how to incorporate wfoe in china

Incorporating a WFOE (WOFE) just needs 3 weeks to complete the whole process in mainland China after you preparing all requirements and documents listed at this WFOE registration guidance.

If you are looking for a lawyer team to assist you starting and launching a Chinese company owned by nonresidents or held by foreign existed enterprises, SMEsChina is a right platform, our WFOE registration lawyers are providing all-around guidance and support for your companies establishment and documents preparation, the purpose of SMEsChina platform is to assist foreign entrepreneurs jumping into the China market smoothly by incorporating wholly foreign owned enterprises (WFOE or WOFE) in mainland China. For better understanding the whole process of registering a Chinese WFOE since the latest implemented regulations and rules of foreign invested enterprise laws officially promulgated on January 1, 2020, SMEsChina will list 9 tips of how to incorporate a WFOE in China for your references and studies.

– The author of this guidance: Jing Chen, senior registrar of companies

WFOE (wholly foreign owned enterprises), or WOFE (wholly owned foreign enterprise) as the most popular company type for foreign investors and shareholders attracting more and more focuses from foreign entrepreneurs and companies who eager to do businesses and expand their brands in the mainland China market. Incorporate a WFOE in China is the directest way of establishing a local business entity because there do not have any nationality restrictions for nonresidents.

9 Core Tips of Incorporating a WFOE in China

The main reason of listing 9 tips is to help our customers to get better understanding to collect and prepare required documents to incorporate a WFOE in China. The key 9 tips were asked frequently by our customers at SMEsChina service teams. And the 9 topics affect your decisions when you setting up WFOE’s corporate structure. OK, let’s started.

Decide who will be the shareholder(s)

WFOE’s shareholder(s) known as owner(s), or investor(s), because there are no any nationality restrictions for foreign shareholders, so you have to decide that who will be the shareholder(s) for a Chinese WFOE. General speaking, a Chinese WFOE has 2 situations to decide the structure of shareholder, corporate shareholder and individual owner.

Corporate shareholder, means the owner of the WFOE is an existed foreign enterprise registered in other country, you have to issue notarized documents for your foreign enterprise’s certificate of business registration from China embassy located in your home country, including foreign company’s registered number, address, and list of director(s). And then courier to SMEsChina office, our lawyers will submit the notarized documents to local registry office and get the approval of verification.

Individual shareholder, means personal owner, or nonresident to own the WFOE’s whole shares, individual shareholders also need to notarized passport copies from the Chinese embassy in your home country, including passport number (ID), and passport information page.

Decide who will be the legal representative

The legal representative of a Chinese WFOE have to be appointed by shareholder(s), known as the executive director of a limited company, even if a WFOE’s shareholders from oversea country, however sometimes, foreign owners appoint a Chinese people as the legal representative to manage and maintain local daily businesses and transactions, Chinese legal representative just needs to verify the original ID card to local registry office to get approval. If the legal representative of WFOE is a foreigner, also need to courier the notarized passport copy issued by Chinese embassy to SMEsChina office, and submit to local registry office verifying.

Prepare documents for corporate supervisor

Company’s supervisor mainly supervising senior management teams on behalf of the shareholder(s) of the WFOE, also is appointed by shareholder(s), if the supervisor is a Chinese people, need to verify the original ID card to local registry department, if the supervisor is a foreigner, just needs to provide the passport copy to get approval.

Choose a WFOE name

From SMEsChina’s experience, most of foreign customers can not consider and list lucky name easily for incorporating a Chinese WFOE, so we suggest you to find a Chinese friend to consider the corporate name with a good meaning, also you can use Google Translation to get help. The requirements of choosing company name, have to contain: registered region, brand name, industry and the end of limited company.

Select business scope

Business scope known as business activities, the list of business scope will be printed on the 5-in-1 business license and issued by local registry office officially. Normally, business activities include services and trades depending on your decisions and what your WFOE does and operates in the mainland China market. Because the cultural difference of the description for choosing business scope for incorporating WFOE in China, SMEsChina teams suggest you contacting our online business experts and lawyers to consider and confirm the selection of WFOE’s business activities, we can provide professional advice to assist your selections.

