China Representative Office(RO) Setup

Setting up a representative office is the most inexpensive entry form for foreign enterprises to enter the Chinese market. The role of a representative office basically is to serve as a liaison office between a foreign company and its business partners in China, and to coordinate the parent enterprise activities in China (travel arrangements, promotion etc.). Representative offices are applicable for many industries: trading, shipping, consulting, etc.

Advantages of setting up representative office(RO) in China

Using a representative office as China entry form has the following advantages:

1. Affordable: no paid capital required, government and service fees are usually lower than what is needed for WFOEs.

2. Quicker registration process (usually within one month or so)

3. Less paperwork required for application (compared to wholly foreign owned enterprises)

The functions of a representative office are as follows:

1. It can handle market research, sourcing, project investigation, quality control for parent company, liaison with customers and suppliers

2. It cannot enter into purchase/sales contracts and receive payment for services, issue invoices.

3. A RO can open bank accounts and employ staff for above- mentioned purposes.

4. Apply for work permit and residence permit.

5. A RO is still subject to tax liability, so monthly tax return should be carried out regularly.

6. If a RO is set up in Shanghai, it is qualified to get a car without entrance tax.

Business Follow Up of China Representative Office Registration

TANNET can provide a series of business follow-up services such as transfer RO to WFOE, monthly bookkeeping and tax return, annual return services, internal auditing, financial planning and tax layout, China policy & market study. Other services include domain name registration, webpage design, website promotion, China trademark registration, Work Permit, Residence Permit, etc. in order to pave a smoother and wider way for your China business success.

Taxation for China RO

Although a RO is not to conduct business, it attracts tax as stated below:

1. Individual Income Tax (IIT)

IIT stands for Individual Income Tax which rates from 5% to 45% based on salary income exceeding more than RMB2000 for local employee and RMB 4800 for overseas employee. All the RO staff is subject to IIT if his income exceeds the limit. IIT is calculated according to such a formula: IIT= (income- limit)* rate.

2. Business Tax (BT)

BT stands for business tax which is based on monthly business operational expense, the rough rate is 5% based on your expenses. It is calculated according to the formula like this: BT= expenses/ (1-15%) ×5%.

3. Enterprise Income Tax (EIT)

EIT stands for enterprise income tax which is based on quarterly business operational expenses, the rate is 25%. It is calculated according to the formula: EIT = expenses/ (1-15%) ×10%×25%.

If you have further queries, don’t hesitate to contact us at anytime, anywhere by simply visiting our website , or calling Jessica at China hotline 86-0791-88167458/86-18970952901 or emailing to nctannet028@163.com , tannet-solution@hotmail.com