China Representative Office (RO)

A representative office is an office established by a company to conduct marketing and other non-transactional operations, generally in a foreign country where a branch office or subsidiary is not warranted. Representative offices are generally easier to establish than a branch or subsidiary, as they are not used for actual "business" (e.g. sales) and therefore there is less incentive for them to be regulated.

Functions of China Representative Office

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.

Process of China Representative Office set up

Business Follow Up of China Representative Office （RO）

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 Representative Office （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%.

Advantages of China Representative Office (RO)

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)

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