Confirm the registered capital

General industries just need 20,000 USD or Euro registered capital to get approvals of business registration, even can be approved to obtain import and export licenses and permits from the local supervision department offices. The latest implemented foreign investment laws and enterprise regulation of registration, allow foreign shareholders (investors) to transfer the registered capital within 30 years once WFOE obtaining the business license. So decide how much the registered capital will speed up the whole procedure of WFOE incorporation.

Requirements of incorporate a WFOE

Key Structure of the WFOE Company:Required Documents you have to prepare in your home country:Remarks:
Corporate ShareholderNotarization and authentication documents for the certificate of registration of foreign parent company issued by the Chinese embassy. Learn more: Embassy Notarization Authentication Documents2 sets, bilingual
Individual ShareholderDigital photo, notarization and authentication documents for the passport issued by the Chinese embassy. 16 years old at least. Learn more: Embassy Notarization Authentication Documents2 sets, bilingual
Legal Representative – Chinese PeopleOriginal ID card, 16 years old at least. Digital photo.none
Legal Representative – NonresidentDigital photo. Notarization and authentication documents for the passport issued by the Chinese embassy. 16 years old at least. Learn more: Embassy Notarization Authentication Documents2 sets, bilingual
Supervisor – Chinese PeopleOriginal ID card, photo, 16 years old at least. Digital photo.none
Supervisor – NonresidentPassport copy, photo, 16 years old at least. Digital photo.none
Financial ManagerLocal ID copy, photo, 16 years old at least. Digital photo.none

Use a virtual registered address

Because renting a physical office (real or actual office) needs more time after you making the decisions, so SMEsChina usually suggest our customers to use a virtual registered office provided by local registry office first, this decision can speed up the process of WFOE registration, also, a virtual registered office just needs a little costs for your selection, learn more: <the reasons of using virtual address>.

Taxation of Chinese WFOE

Basic Taxes of Small Scale Taxpayer:Service Activities:Trade Activities:Engineering and Installation:
VAT – Value Added Tax3%

Tax-free application with a monthly turnover of less than 100,000 RMB

3%

Tax-free application with a monthly turnover of less than 100,000 RMB

3%

Tax-free application with a monthly turnover of less than 100,000 RMB

Corporate Income Tax – Profit Tax

( less than 1 million RMB each year )

5% ( preferential tax rate )5% ( preferential tax rate )5% ( preferential tax rate )
Corporate Income Tax – Profit Tax

( 1 – 3 million RMB each year )

10% ( preferential tax rate )10% ( preferential tax rate )10% ( preferential tax rate )
Corporate Income Tax – Profit Tax

( more than 3 million RMB each year )

25%25%25%
Basic Taxes of General Taxpayer WFOE:Service Activities:Trade Activities:Engineering and Installation:
VAT – Value Added Tax6%13%9%
Corporate Income Tax – Profit Tax

( less than 1 million RMB each year )

5% ( preferential tax rate )5% ( preferential tax rate )5% ( preferential tax rate )
Corporate Income Tax – Profit Tax

( 1 – 3 million RMB each year )

10% ( preferential tax rate )10% ( preferential tax rate )10% ( preferential tax rate )
Corporate Income Tax – Profit Tax

( more than 3 million RMB each year )

25%25%25%

More studies of how to incorporate a WFOE in China

Bank requirements of WFOE

List of Requirement:File / Documents Description:
Approved 5-in-1 business licenseOriginal business license and copy with company stamp
Certificate of foreign owned enterprises (known as: approved certificate of business registration of foreign invested enterprises).Original business license and copy with company stamp
Identity certificate of China company’s legal representativeChinese people needs original ID card and copy Foreign people (nonresidents) needs original passport with entry record within 6 months (if the foreign legal representative does not want to visit China, can issue notarized passport from China embassy instead of original passport).
Application forms of opening bank accountYou can entrust a local accountant going to bank and filling in the information and submit to bank to get approval.
Make a videoCorporate legal representative (know as executive director) takes his/her passport in hand and read the required content (contain the company registered number, tax ID, and passport number and other information).
Appointment letterEntrust document signed by the legal representative

