How to open a representative office of a foreign company in China

How to open a representative office of a foreign company in China

Сообщение HainanWel.com(e)! » 08 июн 2015, 19:51

Representative offices of foreign companies in China - a fast, cheap and convenient way to establish a presence in this country. Most of the missions are created with the aim of establishing relations, market research, the advertising company, quality control, production and shipment of goods from local producers.

In addition, under certain conditions, representations may conduct business in a limited volume.

Industry representation

The majority of foreign companies in China have the right to conduct "indirect economic" activity. Strict definition of the current legislation does not allow the PRC; In practice, this means that the office carries out promotional activities, networking, parent company with partners and contractors, market studies and conducts other activities of organizational and communication activities. Representation can not be used in the chain of business processes of the parent company. It can not replace it when signing the contract, can not on its own behalf to conclude a deal in the interests of the parent company can not act as an intermediary in the purchase and sale transactions. However, some economic activities, activities involving the generation of income, can lead representative.

Representation of shipping companies, particularly airlines, which can sell tickets and cargo;
Representations of accounting, auditing, legal firms that can provide advice in the field of professional interests of parent companies with some restrictions;
Representative offices of trading companies that can carry out commercial mediation efforts, contributing to the conclusion of transactions, receiving a commission and declaring income. It should be noted that the registration of such representative is currently extremely difficult because Chinese tax authorities who decide on the admissibility of representation registration with this form of activity and tax regime, rightly believe that monitor the completeness and accuracy of income declaration in this case very difficult, and claim this tax regime is very reluctant.
Address Mission

Legislation China requires organizations and their divisions carry out activities at registration. Accordingly, the representation can not be registered in the same place but actually exist in the other. At least, this is contrary to the letter of the law. To the room where it will be registered representative must meet certain requirements.

Firstly, the need to provide special consent of the owner premises, as well as documents confirming the ownership of the premises (certificate of ownership or a purchase agreement and loan documents confirming introduction of regular payments).

Secondly, it should not be a space owned by a foreign company or a foreign natural person, as to 29.01.2007, the lease of real estate by foreign nationals and companies discussed in Beijing and could be seen in other cities as an investment in the Chinese real estate market, ie for rental premises need to register as a company with foreign capital, which is actually a prohibitive measure.

In addition, in Beijing for the purpose of registration is only suitable office pomeschenie1 that is determined by the column "space" in the title documents. When selecting a site for the future registration of the representation it is advisable to read the documents on the premises prior to the signing of the contract and even less to the payment of rent and deposit.

Hiring Employees

Representative has the right to employ Chinese and foreign citizens. The procedure for the recruitment of citizens of China and other countries is fundamentally different: the hiring of foreigners is happening directly, Chinese citizens may work at the dealership only indirectly, by means of a special service agencies. The most famous of them Foreign Enterprises Service Company, besides her there are several organizations that perform similar functions:

China Star Corporation
China International Talent Development Center
China International Enterprises Co-operative Corporation
China International Intellectech Corporation


When hiring a citizen of China representative office was not an employment contract with the employee, and the contract for the provision of labor services to one of the above service organizations; salaries and social payments listed office or parent company at its expense, and the organization pays the fee officer and make the necessary contributions to the budget and social spending. The cost of such organizations is usually low, in the range of 400 yuan for one employee. Foreign citizens can be employed directly in the office, on the basis of a letter of appointment signed by the head of the parent company. The need for management involvement of the parent company in the process of staffing representative explained by the fact that foreigners can work only in the representation office representatives (except for the period of probation, when a foreign citizen can run for the position of manager or interpreter) and the appointment of a representative requires its registration in the industry and commerce administration and the issue of the working map, which requires a letter from the parent company.

Number of Representatives

The number of representatives of representation should correspond carry out representation activities. Typically, the number of representatives (including the general representative) should not exceed 4 persons. With regard to missions, where the number of representatives already exceeds 4 person should in principle only allow the removal of the representatives of the register and no longer allow the introduction of new members of staff.

Procedure of registration

The procedure for registration of foreign companies is the same in general throughout China with differences in detail in the different regions.

