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ITEMS
|
WFOE/ JOINT VENTURE |
REPRESENTATIVE OFFICE |
PARTNERSHIP ENTERPRISE |
Minimum Capital |
Starts from 100,000RMB(*1) |
No register capital |
No minimum capital required |
Business Scope |
Specific Industry: Trading WFOE; Consulting WFOE, Manufacturing WFOE(*2) etc. |
Liaison; Quality Control |
Specific Industry according to Foreign Investment Industrial Guidance Catalogue |
Office |
In an office building which can register business |
Shanghai: Grade A building; |
In an office building which can register business |
Working Visa |
1 year multi-entry Visa |
1 year multi-entry Visa |
1 year multi-entry Visa |
Recruiting Staff |
Recruits staff directly |
Through Local HR agency: FESCO, CIIC |
Recruits staff directly |
Taxation |
Turnover tax; Income tax, Dividend tax (*3) |
Approx. 10-15% (*4) on expenses; individual income tax |
Turnover tax; Income tax, Dividend tax (*3) |
Maintenance |
Monthly; Quarterly; Annually |
Monthly; Quarterly; Annually |
Monthly; Annually |
Bank Account |
Access & receive money; Pay bills; Issue cheques; Withdraw cash in China; RMB account and foreign currency |
Can only receive money from parent company; Can only pay for expenses; Can't pay for products |
Access & receive money; Pay bills; Issue cheques; Withdraw cash in China; RMB account |
Invoicing |
Official invoice in China |
Cannot issue invoice or receipt |
Official invoice in China |
Receiving payments |
World Wide |
Not allowed to receive payments from clients |
World Wide |
Liability of equity participants |
Limited to amount of registered capital |
Parent Company must be established for over 2 years (*5) |
Unlimited liability or limited liability in a limited partnership enterprise |
(*1) [Since March 1, 2014] No. minimum registered capital is required for WFOEs with scope of business of consulting, Trading, retailing, information technology etc. in China. It's advisable to choose a registered capital within RMB100K- 500K for most WFOEs. There are minimum registered capital still required for some industries for instance: Banking, Forwarding etc.
(*2) WFOE/ Joint Venture can only conduct business within its approved business scope, which ultimately appears on the business license. Any amendments to the business scope require further application and approval.
(*3) There are 2 major taxes for WFOEs and Joint Ventures in China: Turnover tax (which includes Business tax for
service and consulting business, VAT tax for trading and manufacturing business etc.), Income tax (corporate income tax, individual income tax).
i). Business tax: 3-5% based on the turnover;
ii). VAT tax for trading and manufacturing business
iii). Income tax: based on the gross profit, which is 25 percent nationwide (since January 1, 2008), high-tech
enterprises preferential tax policies for special economic zones and the government encourages the industry in
China and the West are exempted (starting January 1, 2009).
iv). Other taxes include dividend tax: it's 20%. As for public listed company, the dividend tax is: 10% since June 13th,
2005.
Partnership Enterprise: No corporate income tax required if partners are individuals. The individual partners shall pay their respective share of the partnership income. Corporate income tax applies if partners are companies
(*4) Representative office's tax used be based on 9% on expenses. Since March 2010, it has been changed over to approx. 13% according to new regulation from local taxation bureaus in Guangzhou, Shanghai, Beijing, Ningbo and Shenzhen etc.
(*5) According to State Administration of Industry and Commerce's new rules on Foreign Representative offices in China, that: (since March 11, 2011), it's mandatory that PARENT COMPANY be established for more than 2 years;Maximum number of foreign employees in Rep. office is 4.
Advantages of Setting Up A China Company
1. No minimum capital requirements for specific industry.
2. Abundance of cheap raw materials, such as coal, iron ore, natural gas, lead, zinc, gold and aluminum.
3. 3 free zones (including Hong Kong, Pearl river delta, and Shanghai) offering companies i). zero corporation tax, ii). No customs duties, iii). Minimal registration requirements and iv).no exchange controls.
4. 54 Export processing zone (EPZ) offering foreign companies lower corporation tax and subsidized customs duties. There are including the Beihai export processing zone, Changshu export processing zone, Changzhou processing zone, and the Dalian export processing zone.
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