home about us services download faq site map
Foreign Investment in China
China Business Registration
China Taxes
Laws and Regulations
Expatriate's Corner
Scope of Services
Frequently Asked Questions
Wholly Foreign Owned Enterprises (WFOE)
A Wholly Foreign Owned Enterprise (WFOE) is a Limited Liability Company established in China by foreign investor(s). A WFOE is very much like a LLC in the USA that it requires one member only.
The registration procedures of a Wholly Foreign Owned Enterprise (WFOE) could be divided into 3 phases: aproval phase, registration phase and post-establishment phase.
A Wholly Foreign Owned Enterprise (WFOE) could be terminated by way of liquidation or deregistration by its investor(s) or when the conditions of termination in its Articles of Association occurs.
China Taxation
Under the current tax system in China, there are 25 types of taxes which could be divided into 8 categories. The major ones are Business Tax, Value Added Tax and Enterprise Income Tax. More
Representative Offices are also liable for Business Tax and Enterprise Income Tax. However, a RO could be exempted if its parent company is in the manufacturing business.
Any individual who has domicile in China or who has no domicile in China but has resided in China for one year or more shall pay Individual Income Tax on his world-wide income.

China Foreign Investments

Foreign Direct Investment, Equity Joint Ventures, Cooperative Joint Ventures, Wholly Foreign Owned Enterprises
  Q1: What preferential taxation policies foreign-funded enterprise enjoy in China?
  Q2: What projects foreign investors are prohibited to invest in China?
  Q3: What projects foreign investors are restricted to invest in the P.R. China?
  Q4: What are the projects China encourages foreign investors to invest in?
  Q5: What types of foreign investments are allowed in China?
  Q6: How to establish a foreign- funded enterprise in China?
  Q7: How to establish a wholly foreign owned enterprise in China?
  Q8: How to set up a resident representative office in Beijing, P.R. China?
  Q9: How to establish an equity joint venture in China?
  Q10: How to set up a cooperative joint venture in China?

Taxation Related Issues

Shenzhen Special Economic Zone Tax Administration
  Q1. What are invoices?
  Q2. How many basic copies do invoices have? And how are they used respectively?
  Q3. What are the basic contents of invoices?
  Q4. What is special stamp for invoices?
  Q5. What are “invoice-monitor stamp” and “anti-forgery products for invoices”?
  Q6. How to identify false invoices?
  Q7. How to purchase invoices for those who have received Tax Registration Certificates?
  Q8. How to issue invoices for the taxpayers that need tax departments to issue instead?
  Q9. How to apply to purchase invoices for the temporary business units (individuals) from outside Shenzhen?
  Q10. What to do if invoices lost?
  Q11. What types of invoices do local tax departments administer?