Consider a register on the basis of the requirements adopted in Beijing, with the necessary explanations.

Preliminary approval of the representative (Approval)

In China, since 2004, abolished the procedure prior approval of the majority of foreign companies, mandatory for subsidiaries of foreign investors in China.

Exceptions relating to the establishment of representative offices, Activities of head offices which refers to industry specific regulation in China. This representation trucking companies and shipping companies, accounting and law firms, inspection companies, financial institutions, insurance companies, certification organizations, travel agencies, organizations for the protection of intellectual property, media, airlines, television, radio and film companies, stock brokerage firms, non-profit organizations and commercial organizations of countries not having diplomatic relations with China.

The statement comes in the appropriate state body of the PRC: offices for airlines - the State Administration of Civil Aviation for the representative offices of banks - the Commission on banking regulation, law firms - the Ministry of Justice (at the same time with the registration), etc.

To create a non-profit organization offices in China also need prior approval, but registration of representative offices of foreign non-profit organizations in China is extremely difficult for ideological reasons, and without the involvement of a serious administrative resource is almost impossible.

Thus, the establishment of representative offices of most foreign companies in China will begin immediately with the registration.

Date representation (Registration)

Registration of legal entities and their subsidiaries in the PRC engaged in industry and commerce authorities of the PRC Administration (Administration for Industry and Commerce).

As a model, we consider the procedure for registration of foreign companies in Beijing. Register representation consists of 2 parts: the registration in the industrial and commercial administration and post-registration procedures.

The first part of the Beijing takes 5 working days, the second - 2-3 months. For registration of representation in the PTA of Beijing required to submit the following documents:

1. A copy of the certificate of incorporation of the company, legalized in the Consulate of China in the country of registration of the parent company. For Russian companies, this document is a certificate of state registration of a legal entity;
2. A copy of the document confirming the existence of at least 2 years to date, legalized in the Consulate of China in the country of registration of the parent company. For Russian companies, such a document is an extract from the register;
3. A copy of the Charter or the founding agreement of a foreign enterprise, legalized in the Consulate of China in the country of registration of the foreign enterprise;
4. A copy of the power of attorney or a document issued by a foreign company and confirming the authority of the person signing the document on behalf of a foreign company, legalized in the Consulate of China in the country of registration of the parent company. For Russian companies, such a document is usually the decision of the Board of Directors the appointment of the CEO, who is usually the person who has the right to sign;
5. A copy of the power of attorney or letter of appointment of the representatives and issued by a foreign company, legalized in the Consulate of China in the country of registration of the parent company;
6. A copy of the identity document of the general representative and representatives of the legalized in the Consulate of China in the country of registration of the parent company;
7. A copy of the bank certificate, legalized in the Consulate of China in the country of registration of the parent company;
8. The filled forms of documents as required by the PTA and other state bodies.

Upon completion of the registration office receives a certificate of registration and work cards of Representatives who are confirming their status in the PRC and are the basis for the subsequent work permit and residence permit.

Post-registration procedures are in registration and statement on the account of representation in various government agencies - police, administration, quality control, tax authorities, Department of Statistics, the organs of the Ministry of Manpower and Social Security of China, the manufacture of seals and opening a bank account (s) representation. Most of these procedures are performed in sequence, ie, for example, to register with the management of the central (state) taxes and administration of local taxes is required certificate of registration and certificate of representation assignment code organization. To open an account in a bank must present certificate of registration tax, etc., so the completion of all procedures in Beijing takes about 2 months.

Taxes Mission

Representative offices of foreign companies in China are required to pay taxes. Representations are payers of the business activities and corporate income tax as well as tax agents for their own employees in the tax on personal income.

Method of calculation and tax rates depend on the tax regime, the tax authorities installed after setting representation registration.

