SMEsChina.com guides everything if you plan to start up a Software enterprise in China.
Through this guidance to learn the detail requirements, regulations of business registration and download the registration files to set up a software company in mainland China. Before you launching a software enterprise, you have to consider what business activities your local company operate and what is the taxation you have to learn. You can register your software company as a wholly foreign owned enterprise (WFOE), or joint venture, or other company type depending on your structure of shareholder.
In mainland China, a software company can be set as technology services, or software development and technological supporting, and transfer of technology as well as sales of software products and after sales services. Maybe you have found that why SMEsChina lawyers list the different business scope of incorporating a software enterprise first, because software companies have different taxation rates depending on the different business activities. OK, let’s go ahead.
Generally speaking, Chinese private software enterprises main contain 4 types of business activity, such as: sales, installation, research and development, and technological services of after-sales. Because of the complexity of Chinese taxation system, SMEsChina suggests you browsing our previous two guidance pages: <corporate tax in China WFOEs>, and <what is the tax rules in China for a foreign company> posted by our executive finance manger Mr Zheng.
From implemented tax regulations, China has 2 types of taxpayer, one is the small scale taxpayer, another is the general taxpayer (VAT qualification). And the small scale taxpayer can apply for the 3% invoices, and a local general taxpayer can apply for the 6%, 9% and 13% depending on the different activities, for better understanding the taxation regulations, SMEsChina list a table below for your studies.
A traditional software company can apply for the business activities as: sales, installation, research and development, and technological services of after-sales. Of course, sometimes some software companies sell mixed hardware products.
The small scale software companies, enjoy the same tax rate 3% for sales, installation (contain hardware products), research and development, and technological services of after-sales.
But the general taxpayer software companies, enjoy the different VAT rates, such as: sales VAT is 13%, installation (contain hardware products) is 9%, research and development (contain software secondary development), and technological services of after-sales (or annual software update fees) is 6%.
Tax table of small scale taxpayer of a software company
| Basic Taxes of Small Scale Taxpayer: | Software Sales: | Software Installation: | Research & Development, and Technological Services: |
|---|---|---|---|
| VAT – Value Added Tax | 3% Tax-free application with a monthly turnover of less than 100,000 CNY | 3% Tax-free application with a monthly turnover of less than 100,000 CNY | 3% Tax-free application with a monthly turnover of less than 100,000 CNY |
| Corporate Income Tax – Profit Tax ( less than 1 million CNY each year ) | 5% ( preferential tax rate ) | 5% ( preferential tax rate ) | 5% ( preferential tax rate ) |
| Corporate Income Tax – Profit Tax ( 1 – 3 million CNY each year ) | 10% ( preferential tax rate ) | 10% ( preferential tax rate ) | 10% ( preferential tax rate ) |
| Corporate Income Tax – Profit Tax ( more than 3 million CNY each year ) | 25% | 25% | 25% |
Tax table of general taxpayer of a software company (VAT qualification)
| Basic Taxes of VAT Qualification: | Research & Development, and Technological Services: | Software Sales: | Software Installation (contain hardware products): |
|---|---|---|---|
| VAT – Value Added Tax | 6% | 13% | 9% |
| Corporate Income Tax – Profit Tax ( less than 1 million CNY each year ) | 5% ( preferential tax rate ) | 5% ( preferential tax rate ) | 5% ( preferential tax rate ) |
| Corporate Income Tax – Profit Tax ( 1 – 3 million CNY each year ) | 10% ( preferential tax rate ) | 10% ( preferential tax rate ) | 10% ( preferential tax rate ) |
| Corporate Income Tax – Profit Tax ( more than 3 million CNY each year ) | 25% | 25% | 25% |
What business activities can be approved?
SMEsChina has listed a collection of guidance of standard business scope description of top 10 industries for your study, you may link the guidance page: <a collection of guiding corporate business scope> to choose your business scope from 10 selections. Here, SMEsChina consultants also list top 10 popular samples of software company for your reference.
Conditions and requirements of shareholder, director and supervisor
A legal software company in mainland China, has to include below 4 key structure, shareholder(s), legal representative (known as executive director) and supervisor, financial manager (known as accountant).
| Key Structure of the Company: | Required Documents you have to prepare in your home country: | Remarks: |
|---|---|---|
| Corporate Shareholder | Notarization and authentication documents for the certificate of registration of foreign parent company issued by the Chinese embassy. Learn more: Embassy Notarization Authentication Documents | 2 sets, bilingual |
| Individual Shareholder | Digital photo, notarization and authentication documents for the passport issued by the Chinese embassy. 16 years old at least. Learn more: Embassy Notarization Authentication Documents | 2 sets, bilingual |
| Legal Representative – Chinese People | Original ID card, 16 years old at least. Digital photo. | none |
| Legal Representative – Nonresident | Digital photo. Notarization and authentication documents for the passport issued by the Chinese embassy. 16 years old at least. Learn more: Embassy Notarization Authentication Documents | 2 sets, bilingual |
| Supervisor – Chinese People | Original ID card, photo, 16 years old at least. Digital photo. | none |
| Supervisor – Nonresident | Passport copy, photo, 16 years old at least. Digital photo. | none |
| Financial Manager | Local ID copy, photo, 16 years old at least. Digital photo. | none |
How long does it take for setting up a software company?