Frequently asked Questions Concerning Foreign Investments in Shanghai

Investment Policies & Relevant Regulations
  Q1: Where is Pudong New Area?
  Q2: What sort of tax preferential policies can foreign investors enjoy in pudong New Area?
  Q3: How do you apply for the establishment of duty-free warehouses and duty free processing factories?
  Q4: What are the standard fees for electricity, gas and water in Pudong New Area?
  Q5: How can the land-using right be granted in development zones, industrial zones and export processing zones?
  Q6: Can foreign invested enterprises in Pudong New Area be exempt from Customs duty in importing manufacturing equipment for self use?
  Q7: Are there any differences with regard to foreign investment policies between Pudong New Area and Minhang, Caohejing, Hongqiao Development Zones and Forward High-tech Park in Puxi Area?
  Q8: How many industrial zones are there in Shanghai?
  Q9: What are the differences between investing in Songjiang Export Processing Zone and in Waigaoqiao Free Trade Zone?
Guidance and Examination & Approval of Foreign Invested Enterprises
  Part I
  Q1: How many organizations are responsible for the examination and approval of foreign investment projects in Shanghai? What are the detailed regulations?
  Q2: How to handle the projects which go beyond the power of the Shanghai Municipal Government?
  Q3: How were the laws on foreign invested enterprises modified?
  Q4: What shall be included in the project proposal of a Sino-foreign joint venture?
  Q5: What shall be included in the feasibility study report of a Sino-foreign joint venture?
  Q6: What shall be included in the contract of a Sino-foreign joint venture?
  Q7: What are the requirements for setting up an investment company?
  Q8: What qualifications shall a foreign-funded bank have to apply for establishment?
  Q9: What qualifications shall a foreign bank have to apply for the establishment of its branch?
  Part II
  Q10: What organization is responsible for the examination and approval of Sino-foreign funded financial institutions?
  Q11: Are there any differences between cooperative enterprises and joint ventures?
  Q12: How does a Sino-foreign joint venture divide its profit?
  Q13: How does a Sino-foreign cooperative enterprise divide its profit?
  Q14: What if the contract of a Sino-foreign joint venture which has already been signed conflicts with the newly promulgated law?
  Q15: What are the regulations on foreign investor's proportion in a jointly invested or solely foreign-funded enterprise?
  Q16: What is the lowest investment quota of overseas businessmen in a jointly invested or solely foreign-funded enterprise?
  Q17: By what means of forms can a Sino-foreign joint venture pay the investment?
  Q18: Are there any regulations stipulating the time limit of investment?
  Q19: What shall be done if the foreign party wants to withdraw its shares?
  Part III
  Q20: What if a wholly foreign-owned enterprise's fiscal year is different from the calendar year?
  Q21: Can a foreign invested enterprise which has already been registered reduce or increase its registered capital?
  Q22: Can a registered foreign invested enterprise enlarge its business scope?
  Q23: What are the regulations about the merger and split-up of foreign invested enterprises?
  Q24: Can foreign invested enterprises become shareholders by means of technology?
  Q25: What preferential policies can a foreign invested research & development center enjoy?
  Q26: What sort of preferential policies can foreign investors in software and integrated circuit industry enjoy?
  Q27: How can a joint venture prolong its term after it expires?
  Q28: What is an export-oriented enterprise?
  Q29: What is an advanced hi-tech enterprise?
  Q30: What preferential policies can an export-oriented enterprise and an advanced hi-tech enterprise enjoy?
  Q31: Where to apply for the status of an export-oriented enterprise of an advanced hi-tech enterprise?
Real Estate Issues Regarding Foreign Investment
  Q1: What kind of land must be obtained through the granting of landusing right?
  Q2: How are the time limits and means for the granting of land-use right regulated?
  Q3: What are the main contents of the granting contract of land-using right?
  Q4: .What are the basic requirements for development, utilization and management of the land?
  Q5: What if the violation of the land administration regulations occurs?
  Q6: Can the land-using right be re-transferred?
Operation and Compliance Issues of Foreign Invested Enterprises
  Part I
  Q1: What other formalities should be done after a foreign invested enterprise gets its business license?
  Q2: Dose the Customs have any regulations about foreign invested enterprises and their imports and exports?
  Q3: Is it necessary to get the assessment from the relevant government authority when the foreign invested enterprises use equipment as their capital contribution?
  Q4: What procedures shall the foreign invested enterprises follow to exchange the foreign currencies at the bank?
  Q5: How shall a foreign invested enterprise organize its production and export if some of the products are under the administration of state export license?
  Q6: How can a foreign invested enterprise obtain an import license?
  Q7: What should foreign invested enterprises do to establish branches?
  Q8: Can foreign invested enterprises establish branches out of China?
  Q9: Can a foreign invested enterprise set up manufacturing place besides its registered address?
  Q10: Can foreign invested enterprises enjoy the tax-refund policy6 for their exported goods?
  Part II
  Q11: What's the difference between VAT and Consolidated Industrial and Commercial Tax?
  Q12: What's the provision about the legal person of a foreign invested enterprise?
  Q13: Can a foreign investor remit abroad is share of profit from the foreign invested enterprise?
  Q14: Shall a foreign investor be levied on his share of profit form the foreign invested enterprise?
  Q15: How does a foreign management staff in a foreign invested enterprise pay personal income tax?
  Q16: What preferential policy can foreign investors enjoy if they reinvest the after-tax profit got form the foreign invested enterprise?
  Q17: Can a foreign invested enterprise a loan from a bank in China and what's the interest rate upon loans?
  Q18: How do the Chinese and the foreign party share the loss in the joint venture?
  Q19: How is a dispute solved between the two parties of either a Sino-foreign joint venture or a Sino-foreign cooperative enterprise?
  Q20: Can foreign businessmen working for foreign invested enterprises apply for a mulit-time exit and re-entry visa?
  Q21: Can foreign employees of a foreign invested enterprise remit their pay abroad?
  Q22: Can a foreign invested enterprise open a bank account at a foreign bank in China?
  Q23: What shall be done if there are disputes about production between a foreign invested enterprise and its employees?
  Q24: Is it necessary to form a trade union in a foreign invested enterprise?
  Q25: What's the regulation about the trade union's funds of a foreign invested enterprise?
Issues Regarding Foreign Investors' Setting Up Representative Offices
  Q1: How do foreign or Taiwan, Hongkong and Macau enterprises apply for the establishment of representative offices in Shanghai?
  Q2: What sort of documents and materials shall be presented when an application is made?
  Q3: Is a Representative Office/Company permitted to be located in a building both used for business and living or an apartment?
  Q4: Is it necessary to rent office space prior to application of setting up representative office/company?
  Q5: Must the Chief Representative go to Shanghai to handle those issues such as office registration, tax registration, bank account opening etc.?
  Q6: What's the maximum time limit of a representative office for one approval? How long does the business registration certificate remain in force?
  Q7: What shall be done if a representative office wants to change the contents of registration?
  Q8: How to apply for extension of Registration Certificate when it is expired?
  Q9: How are the cancellation procedures followed when the representative office expires or winds up operation bzai efore expiration?
  Q10: As a representative office is only permitted to engage in business liaisons according to relevant regulations, why should it pay taxes?
  Q11: How to go through the formalities of foreigner employment in Shanghai?
  Q12: How should representative offices of foreign enterprises including Taiwan, Hong Kong and Macau enterprises pay taxes?
Hong Kong Head Office              Room 803, Futura Plaza, 111 How Ming Street, Kwun Tong, Hong Kong
                                                 TEL +852 2341 1444      FAX +852 2341 1414      E-mail info@bycpa.com

Shenzhen Office   TEL +86 (0755) 82684480 82684483 82684484 FAX +86 (0755) 82684481
Shanghai Office   TEL +86 (021) 64394114 64399276 FAX +86 (021) 64394414
Beijing Office   TEL +86 (010) 68748420 68748422    FAX +86 (010) 68748421