Currently, the tax regime applicable three missions:

1) On the basis of real income for the missions, leading the allowed economic activity and are able to provide contracts indicating the commission rates, primary documents, leading a full accounting, including with the calculation of the cost of operations, and if the costs are incurred outside China, they must be confirmed by registered in the countries of expenses accounting firms;

2) On the basis of the rate of imputed income to missions, leading the allowed economic activity, but are unable to provide documents confirming the proper amounts of revenues and expenses, including cost (for example, if the contract amount of commission is not specified or not available for all operations, there is no primary documents, foreign expenses not supported);

3) On the basis of expenditure for missions, leading the allowed economic activity, including indirect, unable to provide proof of the amount of revenues, costs and profits.

Most applicable taxes based on the amount of expenses of representation, because, on the one hand, management accounting to provide supporting documentation often causes difficulties for members of the mission, on the other hand, the simplicity of the system convenient for the tax authorities. In this case, the tax burden for the payment of business tax and income tax of about 11%.

Payer of tax on income of individuals in favor the very person who received the income, and representation acts as a tax agent, obliged to keep the amount of tax from the employee's salary and remit it to the budget.

China applies a progressive scale of personal income tax, with revenue growth rates vary from 5% to 45%, while the income is not more than 3,500 yuan to 4,800 residents and non-residents are not taxed.

In some regions of China representative offices of foreign companies may provide additional tax benefits. For example, a registered representative office in Beijing manufacturing enterprises by the decision of the tax authorities may be exempt from income tax and business tax. To apply for exemption from payment of taxes required to submit documents confirming the nature of the manufacturing activities of the parent company.

Accounting and auditing

Representation is required to keep accounting records and pay taxes. The system of accounting records offices, paying taxes on income, does not differ, or not very different from reporting companies.

Stringent requirements for reporting offices, exemption or pay taxes on spending, there is, the main condition - neat collection and storage of primary documentation.

Accounting can be carried out by employees of the mission or attracted accounting firm. The requirement of accounting education and professional accounting certificate no.

Audits are conducted annually by licensed auditors. Representations exempted from taxes annually audits are not required. In this case, it is sure to audit carried out at the closure of the mission or at a different time on a voluntary basis.

Closing Mission

The procedure for the closure of representation is more complex than treatment facilities. This is due to the fact that in order to "let go of office with the world", the authorities of the PRC should be assured that all the taxes are paid on time and in full. Beijing test in the management of the central (state) and local taxes take 2-3 months, and the need to provide the original certificates of income representatives of the closing statements signed by the head of the parent company, audit reports and other documents at the request of tax authorities.

The complexity and duration of the closure procedures for representation must be taken into account when planning the organization's business presence in China. If in the future are assumed to be active contacts with Chinese enterprises and settlements in RMB, it may make sense from the outset to establish a subsidiary in the form of joint venture or enterprises with 100% foreign capital, which will enjoy a full economic activity.

Penalties for offenses

The new rules increase the maximum penalties that may be imposed by the PTA authorities in violation of the order of registration and regulation of offices.

In the event of unauthorized creation of representative offices and conducting business without registration registration authority shall issue an order to cease the activity and apply a fine ranging from 50,000 to 200,000 RMB.

Representative offices of foreign companies in China - a fast, cheap and convenient way to establish a presence in this country. Most of the missions are created with the aim of establishing relations, market research, the advertising company, quality control, production and shipment of goods from local producers.

In addition, under certain conditions, representations may conduct business in a limited volume.

Industry representation

The majority of foreign companies in China have the right to conduct "indirect economic" activity. Strict definition of the current legislation does not allow the PRC; In practice, this means that the office carries out promotional activities, networking, parent company with partners and contractors, market studies and conducts other activities of organizational and communication activities. Representation can not be used in the chain of business processes of the parent company. It can not replace it when signing the contract, can not on its own behalf to conclude a deal in the interests of the parent company can not act as an intermediary in the purchase and sale transactions. However, some economic activities, activities involving the generation of income, can lead representative.

