Tetra Consultants assist our clients to register company in China. Our service package includes China company registration, opening corporate bank accounts and accounting and tax obligations. Tetra Consultants is the one-stop solution for you to legally start business in China.
To register company in China is a hassle-free process with Tetra Consultants’ assistance.
China’s rising economy and its strategic location makes it an attractive place to set up your new corporate entity. Simplifying business setup procedures, the recently introduced “5-in-1” business license aims to speed up the registration process. With all these benefits, it is understandable why many businessmen choose to register a company in China.
Our service package includes everything you will require to incorporate your company in China:
Company registration with the State Administration of Industry and Commerce
Local company secretary and registered address
Opening a corporate bank account
Financial license applications
Annual accounting and tax services
How long to register company in China and open a corporate bank account?
Tetra Consultants will assist you to complete the process to incorporate your company in China within 2 weeks. After receiving the required due diligence documents of the directors and shareholders, we will proceed to check on the availability of your preferred company name and prepare the required incorporation documents.
Throughout the registration process, we will offer non-travel solutions.
After the setup is completed, we will courier the documents of your new company to your preferred address. The documents will include the Certificate of Incorporation as well as the Memorandum and Articles of Association.
Upon company registration, Tetra Consultants will open a corporate account with a bank for you. This will take around 4 weeks to complete.
We will seek to provide you with non-travel banking solutions.
Within 6 weeks from our engagement, you can expect your company to be fully set up and ready for business.
Can a foreignerregister company in China?
China has repealed most of its protectionist foreign ownership limits in the financial sector, and allowed full foreign ownership in securities, fund management, futures and life insurance companies from 23 July 2020 onwards.
Foreign company registration in China has been made easier since a new company structure specifically for foreign investors has been created. The Wholly Foreign-owned Enterprise (WFOE) is a specific form of LLC that is relatively easier for foreign owners to incorporate and manage.
These foreign investments are protected under the Foreign Investment Law 2020 in the same way that domestic investments would be, offering the legal certainty needed to retain and attract foreign investors.
Despite these improvements, the Special Administrative Measures for the Access of Foreign Investment still apply, with some 33 sectors still facing restrictions on foreign ownership and investment. Industries in the Free Trade Pilot Zones also have similar restrictions on 30 sectors. Certain sectors such as agriculture, rare earth mining or domestic transport require Chinese companies to have a controlling stake.
How to register company in China?
Tetra Consultants advises you to read through this guide to fully understand the steps required on how to incorporate a company and set up a bank account in China.
Step 1: Choosing a suitable corporate entity before you register company in China
After understanding your business goals and activities, our team of dedicated consultants will recommend the most suitable corporate entity for you to carry out your business. Prior to China company formation and registration, you will be advised on the optimum paid-up share capital, corporate structure, legislations and whether there is a need to apply for any licenses to operate.
Step 2: Reservation of company name
Tetra Consultants will reserve your preferred company name with the China Registrar of Companies.
Step 3: Preparation of supporting documents toregister company in China
Before Tetra Consultants can incorporate your company in China, you are required to provide a list of required KYC documents. Some of these documents include the names of directors and identification proof.
Upon receiving all the necessary documents, Tetra Consultants will proceed to draft and notarize the company’s Memorandum and Articles of Association.
According to the business activity and corporate structure, Tetra Consultants will also draft articles of incorporation, business plan and other incorporation documents.
If needed, Tetra Consultants can also provide translation services for these documents.
Step 4: Filing to register company in China
A registered office is also required under the Chinese laws and will be provided by our team.
We will then proceed to file for registration with the State Administration of Industry and Commerce.
After receiving approval, Tetra Consultants will courier the Certificate of Incorporation, Memorandum and Articles of Association, China company registration certificate and other corporate documents to your preferred address. You will also be notified of your registration number.
Following the setup, our team will proceed to apply for a Chinese business license. With regards to the newly amended legislation, the “5-in-1” China business license will include a business license, an organization code, a tax registration certificate, a social security registration certificate and a statistical registration certificate.
Step 5: Opening a corporate bank account after you register company in China
After registration, Tetra Consultants will assist you in setting up a corporate bank account. Our team has established partnerships with multiple reputable banks in China. We will present your business to each relationship manager and compliance team.
Typically, the full process will take roughly four weeks. In most cases, the directors and shareholders are not required to travel. However, if travel is required, we will have a representative accompany you to the bank meeting. Alternatively, our team will negotiate with the banks to conduct a conference call instead or to request for a waiver.
Once your account has been successfully opened, Tetra Consultants will courier the internet banking token and access codes to your preferred address.
By engaging our services, you can leverage our full portfolio of banking partners.
Step 6: Financial reporting and taxation obligations
Following the setup of your new Chinese corporate home, Tetra Consultants will continue to provide you with the necessary accounting and tax services to ensure that you can continue to legally conduct business while staying compliant to regulatory obligations.
Our team of dedicated consultants will timely prepare your firm’s financial statements, corporate tax returns and manage bookkeeping on your behalf.
