China Representative Office called foreign representative office is also known as a resident representative office of foreign enterprise in China. A resident representative office of foreign enterprise can only engage in non-direct business activities in China, on behalf of foreign company liaison, product promotion, market research, technical exchanges and other business activities.
The Specification of Establishment
Must satisfy the following conditions that foreign company to set up the China Representative Office:
1. Register more than two years in the country or region.
2. Never bad records to collide China legislation.
3. Having record or proof of good business activities in the country or region.
4. Certificate of Incorporation must be notarized and approved by local institution, Chinese embassy and Credibility Letter. Without years limitation demand for companies of Hong Kong, Macau and Taiwan and only to do document notarization. In addition, Hong Kong company need to make lawyer notarization.
The Rules of name for Representative Office
Representative Office is composed of Nationality, the Chinese name of headquarters and Representative Office of Shenzhen. Headquarters have Limited property, the best for end of company name; Chamber of commerce can register as well, but must be approved by higher management department.
The Feature of Representative Office and Notes
Representative Office cannot engage to business activities that cannot sign the commerce contract, place the orders, make collocations and keep the stock and other activities. Representative Office only coordinate with headquarter to engage the information, contact and market promotion and something non-business activities of China.
1. Representative Office address must be true real address, office space required information have the purchase contract, the developer pre-sale permit a photocopy, purchase invoices.
2. Paying taxes have income tax and sales tax that depend on the company after deducting the cost of the degree. According to "State Administration of Taxation to strengthen the Representative Offices of Foreign Enterprises Tax Administration issues related to notice" to the authorized representative of the foreign tax, in particular in terms of expenditure according to income tax.
The following are formulas:
Taxable income is expenditure divide by 1-15% times 10%.
Taxable business income is expenditure divide by 1-15% times 10% profit times interest rate.
Business tax is expenditure divide by 1-15% times rate.
3. Representative people of representative institution should be adapting with business activities, not more than 4 people include chief representative of representative in representative institution. It can be allow cancellation representative, not allow increase representative anymore to the representative institution which more than 4 people.
Q&A
Q: What's function to set up the China Representative Office?
A: Establish China Representative Office not only help business to gathering information and promotion of China, but also be a contact unit. Certainly, representative office apply to be registered in accordance with local regulations.
Q: What's limitation for set up China Representative Office?
A: Cannot do business activities and receipts and disbursements, expect expenditure. In addition, need to conduct continuation for every year and recertification the information of offshore mother company.
Q: Is it allowed to engage profit behavior in China Representative Office?
A: It is not to do engage any profit behavior; therefore, it is not to issue the invoice and receive orders, stock and make collections and so on. Representative Office only have expenditure and not any income.
Q: What's tax should be pay?
A: Generally speaking, the taxable income approximately 10% of expenditure in Representative Office because do not engage the business behavior here. The standard is according to expenditure in Representative Office.