Representation of shipping companies, particularly airlines, which can sell tickets and cargo;
Representations of accounting, auditing, legal firms that can provide advice in the field of professional interests of parent companies with some restrictions;
Representative offices of trading companies that can carry out commercial mediation efforts, contributing to the conclusion of transactions, receiving a commission and declaring income. It should be noted that the registration of such representative is currently extremely difficult because Chinese tax authorities who decide on the admissibility of representation registration with this form of activity and tax regime, rightly believe that monitor the completeness and accuracy of income declaration in this case very difficult, and claim this tax regime is very reluctant.
Address Mission

Legislation China requires organizations and their divisions carry out activities at registration. Accordingly, the representation can not be registered in the same place but actually exist in the other. At least, this is contrary to the letter of the law. To the room where it will be registered representative must meet certain requirements.

Firstly, the need to provide special consent of the owner premises, as well as documents confirming the ownership of the premises (certificate of ownership or a purchase agreement and loan documents confirming introduction of regular payments).

Secondly, it should not be a space owned by a foreign company or a foreign natural person, as to 29.01.2007, the lease of real estate by foreign nationals and companies discussed in Beijing and could be seen in other cities as an investment in the Chinese real estate market, ie for rental premises need to register as a company with foreign capital, which is actually a prohibitive measure.

In addition, in Beijing for the purpose of registration is only suitable office pomeschenie1 that is determined by the column "space" in the title documents. When selecting a site for the future registration of the representation it is advisable to read the documents on the premises prior to the signing of the contract and even less to the payment of rent and deposit.

Hiring Employees

Representative has the right to employ Chinese and foreign citizens. The procedure for the recruitment of citizens of China and other countries is fundamentally different: the hiring of foreigners is happening directly, Chinese citizens may work at the dealership only indirectly, by means of a special service agencies. The most famous of them Foreign Enterprises Service Company, besides her there are several organizations that perform similar functions:

China Star Corporation
China International Talent Development Center
China International Enterprises Co-operative Corporation
China International Intellectech Corporation


If the mission is an activity that is aimed at generating income and violates the current system of regulation, the registration authority shall issue an order to remedy the situation confiscate the illegal income, confiscate the profits used for the extraction tools, equipment, raw materials, products (goods) and uses a fine of 50 000 to 500 000 RMB; in the presence of aggravating circumstances, certificate of registration of representation should be repealed. In case of exceeding the scope of applied a fine of 10 000 to 100 000 RMB; in the presence of aggravating circumstances, certificate of registration should be canceled.

When submitting false information, concealment of reliable information by any means in order to obtain a certificate of registration of representation registration authority shall issue an order to remedy the situation and apply a fine ranging from 20,000 to 200,000 RMB against representation and a fine of from 1 000 to 10,000 RMB against the leading and other persons who are directly responsible. In the presence of aggravating circumstances, the registration authority shall cancel or revoke the registration certificate of registration offices and representatives of certificates.

In the case of concealment of reliable information when filing annual accounts registration authority shall issue an order to remedy the situation and apply a fine ranging from 20,000 to 200,000 RMB.

Forgery, make edits, sale and transfer of the Certificate of Registration Certificates representative offices and is punishable by a fine of 10 000 to 100 000 RMB against representation and a fine of 1 000 to 10 000 yuan in respect of management and other persons who are direct responsibility; in the presence of aggravating circumstances, certificate of registration and certificate of representation of the representative shall be canceled.

In these cases, the registration authority shall issue an order to remedy the situation and applies a fine of 10 000 to 30 000 RMB; if the situation is not remedied within the prescribed period, certificate of registration of the representation should be repealed:

1. Representation has not submitted annual reports.
2. Representation operates not on the name under which it is registered.
3. Representation does not change the location at the request of the relevant regulatory authorities.
4. Representation does not deliver ads when creating or amending the registration data.
5. Representation does not make the necessary changes to the registration data, does not draw up the removal from the register or notice of the registration authority.

The certificate of registration of the representation must also be canceled if the representative office conducts activities that harm China's national security or the public interest of society.

In addition, under the new rules a foreign company has no right to create a representation in China for 5 years in the case of cancellation of registration, revocation of registration certificate, or the closure of the former representative of the company as prescribed by the relevant authorities.

