1. Is there any difference for setting up a WFOE in different cities
Do not have any difference, all of the processes, taxation, foreign exchange policies, social insurance are implemented by center government with the same regulations and rules.
2. The requirements of registered capital and timeline of injectiong
The minimum registered capital for foreign owned businesses is 20,000USD or EURO, China government allows foreign shareholders to inject the capital within 30 years, how much will be transferred from foreign shareholder’s account depending on your daily operations and decisions.
3. How it works for injecting registered capital
3.1. China WFOE will be allowed to open a capital account with foreign currency, foreign shareholders inject the capital from oversea.
3.2. China foreign exchange department will verify the payment, and apply for the process.
3.3. 1-2 weeks obtain approval.
3.4. Payment will be exchanged to be RMB and be used in mainland China.
4. How about director and supervisor
WFOE owned by foreign shareholders, 100% shares, just need to set up 1 person as the executive director, known as legal representative, and 1 personal as the supervisor. All of 2 positions appointed by foreign shareholder.
5. What is the notarized documents for shareholder and director
All shareholders, and legal representative need to apply for the notarized documents issued by China embassy in your home country, 2 sets for each, both languages.
6. How about adding business scope in the future
Cancel the old license and apply for a new one, cost is the same as register fee.
7. About physical office and virtual address
Do not have affect, virtual registered address is the cheapest cost for open and run a business in China as a test.
8. Requirements of WFOE’s employees
No requirements, just 1 personal to report monthly salary, can be zero at the beginning.
Future, depend on the operations to hire local staffs and to pay social insurance and housing fund, about foreign employees, must obtain work permit and resident visa then can be hired and get salaries each month.
9. What is the small scale taxpayer and general taxpayer
Small scale enterprise, VAT is 3%, within COVID period, down to 1%.
Corporate income tax (profit tax), 3 rates, 5% (less than 1 million, RMB), 10% (1-3 million), and 25%(more than 3 million)
General taxpayer, service VAT is 6%, trade business VAT is 13%.
Corporate income tax (profit tax), 3 rates, 5% (less than 1 million, RMB), 10% (1-3 million), and 25%(more than 3 million)
Suggest small scale first, because its a lower tax rate.
Except the yearly sale income 5 million RMB, you have to make another decision, small scale taxpayer just can issue general invoices to your customers, but general taxpayer can issue VAT qualification invoices, this depends on which your local customers needed.
In Mainland China, you can update the taxpayer from small scale taxpayer to be general taxpayer (means, 3% increase to be 6%), but general taxpayer can not down the VAT rate to be small scale taxpayer (6% down to 3%), if your customers want to 6% invoices (general taxpayer), you can not issue small scale taxpayer VAT rate 3%.
10. About VAT and CIT taxation
Sale income VAT depending on your sale income, corporate income tax (profit tax), 3 rates, 5% (less than 1 million, RMB), 10% (1-3 million), and 25%(more than 3 million) depending on your quarterly net profits (after you deduct all daily costs, expenses).
11. About SMEsChina’s accounting package
Our accounting packages including the monthly VAT returns, and quarterly corporate income tax, and your employee’s personal tax of monthly salary, and annual financial returns.
12. About annual inspection and tax return
1.Inspection of annual license.
2.Financial tax report and returns.
3.Employee’s salary report and return.
13. About WFOE’s bank account
In China, 2 types of corporate bank account. First is the capital account, just can receive the registered capital from foreign shareholder’s bank account to run and operate daily expenses.
The second is the basic account, to receive the payments from customers who from local markets or foreign clients.
About the costs, its strict, all costs paid by local basic bank account, you have to provide related invoices to verify these payments are allowed, for example, salaries, rents, marketing and other daily operating costs, you must provide these related invoices, known as fapiao in mainland China.
14. How incomes paid to accounts
Capital account just can receive registered capital from shareholder’s account, can not receive any payments transferred from you customers.
All sale incomes you have to ask your customers to transfer into basic account (local RMB or foreign currencies).
15. About dividend tax after obtain net profits
This means dividend tax in China, after you get net profits made by Chinese markets, you pay to pay 20% dividend tax in China, and the rest 80% will be exchanged to be foreign currencies and transferred to your oversea shareholder’s bank account and provide the SWIFT bank information, all processes around 2 weeks, you have to notice, the net profits must be the same as your balance sheet.
16. About package of business registration of WFOE
Our business registration package including corporate name approval, and license issuing and corporate seals, also including the legal documents of company incorporation.
