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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.
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The registration procedures of a Wholly Foreign Owned Enterprise (WFOE) could be divided into 3 phases: aproval phase, registration phase and post-establishment phase.
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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.
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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.
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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.
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CHINA CORPORATE INCOME TAX


OVERVIEW OF CHINA'S CURRENT TAX SYSTEM

Foreign Investment Taxation

Legislation

Date of issue and issued by Effective Date
1.Provisional Regulations of the People's Republic of China on Value Added Tax Detailed Rules for Its Implementation 13 Dec. 1993, by State Council 25 Dec. 1993, by Ministry of Finance 1 Jan.,1994 1 Jan.,1994
2.Provisional Regulations of the People¡¯s Republic of China on Consumption Tax Detailed Rules for Its Implementation 13 Dec.1993, by State Council 25 Dec.1993, by Ministry of Finance 1 Jan.,1994 1 Jan.,1994
3.Provisional Regulations of the People¡¯s Republic of China on Business Tax Detailed Rules for Its Implementation 4.Provisional Regulations of the People¡¯s Republic of China on Enterprise Income Tax Detailed Rules for Its Implementation 13 Dec.1993, by State Council 25 Dec.1993, by Ministry of Finance 13 Dec.1993, by State Council 4 Feb.1994, by Ministry of Finance 1 Jan.,1994 1 Jan., 1994 1 Jan.,1994 1 Jan.,1994
5. Income Tax Law of the People's Republic of China on Enterprises with Foreign Investment and Foreign Enterprises Detailed Rules for Its Implementation 9 Apr.1991, by the Fourth Session of the 7th National People's Congress (NPC) 30 Jun.1991, by State Council 1 Jul.,1991 1 Jul.,1991
6.  Individual Income Tax Law of the People's Republic of China Regulations for Its Implementation 10 Sep.1980 passed by the Third Session of the 5th National People¡¯s Congress and revised and re- issued by the Fourth Session of the 8th NPC on 31 Oct.1993 28 Jan.1994, by State Council 1 Jan.,1994 28 Jan.,1994
7.Provisional Regulations of the People¡¯s Republic of China on Resource Tax Detailed Rules for Its Implementation 25 Dec.1993, by State Council 30 Dec.1993, by Ministry of Finance 1 Jan.,1994 1 Jan.,1994
8.Provisional Regulations of the People' s Republic of China on Urban and Township Land Use Tax Detailed Rules for Its Implementation 27 Sep.1998, by State Council to be made by the People' s Government at Provincial Level 1 Nov.,1998
9.Provisional Regulations of the People' s Republic of China on City Maintenance and Construction Tax Detailed Rules for Its Implementation 8 Feb.1985, by State Council to be made by the People' s Government at Provincial Level the year of 1985
10.Provisional Regulations of the People¡¯s Republic of China on Farmland Occupation Tax Detailed Rules for Its Implementation 1 Apr.1987, by State Council to be made by the People¡¯s Government at Provincial Level 1 Apr.1987
11.Provisional Regulations of the People¡¯s Republic of China on Fixed Assets      Investment Orientation Regulation Tax Detailed Rules for Its Implementation 16 Apr.1987, by State Council 18 Jun., 1991, by the SAT 1991 1991
12.Provisional Regulations of the People' s Republic of China on Land Appreciation Tax Detailed Rules for Its Implementation 13 Dec.1993, by State Council 27 Jan.1995, by Ministry of Finance 1 Jan.,1994 27 Jan.,1995
13.Provisional Regulations of the People¡¯s Republic of China on House Property Tax Detailed Rules for Its Implementation 15 Sep.1986, by State Council to be made by People¡¯s Governments at Provincial Level 1 Oct.,1986
14. Provisional Regulations Governing Urban Real Estate Tax Detailed Rules for Its Implementation 8 Aug.1951, by the Central People¡¯s Government Administration Council to be made by People¡¯s Governments at Provincial Level 8 Aug.,1951