Closing

Representation - the most convenient and cheapest tool for creating a presence in the Chinese market has enough opportunities. We hope that the information presented in this article will help you understand the limits of the powers of representation, the right to organize its work and interaction with the parent company and contributes to the success of your business in China.

However, when choosing a method of doing business in China should be aware that in most cases representation can not conduct business activities in China, and companies with 100% foreign capital and joint ventures are the main forms of the full presence of foreign business in China.

1 Since the end of December 2007 the city authorities for industry and commerce administration once again allowed the registration of companies and representative offices in residential complexes, but subject to the consent of all owners of apartments houses, property interests may be affected by the re-registration of non-residential premises on the destination.
HainanWel.com(e)!
Администратор
 
Сообщений: 12286
Зарегистрирован: 01 июл 2010, 14:25

Re: How to open a representative office of a foreign company in China

Сообщение HainanWel.com(e)! » 08 июн 2015, 19:55

representation of a foreign company or a company with 100% foreign capital? What is the difference and what to choose?

Representation will cost you less and you register it faster than a company with 100% foreign capital in China. Thus, the timing of registration and post-registration procedures of representation - for registration wherever necessary - lasts about 2-3 months.
The process of registering a company with 100% foreign capital takes about a year. These periods may be reduced greatly if you resort to the services of a mediator, because a large amount of time eat red tape and waiting for turns to the - to give you permission or not. There are always people who can jump the queue and save your time. This service costs 5000 - 6000 dollars. Ordinal amount of taxes and fees during the registration process - about $ 2,000.

In addition, China's huge minimum statutory fund. Exact figures called meaningless - they are different for different types of activities differ by 3 times if several founders or he alone (the latter - more expensive). And finally determined by the local authorities of the Ministry of Commerce - depending on what numbers they deem reasonable to start your business. Order-- cook about 130-150 thousand dollars.

So, a full company - it's expensive and time consuming. Representation - cheaply and quickly. But keep in mind that Chinese law representation can not take economic activity in China. Exception - the so-called "indirect economic activity." A clear definition of what it is, does not exist. Obviously, to leave local officials some discretion in deciding - to give you permission or not.

But in general, it refers to advertising, cargo control, networking with partners, consulting, mediation. That is, it makes sense to create a representation for advertising campaigns, to control the quality and shipment could deal with a person who formally pertaining to this product and contract to build online dating - to legalize the presence in China, in a word.

Representative can not conclude transactions on its behalf. There can also sign a contract on behalf of the parent company. It can not participate in the chain of sale.


What else can make a representation of a foreign company?

Representation of the transport company can sell tickets and seats for transportation of goods.
Representation of legal and accounting firms can provide advice.
Representative trade companies can carry out the mediation efforts of the commission. Theoretically. Almost register such a venture is very difficult - in China are reluctant to issue permits for this type of activity. But some people can.

At the same time, in some regions of China representative office may be exempted from business tax. But only if the parent company is in production activities. If this applies to you - Learn the matter carefully before proceeding to the registration process. Perhaps the correct registration of the selected region will save you money.

To create a company with 100% foreign capital is necessary if you plan on any economic activity, except for the above options. Consider this point: unlike Russia, where the company can conduct any activity being registered again in China activity is fixed, prescribed in the certificate of the right of economic activity, and must be strictly observed.

Companies with 100% foreign capital, not all types of activities. Therefore, when planning registration, make sure you will be able to start the process. If what you plan to do, do not fall within the scope of permitted activities, the yield - the search for partners in China and the registration of the joint venture. For example, you can not invest in certain sectors. Or combine various activities - such as production and trade. But this can be overridden.

The decision to grant you a permit for such a combination will make an official of the provincial or municipal level of the organizations subordinate to the Ministry of Commerce of China. He is reluctant to authorize the combination of activities. But the law of China is not directly prohibited. So, the chances to resolve the issue in this case is.
HainanWel.com(e)!
Администратор
 
Сообщений: 12286
Зарегистрирован: 01 июл 2010, 14:25

Re: How to open a representative office of a foreign company in China

Сообщение HainanWel.com(e)! » 08 июн 2015, 19:57

Question: I - the director of the Russian company. In recent years, we have established trade relations with Chinese companies. Now we want to open a representative office in China. What is the procedure we have to go?

