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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 TAXATION SYSTEM


OVERVIEW OF CHINA'S CURRENT TAX SYSTEM
Resource Tax

(1) Taxpayers

The taxpayers of Resource Tax include all units and individuals engaged in the exploitation of mineral resources or production of salt prescribed in the Resource Tax Regulations within the territory "of the People' s Republic of China.

(2) Taxable items and tax rates

Table of Resource Tax Taxable Items and Tax Amount per Unit

Taxable items Ta x amount per unit
1. crude oil 8-30yuan per ton
2. natural gas 2-15 yuan per 1000 cubic metres
3. coal 0.3-5 yuan per ton
4. other non-metal ores 0.5-20 yuan per ton or per cubic metre
5. ferrous metal ores 2-30 yuan per ton
6. non-ferrous metal ores 0.4-30 yuan per ton
7. salt   (1) solid salt   (2) liquid salt 10-60 yuan per ton 2-10 yuan per ton

(3) Computation of tax payable

The amount of Resource Tax payable is based on the quantity of the taxable products by applying the applicable tax amount per unit. The formula is:

Tax payable = Quantity of taxable products × Applicable tax amount per unit

(4) The main tax reductions and exemptions

a. Crude oil used for heating or repairing wells in the course of exploiting crude oil may be exempt;

b. For taxpayers suffering huge losses due to such reasons as accidents or natural disasters in the course of exploiting or producing taxable products, tax reduction or exemption may be given by taking into consideration the seriousness of the situation;

c. The Resource Tax payable on iron ores and on the non-ferrous metal ores by independent mines may be reduced.
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