If you have prepared all required documents and have everything to launch a private software business in mainland China, your local limited company can be set up within 20 working days. And whole procedure can be set up with comfortable and confident experience by SMEsChina lawyers. You can start the process any places and no nationality restriction, also do not need to visit into China face to face or interview.
Timeline of incorporating a software business
| Description of Each Step: | Time Required: |
|---|---|
| Chinese software company name submit, search and obtain approval | 3 working days |
| Download and signature of the required documents of company formation (see below) and courier to SMEsChina | 5 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 approval | 2 working days |
| Open a local corporation bank account and internet banking | 5 working days |
That’s all, congratulations, your Chinese software company has been obtained the permission to operate and run businesses in mainland China, you can use it to do local or oversea transactions confidently. In mainland China, the certificate of registration also known as business license, and China market and supervision authority has implemented new version of the business license since the reforming of business registration system, you may link our previous post <5-in-1 business registration certificate> to get studies.
How to get started to set up a software company?
Before starting the process, SMEsChina team suggests you to learn another guidance if you are nonresidents, <how to open a company in China for foreigner>. If you have already decided your industrial selection is a software company, or an IT business, and to operate the related software sales, installation, research and development, and technological services in the mainland China. SMEsChina team has posted related guidance on starting a Chinese limited company, you can view the following links to get studies. And after you learning the useful guidance from below links, you can download the legal files and forms of company registration, and filling in the related registration information and signing these documents to SMEsChina offices. You can find the related file download list at the bottom of this page.
Learn the regulations of software business setting up
| Steps: | Topics of Study: | Links of Reference: |
|---|---|---|
| Step 1 | Decide what types of software company, depends on your key structure of corporation (shareholder’s structure). | Selecting a company type |
| Step 2 | How to choose an available company name with bilingual for your private limited company. | Naming rules and requirements |
| Step 3 | List detail business activities from 10 industrial categories. | Selecting business scope |
| Step 4 | Set up the registered capital for your limited company. | Company registered capital |
| Step 5 | Set up core people of your local corporation, and key positions. | Decide corporate structure |
| Step 6 | Required documents you have to prepare in your country. | Documents required to register a company |
| Step 7 | Prepare notarization and authentication documents issued by China embassy. | Notarization and authentication documents |
| Step 8 | Download application forms and legal files and after filling and signing, courier to SMEsChina offices. | Company formation documents download |
After you learning the regulations and processes of company formation, SMEsChina suggests you reading the following guidance to check if you have everything to register a local private business.
Price table of software companies registration
Software Service LLC
- Government Costs
- Certificate of Registration
- Business License
- Seals/Stamps
- Virtual Business Registration Address ( 12 months )
- Annual Tax Compliance ( 12 months )
Software Trade LLC
- Government Costs
- Certificate of Registration
- Business License
- Seals/Stamps
- Virtual Business Registration Address ( 12 months )
- Annual Tax Compliance ( 12 months )
- Import and Export Permits of Hardware Equipment
Download list of software company registration documents
| Documentation Download List (PDF): | Signatory: | Remarks: |
|---|---|---|
| Letter of Commitment of Establishment of Foreign Investment Enterprise | Shareholder(s) | Bilingual, print double, black pen |
| The Letter of Attorney for Appointed or Authorized Agent | Shareholder(s) | Bilingual, print 4 copies, black pen |
| Foreign Company Registration (Record) Application | Legal Representative | Bilingual, print double, black pen |
| Information of Legal Representative | Legal Representative | Bilingual, print double, black pen |
| Information of Executive Director | Director | Bilingual, print double, black pen |
| Information of Supervisor | Supervisor | Bilingual, print double, black pen |
| Situations of Investors ( Shareholder Roster ) | Needn’t | Bilingual, print double |
| The Letter of Attorney of Services of Legal Documents of Foreign Investment Enterprise | Legal Representative and Shareholder(s) | Bilingual, print double, black pen |
| Commitment of the Registry Authority | Legal Representative | Bilingual, print double, black pen |
| Commitment of New Establishment | Shareholder(s) | Bilingual, print double, black pen |
| Virtual Registered Address Agreement | Legal Representative | Bilingual, print double, black pen |
| Letter of Attorney of Application of Company Seals | Legal Representative | Bilingual, print double, black pen |
| Letter of Attorney of Corporate Digital Certificate | Legal Representative | Bilingual, print double, black pen |
| Appointment Document | Shareholder(s) | Bilingual, print double, black pen |
| Sample of the Articles of Association | Shareholder(s) | Bilingual, print double, black pen |
| Application of Foreign Trade Operator Certificates | Legal Representative | Bilingual, print double, black pen, import and export businesses need it |
| General Taxpayer Application (VAT Qualification) | Legal Representative | Bilingual, print double, black pen |
Other studies you also might be interested:
Software Company Formation Services | SMEsChina.com
Documents and application forms of incorporating software business in China, and learn about taxation, corporate structure and required conditions by our lawyers.
Service Type: Software Company Formation Services
Price: 4,950-6,450
Currency: USD