Answer: According to the rules of the Chinese Interim Management permanent representative offices of foreign enterprises need the following procedure:

1. Apply.

2. Prepare the documents for permits and fill out a questionnaire.

3. Provide the completed questionnaire and documents prepared.

4. To approve the relevant authority:

(1) for companies in the areas of trade, production, cargo transportation to approve the Ministry of Foreign Trade and Economic Cooperation of the PRC;

(2) for companies in finance, insurance, to approve the People's Bank of China;

(3) for the companies in the field of maritime transport to approve the Ministry of Communications of the PRC;

(4) for the companies in the field of air transport to approve the State Administration of Civil Aviation of China;

(5) for companies of other industries by the nature of the activities of the relevant authorities to approve China.

5. Register of Commerce and the State Administration for Industry (GT-PAH) (obtain a certificate of registration of the representation, the representative of the working card).

6. Open a bank account (foreign currency account and an account in RMB), registered with the foreign exchange control.

7. Register with the tax inspectorate.

8. Register at the Office of Public Safety.

9. Sign-up printing.

10. Get the code for the enterprise.

11. Get the document to representatives of foreign companies employment.

12. Get a residence permit and visa.

13. Complete the customs registration.

14. get permission of hiring Chinese workers.

Any changes to the documents should be registered in the bodies.

Question: What documents are required?

Answer: The following documents are required:

1. The original application (approved by the director. Print name and title of the person who signed the statement).

2. A copy of the registration document.

3. The original certificate of bank (with an estimate of the financial condition and reputation of the company). Help act within 3 months from the date of prescribing).

4. The original document on the appointment of a representative, approved by the head of the enterprise (print name and title of the person who signed the document).

5. Summary representative.

6. A copy of the passport or identity card representative.

7. 5 photos (6.6 x 6.6 cm).

8. A copy of the lease of office.

9. License landlord or lessor to seal a shock of document confirming the right to property with a seal, or a copy of the purchase contract office, the shock of the purchase invoice office, a copy of the document for the sale of the building.

10. Application for opening the permanent establishment of a foreign enterprise.

11. Statement of the Permanent Mission of the foreign enterprise.

12. Contracts and agreements with Chinese companies when the overseas headquarters of the company set up less than a year ago.

Q: How long does the procedure of registration of representation?

Answer: After receiving permission to register, the foreign company may, within the next 30 days to register with the SAIC to get "document registration permanent establishment of a foreign enterprise." After receiving the document, it is possible to formally establish a permanent establishment of a foreign enterprise. Validity - one year, and every year it is necessary to renew the registration.

Q: How to design hiring representation?

Answer: The Permanent Mission of a foreign company and its employees have no right to hire their own employees in China, it is necessary to instruct the authorities designated by the Chinese government (eg, FESCO), the signing of the contract of employment. Within 10 days after signing the contract it is necessary to register with the SAIC and get a work card.

Q: Can I close the office at any time, if the permanent establishment of a foreign enterprise wants to terminate the activities?

Answer: You can, but you need to arrange the deregistration offices in SAIC. If you still have representation unfinished business, the foreign company of the permanent establishment must complete these cases.

Q: What problems should I look for when registering?

Answer: In my experience, it is necessary to pay attention to the following issues:

1. It is necessary to register printing, print business cards and letterhead clearly in accordance with the name of the company, which has been registered. Do not use non-proprietary name.

2. All documents must be in 2 copies. All documents in foreign languages ​​must be accompanied by accurate translations in Chinese, certified translation agency.

3. Foreign companies can not engage in activities that adequate permanent representation without registration.

You can invite an experienced lawyer to get registered representative, because the procedure is complicated.
HainanWel.com(e)!
Администратор
 
Сообщений: 12286
Зарегистрирован: 01 июл 2010, 14:25


Вернуться в Jobs and business in China

Кто сейчас на форуме

Сейчас этот форум просматривают: нет зарегистрированных пользователей и гости: 1