China Representative Office
RO is the easiest way for foreign investor to put her foot print in China. The advantage of setting up RO in China is quick and low cost and no capital required. However, not likely WFOE, RO is not legal person in China, RO cannot engaging directly any business activities for profit. RO can only represent her parent enterprise and cannot buying property or import production equipment.
- Easy &quick to set up with low cost.
- Staff can only hire through admitted agency.
- No capital required.
- Tax is paid on Expense.
- Not legal person in China.
- Cannot engage business with profit.
- Cannot buy property/import production equipment.
- High tax rate paid on total expense.
- Parent company need to commence at least 2 years
Majority of foreign investor set up her RO in China is working for the following purpose
- Marketing Research
- Marketing Promotion
- Meeting and contacting China partners on parents company behalf.
- Quality Control
SET UP REQUIREMENT AND PROCEDURE
Although RO is the easiest type of entity allow foreigner to set up in China, but there is still plenty of documentation and process need to go through. Our professional team will help our partner to work through below process for her setup of RO in China.
- Collection the require documentation of parent company
- Apply registration in Administration for Industry and Commerce (AIC)
- Collect business registration license after approval of AIC
- Apply RO Registration Certificate from State Administration of Industry and Commerce (SAIC)
- Prepare company stamp from Public Security Bureau (PSB)
- Apply Organization Code License from Technical Supervision Bureau (TSB)
- Register in Tax Bureau
- Apply bank account certificate
- The copy of the legal qualification document of the foreign investors Parent Company - Copy of the business license (Certificate of Incorporation*) which is certify by Chinese Embassy or Chinese Consulate.
- The copy of the Company Directors Passports 2 x Passports Copies that are notarized by the local authority and endorsed by the Chinese Embassy in your country.
- 2x Bank Reference Letters from investor’s bank. The original bank reference of the Company (issued by the bank).
- Passport copy of: (a) Parent company's director (b) China company's Legal Representative and (c) China company's supervisor.
- The China Legal Representative provide 6 photos (2 inches size on white background) and a brief resume CV (from the age of 18) (passport copy for foreigner and ID card copy for Chinese).
- A summary of the operations of parent company and China Representative office.
- Registered Address: 2x copies of the property ownership certificate of the registered address of the preparative company
KEY FEATURES FOR COMPANY MAINTENANCE
1. Annual reporting
Annual report & Inspection is required for RO since 2011. All RO have to submit the annual report to Administration of Industry and Commerce between March to June every year. The report will cover the following information:
- Legal status of holding company
- Description of RO business operation
- Audited financial report
Although RO is not allowed to generate any revenue, a monthly or quarterly report has to submit to Tax Bureau for tax purpose.
Business tax and income tax is the main category for RO.
- Business Tax
- Business Tax is file in month basic with a tax rate of 5% of the income amount.
- ormula of calculation income amount is: Total monthly expense / (1-10%-5%)
- Income Tax
- Income tax has to file in quarter basic.
- Income tax is impose if RO have the below activities which is listed by The State of Administration of Taxation (SAT)
- Income tax rate is 33% on deemed profit. And deem profit is 10% of income amount. The calculation will be:
Step 1: Income amount: Total expense /( 1-10%-5%)
Step 2: Deem Profit: Income amount x 10%
Step 3: Income tax payable: Deem Profit x 33%
- RO can hire foreigner directly as representative. And such representatives have to hire pursuant to a written contract and their taxes and social benefit must be paid.
- RO must hire local staff indirectly through a Chinese dispatch company such as FESCO. And such staff is not contract under RO but with the dispatch company.
Although RO is not allow to engage business with profit, a proper account record is require and auditing and tax report is required to submit to government authority. And all account record, except staff compensation which is supported with contract, all expenses have to support by the government tax invoice. And account record can only destroy when the entity completion of dissolution.