Both resident and non-resident firms will be liable for corporate tax. Unlike most other jurisdictions, you can be taxed on both local and global income. In general, you can expect to make corporate tax payments of about 25%, although this will be less with the relevant subsidies for non-resident firms on China-sourced income and for small to medium enterprises. Certain high-tech or encouraged industries will also qualify for additional subsidies.
Withholding tax will also apply for non-resident firms that generate income in China.
Companies are required to submit Income Tax Returns along with audited accounts to the relevant department.
Our team of dedicated consultants will continue to clarify any doubts you may have with regard to your company’s obligations.
Type of business entities in China
Before the start of the engagement, Tetra Consultants will fully understand your business activities before recommending the most optimum business entity in China. Some considerations we take into account include the type of business activity, tax obligations and nationalities of shareholders and directors. Our consultants will also offer more information on the requirements imposed to set up these entities.
Generally, for most companies in China, you will only require a director and shareholder of any nationality, a local listed address and registered agent. No minimum paid-up capital is necessary in incorporation.
Sole proprietorships must be operated by a single, natural person. This person must also be a Chinese citizen. Such household enterprises represent an extension of the person’s legal personality and thus do not provide any liability protection from the debts and obligations incurred as a result of doing business. This negates the minor benefits it has of no minimum capital and ease of incorporation, especially since it is becoming increasingly easier to incorporate companies.
Partnerships can be split into general and limited partnerships. Much like a sole proprietorship, they do not provide protection from legal liabilities of the business. In general partnerships, both general partners are wholly liable. In limited partnerships, only the general partner will be liable. The limited partner will not be liable, but as a result will not be able to directly manage the business as well. This negates the minor benefits it has of no minimum capital and ease of incorporation, especially since it is becoming increasingly easier to incorporate companies.
Limited Liability Company (LLC)
This business structure creates a separate legal personality from its directors and shareholders, and can thus transact on its own, sue or be sued in its own name. Directors of an LLC are not to be personally liable for any debts or obligations incurred by the business. They will only be liable up to a specified amount of liability insurance declared. These companies provide different classes of members that come with specific rights, powers and duties.
To set up an LLC, you will have to meet the following conditions:
There can only be less than fifty members.
You will also require a registered office in China to operate your business.
There is also no formal requirement for the amount of registered minimum capital.
Company limited by shares
This business structure behaves as a public limited company would and thus faces stricter reporting and incorporation requirements in exchange for the ability to be listed, which allows it to secure capital faster. Shares can also be freely transferred, allowing for easier management of ownership of the company.
As compared to a private limited liability company, companies limited by share must instead meet the following conditions:
The board must be appointed in a two-tier structure, split into the board of supervisors and the board of directors. If it is publicly traded, it must also appoint independent directors.
The company must hold regular shareholder meetings.
It is also subject to stricter financial reporting and auditing requirements.
Branch companies are not a distinct legal entity and represent an extension of the foreign parent company’s legal entity. Thus, this parent company would continue to be liable for any debts and obligations incurred by the branch office. However, foreign investors should note that branch offices can only be registered for existing businesses in China, therefore it is best used for expansion within the region.
It is subject to the same financial reporting and tax requirements of other company structures, and similarly requires one local director and a registered office. No minimum capital is required.
Albeit not a legal business entity, a Representative Office in China exists to represent a foreign registered company. Through its set up, a foreign company can enjoy a limited presence in China. Representative Offices do not own any legal personality. In the case of any breach of contract, typically the foreign company would have to assume liability on its behalf. Generally, it is one of the simplest and fastest ways for a foreign investor to set up their business operations in China.
Typically, we encourage individuals who are looking to engage in market research, invest in the Chinese market or liaise and leverage on Chinese suppliers to opt for this option instead. However, it is to note that a Representative Office will not be suitable if you are intending to operate within the country.
To register a legal Representative Office, your overseas parent company must be operating for more than two years. You should also own a relevant lease agreement. Following its registration, you will need to obtain a series of chops from the Public Security Bureau. These chops will function as official representation. No minimum capital input is required to set up a representative office. A local registered office is necessary.
Types of Companies
These are more specific types of companies that can be found in China that use one of the legal business entities mentioned above.
Wholly Foreign-Owned Enterprises (WFOE)
WFOEs are the most popular option for foreign investors to enter the Chinese market since they allow for full foreign ownership. This offers them greater flexibility and control over its operations, and you will get to enjoy the freedom and independence without the need to source for a Chinese partner. Popular examples of activities such companies engage in include consulting, management, software development or trading company.
In general, no minimum capital is necessary, but this is dependent on your business activities. While no fixed legal capital is given, you will still require some capital as it will be reviewed by the local authorities when you make your business registration application. A registered office is required. WFOEs set up in China are also subjected to a tax rate on corporate income that may differ between industries as well as an annual audit report and license renewal costs. Generally, you will not require a local director to incorporate. Minimally, there should be 1 director when incorporating.
Equity or contract-based joint ventures allow investors to tap on the business experiences of their pre-existing networks in China to ease their entry into the Chinese market. It is subject to the same requirements for a WFOE, and also allowed to carry out the same activities as a WFOE would.
