic of China on Chinese-Foreign Contractual Joint Ventures, the Law of the People’s Republic on Foreign-capital Enterprises and other pertinent laws and regulations to promote the healthy development of enterprises with foreign investment, protect the legitimate rights and interests of investors, and maintain social and economic order.

Article 2 “Alteration of investors” equities in enterprises with foreign investment as used in these Provisions refers to alteration of investors of Sino-foreign equity joint ventures, Chinese-foreign contractual joint ventures, enterprises with foreign investment set up on the territory of the People’s Republic of China (hereinafter referred to as the enterprise) or their shares (hereinafter referred to as equities) of investment in the enterprise (including terms of cooperation they provide). It will include, but will not limit to, the following major factors leading to alteration of investors’s equities in enterprises with foreign investment: (more…)

Gathered By Vincent Cheung from www.pathtochina.com 

In China, there are three different social benefit schemes and their application depends on the employee’s “hukou”.

1. Urban Social Insurance – for Shanghai residents residing in urban areas
2. Township Social Insurance – for Shanghai residents residing in Shanghaisuburb areas such as Qingpu, SongJiang, NanHui, JinShan, etc.
3. Integrated Social Insurance – for non- Shanghai residents

For urban and township social insurance, the company’s contribution is equivalent to 44% and 32% of the employees’ salary respectively. This contribution would go towards the employees’ pension, unemployment, medical, workplace and maternity insurance as well as public housing fund. In addition, a minimum and maximum salary range applies for the contribution to various insurance items and public housing fund.It’s very important for foreign employers to have a good understanding of China’s mandatory welfare payment system when hiring Chinese staff. (more…)

1.   Minimum Registered Capital ≠ the Real Amount of Registered Capital

This might be the most misunderstood area in setting up a FIE in China. A great number of newly-established companies run out of money and put themselves in a very awkward situation soon after the company registration due to less sufficient registered capital. Only a small proportion of our clients are suggested inject exactly the same amount of initial investment capital with minimum registered capital in the process of company registration, however, those cases are not supposed to be applied to others. So don’t you never ever try to take advantage the minimum registered capital policy without calculating carefully the right amount of registered capital enough for you to run your business. You will suffer a lot from re-registering the capital, which usually takes more than 6 weeks, out of underestimation  of registered capital. Even if everything goes swimmingly in the process of re-registration, you will find your money has already been ”stolen” : the re-injected capital is considered as your profit, meaning it’s (more…)

A lot of Foreigners living in china are totally lost when it comes to paying their IIT( individual income tax). Chinese IIT is so complicated and hard to interpret that even some foreign tax consultants feel confused when they are handling tax issues for their expatriate clients in China. High mobility of expatriates, variations in interpretation and implementation of the IIT regulations as well as different rules among local tax authorities make things very complicated. One of our clients who owns a trading WFOE in Shanghai was very concerned about his IIT issue when the incorporation of his company was still in progress.  

To clarify a few frequent asked questions many HR professionals and foreign individuals living in China have raised over the past years, the State Administration of Taxation (SAT) issued the “ Notice on Issues in Implementation of IIT Regulations and Tax Treaty for Non-residents in China” (more…)

By Vincent Cheung

Aiming to find a balance between encouraging foreign investment and improving workers’ life quality to tackle the country’s serious side effects of the enormous economic growth. NPC Law Committee, enacted the long-awaited new China Labour Contract Law on June 29, offering a magnificent increase in the protection of the employee’s rights and entitling bigger power to the all-China Federation of Trade Unions (ACFTU). The law caused a growing concern about the potential less favorable investment environment in china. The US-China Business Council warned that the Draft Law may reduce employment opportunities for Chinese workers and negatively impact China’s competitiveness and appeal as a destination for foreign investment.”

Some companies had expressed concern that the new law is likely to increase wage costs, give unions too much influence and control over company rules and make it more difficult to dismiss employees for unqualified performance. After the first draft was approved in March 2006, Wal-Mart, Google, General Electric and other multinational corporations were  aggressively lobbying to restrict new rights for Chinese employees and some of the companies even threated to leave China for countries like Pakistan and Thailand if the law finally came into force. Chinese government will never risk the country losing her attractiveness for foreign investors. There are four reasons why the new labour contract law won’t have serious negative impact on

1.      Poor Enforcement  

The impact of the law lies in the government’s wiliness and ability to enforce it. Chinese people seem to be too flexible to be in full compliance with any rules. In some sectors, Chinese’s laws are even more rigorous than the laws of developed countries, but enforcement is the real problem.  With much probability, there will be a watered-down version of the new labor contract law when it comes to Local governments, who are much keen on attracting foreign investment and therefore has huge tolerance for foreign investors. Some officials of local governments dare to sacrifice everything for GDP growth.  We shouldn’t neglect that, in china, where independent worker’s union is illegal, (more…)

By www.PathToChina.com 

The China’s new enterprise income tax law got approved in the Fifth Session of the Tenth National People’s Congress, which was held on March 16, 2007. This law attracted widespread attention at home and abroad for the unified enterprise income tax rate of foreign enterprises and domestic enterprises.  

In the New Enterprise Income Tax Law, the unified enterprise income tax rate is 25%, while China’s current enterprise income tax rate for both foreign enterprises and domestic enterprises is 33%, but the foreign enterprises with production nature located in special economic zones and economic and technological development zones still enjoy the preferential tax rates of 15% or 24%. Since only the foreign enterprises, which were operating in special economic zone or in economic and technological development zone, could enjoy the preferential tax rates, the new tax rate of 25% would actually lighten the tax burden of foreign enterprises. On the contrary, it would create a more regulated and transparent investment environment in China. 

The new enterprise income tax law will be implemented in January 1, 2008. In the meantime, the old Income Tax Law of the People’s Republic of China for Enterprises with Foreign Investment and Foreign Enterprise which was promulgated on April 9, 1991 will be canceled.

Processing Authority: Shanghai Municipal Office of State Administration of Taxation, each sub-bureau of Shanghai Local Taxation Bureau, each office of State Administration of Taxation at the district/county level of Shanghai Municipality, and each sub-branch of Shanghai Local Taxation Bureau at the district/county level of Shanghai Municipality
Application Formalities: 

Processing Procedures: 
(I) Any and all of applications for tax registration upon starting businesses by the taxpayers with whole domestic investment or with foreign investment administrated by Shanghai Municipal Office of State Administration of Taxation or any of No.1 through No.8 Sub-branches of Shanghai Local Taxation Bureau or by the taxpayers with whole domestic investment administered by the office or sub-branch at the district/county level and incorporated by the taxpayers with whole domestic investment administrated by of any of the above 8 sub-branches of Shanghai Local Taxation Bureau in the manner of equity participation shall be accepted and disposed by the office of tax registration acceptance whereof directly. Any application for alteration by private enterprises or small industrial or commercial businesses administrated by No.5 Sub-branch of Shanghai Local Taxation Bureau shall be accepted and disposed by No.5 Sub-branch of Shanghai Local Taxation Bureau directly.. Any application for alteration by the taxpayers with foreign investment administrated by each office of State Administration of Taxation at the district/county level of Shanghai Municipality or each sub-branch of Shanghai Local Taxation Bureau at the district/county level of Shanghai Municipality shall be accepted and disposed by the office of tax registration whereof acceptance directly.

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