What registered information have to decide

Steps:Topics of Study:Links of Reference:
Step 1Decide what types of software company, depends on your key structure of corporation (shareholder’s structure).Selecting a company type
Step 2How to choose an available company name with bilingual for your private limited company.Naming rules and requirements
Step 3List detail business activities from 10 industrial categories.Selecting business scope
Step 4Set up the registered capital for your limited company.Company registered capital
Step 5Set up core people of your local corporation, and key positions.Decide corporate structure
Step 6Required documents you have to prepare in your country.Documents required to register a company
Step 7Prepare notarization and authentication documents issued by China embassy.Notarization and authentication documents
Step 8Download application forms and legal files and after filling and signing, courier to SMEsChina offices.Company formation documents download

Timeline table of incorporating WFOE

Description of Each Step:Time Required:
Chinese WFOE company name submit, search and obtain approval3 working days
Download and signature of the required documents of company formation (see below) and courier to SMEsChina5 working days
Obtain the certificate of foreign owned (investment) enterprise and the certificate of business registration (known as: business license)5 working days
Apply for the company stamps (known as corporate seals) and obtain approval2 working days
Open a local corporation bank account and internet banking5 working days

How much cost does it to set up a Chinese WOFE

Service Industry

$4,950first year
  • Government Costs
  • Certificate of Registration
  • Business License
  • Seals/Stamps
  • Virtual Business Registration Address ( 12 months )
  • Annual Tax Compliance ( 12 months )

Trade Industry

$6,450first year
  • Government Costs
  • Certificate of Registration
  • Business License
  • Seals/Stamps
  • Virtual Business Registration Address ( 12 months )
  • Annual Tax Compliance ( 12 months )
  • Assist global customers to jump into China market.

  • Collection, approval, and verify the documentation prepared by customers and our teams.

  • Offer a legal virtual office address to obtain the approval of registration.

  • Name search and submit application, get the approval of the corporate name.

  • Documents and forms preparation, and signature of the corporate shareholder(s).

  • Apply for the certificate of registration of foreign owned enterprise approved by the local Municipal Commission of Commerce.

  • Obtainment of the business registration license from the local licensing authority, know as: 5-in-1 business license.

  • Issuing of the corporate stamps, known as corporate seals.

  • Documents collection and submitting for tax registration, and VAT taxpayer application.

  • Basic and capital accounts opening and capital account declaration.

  • Government cost, translate fee, and drafting of the legal files and forms.

  • Import and export license registration and permits application.

  • Yearly administrative and maintaining services, such as license renew.

  • Annual bookkeeping and tax declaration services for income tax report, annual audit, government inspection, tax final settlement.

  • Other optional service selections, such as: HR, social insurance, housing fund, VISA and resident permit, trademark, etc.

We Help With WFOE Setting Up within 20 Workdays

Check if setting up a private company is right for you, how you launch a corporation depends on what business activities your company does. It can also affect the processes of registration and different requirements for your preparation.

SMEsChina focus on the growth of enterprise and providing a variety of business solutions in the area of strategy consultancy, WFOE setting up services, business registration, company formation, incorporation of domestic invested enterprise, finance and audit services, HR and payroll, corporate bank account, resident permit, immigration and visa, trademarks and legal compliance. If you have everything to set up a private business in Mainland China, you can get in touch with our teams to get more useful information and online guidance.

More than 47 million companies and small medium enterprises have registered their business entities in mainland China and over 3.5 million new enterprises are incorporated during each financial year with comfortable process of registering companies due to China government implemented new rules and regulation on business registration laws since Oct. 2014. That’s Why SMEsChina is Here.

Further reading about WFOE