15. Inheritance Tax (to be legislated)    
16.Provisional Regulations of the People's Republic of China on Vehicle and Vessel Usage Tax Detailed Rules for Implementation 15 Sep., 1986, by State Council to be made by People ' s Governments at Provincial Level 1 Oct.,1986
17.Provisional Regulations Concerning the Vehicle and Vessel Usage License Plate Tax Detailed Rules for Its Implementation 20 Sep.1951, by the Central Government Administration Council to be made by People¡¯s Governments at Provincial Level 20 Sep.,1951
18.Provisional Regulations of the People¡¯s Republic of China Concerning Stamp Tax Detailed Rules for Its Implementation 6 Aug.1988, by State Council 29 Sep.1988, by Ministry of Finance 1 Oct.,1988 1 Oct.,1988
19.Provisional Regulations Governing Deed Tax Detailed Rules for Its Implementation 7 Jul.1997, by State Council 28 Oct.1997, by Ministry of Finance 1 Oct.1997 1 Oct., 1997
20. Security Exchange Tax (to be legislated)    
21.Provisional Regulations Concerning Slaughter Tax (administered by local governments) 19 Dec.1950, by the Central Government Administration Council  
22.Provisional Regulations of the People¡¯s Republic of China on Banquet Tax (administered by local governments) 22 Sep.1988, by State Council  
23.Provisional Regulations of the People¡¯s Republic of China on Agriculture Tax Detailed Rules for Implementation 3 Jun.1958, by the 96th Session of the Standing Committee of the 1st NPC to be made by the People' s Government at Provincial Level 3 Jun.,1958
24.The Rules of the State Council on Levying Agriculture Tax on Agriculture Specialities Measures for Its Implementation 30 Jan.,1994, by State Council to be made by the People' s Government at Provincial Level 30 Jan.,1958
25. Animal Husbandry Tax: no national legislation If levied, rules should be made by the provincial governments concerned  
26. Regulations of the People ' s Republic of China on Import and Export Customs Duty 7 Mar.1992, by State Council; Second revision by State Council on March 18,1992 1 Apr.1992
27. Rules of Levying Customs Duty on Entry Passengers ' Luggage and Personal Postal Articles 18 May,1994, by the Customs Tariff and Classification Committee of the State Council 1 Jul.,1994
28. Law of the People's Republic of China on Tax Administration and Collection Detailed Rules for Its Implementation 4 Sep.,1992, passed by 27th Session of the Standing Committee of the 7th NPC, and revised and re- promulgated by the 12th Session of the Standing Committee of the 8th NPC on 28 Feb.,1995 4 Aug.,1993, by the State Council 28 Feb.,1995 4 Aug.,1993
29. Supplementary Rules of the Standing Committee of NPC of the People¡¯s   Republic of China on Punishing Tax Evasions and Refusal to Pay Taxes 4 Sep.1992, by the 27th Session of the Standing Committee of the 7th NPC 1 Jan.,1993
30.Measures of the People¡¯s Republic of China on Invoice Management Detailed Rules for Its Implementation 12 Dec.,1993, approved by State Council and issued by Ministry of Finance on 23 Dec., 1993 28 Dec., 1993, by the SAT 23 Dec.,1993 23 Dec.,1993
31. Resolutions of the Standing Committee of NPC of the People¡¯s Republic of China on Punishing Any False Issuance, Forgery and/or Illegal Sales of VAT Invoices 30 Oct.,1995, by the 16th Session of the Standing Committee of the 8th NPC 30 Oct.,1995
32. Rules on Tax Administrative Appealing 6 Nov.,1993, by the SAT 6 Nov.,1993

Note: The provisions of criminal responsibilities in SUPPLEMENTARY RULES OF THE STANDING COMMITTEE OF NPC OF THE PEOPLE'S REPUBLIC OF CHINA ON PENALIZING TAX EVASIONS AND REFUSAL TO PAY TAXES and RESOLUTIONS OF THE STANDING COMMITTEE OF NPC OF THE PEOPLE'S REPUBLIC OF CHINA ON PENALIZING ANY FALSE ISSUANCE, FORGERY AND/OR ILLEGAL SALES OF VAT INVOICES have been integrated into the CRIMINAL LAW OF THE PEOPLE'S REPUBLIC OF CHINA revised and promulgated on 14 March, 1997.

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