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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 FOREIGN INVESTMENTS
FIE REGISTRATION PROCEDURES


Foreign Invested Enterprises Post-establishment Procedures
Tax Administration

I. Tax registration

Following the provisions stipulated by the Administration Law on Collection and Administration of Tax of PRC, the foreign-invested enterprises shall apply to the local tax authorities for tax registration against relevant documents with 30 days after the issuing of the business license. It shall also present the following documents according to the relevant stipulations: approval documents, the business license, contracts, articles of association, bank account number, legal person's identification cards, passports and other legitimate documents, as well as other documents required by the taxation authorities.

After the tax registration,' the foreign-invested enterprises shall notify the original tax registration authorities if there is any change of registration items, and make a change of registration against the relevant documents within 30 days of from the date of the change occurs.

In the case of termination of a foreign-invested enterprise by means of dissolution, bankruptcy and cancellation, etc., it shall apply to the original registration authority for cancellation of the tax registration against relevant documents, before it goes to the administration of industrial and commercial registration for it business license cancellation.

In the case of change of the tax registration authority due to the change of the foreign-invested enterprise's change of residence or business location, it shall apply to the original tax registration authority for cancellation of the original registration, and approach to the tax authority of the new destination to apply for anew registration.

II. Paying Taxes

After the tax registration, the foreign-invested enterprises shall apply to the tax authorities for the "Manual for Purchasing Receipts" with the presentation of the Tax Registration Certificate, and buy the necessary receipts. In case that the foreign-invested enterprises need to use "Special Value-added Tax Receipt'', they shall apply to the tax authorities for the verification of the statues of "General Value-added Tax Payers" and purchase the "Special Value-added Tax Receipt".

After starting operation (including trial operation), the foreign-invested enterprises shall go to the competent tax authorities for tax declaration or submission of tax withholding reports within the period stipulated by the relevant laws and provisions.

See also: Major Taxes under the existing Chinese Taxation System

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