Mainly adopted to manage assets, holding companies are also ideal for investments. This tax-free structure is primarily used to also purchase assets such as mutual funds and real estate or to provide services to their subsidiaries. Typically, these companies are not permitted to engage in manufacturing or production activities. However, they are permitted to engage in trading, distribution as well as research and development activities.
In recent times, the Chinese state has imposed greater regulations when it comes to foreign investment holding companies. These companies are required to reinvest income as registered capital before it is used to reinvest in Chinese projects. They are also subjected to a minimum of $30 million in registered capital investment requirement and to own at least one subsidiary in China. A resident director is not required. However, you may require a resident director, company secretary as well as a local registered office address to set up your China holding company.
You may consider setting up a holding company in China if you are looking to expand your business direction and its portfolio. Otherwise, it may also be useful to manage your respective subsidiaries in China.
State-Owned Enterprises conduct business activities on behalf of the government. Typically, these companies operate specifically in areas that are deemed to be of greatest strategic importance to the Chinese government. These industries include aerospace, telecommunications and energy.
Accounting and tax obligations
Accounting and tax considerations are important factors when incorporating your company. By outsourcing your China accounting and tax obligations to Tetra Consultants, you can be confident that you will be in the best hands. Our team of consultants will ensure that your firm’s financial statements, corporate tax returns and audits are completed without the need for you to travel.
Additionally, outsourcing your accounting and tax needs to Tetra Consultants will allow you to reduce overhead costs while being ensured of timely reporting and filings. Before the start of the engagement, our accounting team will also keep you updated of all the required deadlines and expectations. Thereafter, we will prepare all required filings in advance to ensure that the stipulated deadlines are met.
Annual Reporting Requirements
Typically, a Chinese entity’s financial year is from 1 January to 31 December.
All China-incorporated companies are required to file an annual audit. For a foreign company, this report has to be prepared by a Chinese Certified Public Accounting firm.
Companies are also required to complete an annual Income Tax reconciliation report. Based on the report, additional tax may be required to be paid or a reimbursement will be made. This is to be submitted by 31st May to theState Taxation Administration.
Additionally, companies will have to file a detailed company and financial report to the Administration by 30th June.
As all foreign exchange transactions are controlled by the Chinese government, companies will have to issue a statement regarding its current state of foreign investor’s equity.
Corporate Income Tax
China’s tax levied on corporate income is placed at 25%. However, the rate payable is also dependent on your industry as well as the profits your company makes. For low-profit companies, you can expect to make tax payments charged at 20%.
Typically, it is paid monthly or quarterly within 15 days from the end of the period.
It is also important to note that these payments will be reconciled through an annual Income Tax reconciliation report.
For all non-resident enterprises, you can expect to be charged a withholding tax, which is applicable to payments of China-derived income. Before remittance, a tax will be held at 10%.
This largely applies to dividends or other equity investment proceeds, interests, royalties as well as rent.
Based on the reported sale amount for goods and services, a value-added tax may apply.
Whether this applies to your company will be dependent on your total sales made per month.
Is China a good place to start business?
Chinese President Xi Jinping’s anti-corruption campaign launched recently was the biggest organized effort in China to combat corruption issues in the country.
According toTransparency International’s Corruption Perceptions Index, China is ranked 78th among 180 countries when it comes to corruption.
Hong Kong’s recent protest for independence against China has led to much unhappiness sparked between the bilateral relations of China and Hong Kong.
According to theWorld Bank, ever since China opened up and reformed its economy in 1978, its Gross Domestic Product growth has averaged around 10% annually.
The recent US-China trade war has taken a toll and negatively impacted both countries’ competitiveness and economies.
According toStatista, in 2018, manufacturing labour costs were estimated to be at US $5.51 per hour. The low labour costs, as such, makes it an ideal place to set up your company especially if you are operating a labour-intensive business.
The official language appointed by China is Mandarin. There is only an estimated less than 1% of Mainland Chinese who are fluent in conversational English. This may result in potential inconvenience when communicating and transacting with the local government and banks. If needed, Tetra Consultants can provide translation services for you.
According to theInternational Monetary Fund, China’s income inequality has increased greatly over the years and left China to achieve a position as one of the most unequal countries in the world.
China’s Social Credit System also means that there is too much governmental regulation and oversight into its citizens’ day-to-day lives and behaviours.
According to theHarvard Business Review, the Chinese government is on its way to increase China’s Research and Development expenditures from 1.7% previously to 2.5% of its Gross Domestic Product by 2020.
China’s technological expertise has led to the introduction of big tech giants such asAlibaba andTencent, boosting its economy greatly.
The great firewall of China also means that your business operations in China will not be able to utilise social media platforms such as Facebook and Instagram to conduct social media promotion and generate sales.
In March 2019, the Chinese legislature introduced several new laws that are to positively affect foreign businesses. This includes greater intellectual property and investment protectionlaws.
In 2017, Chinese top judge, Zhou Qiang denounced the country’s judicial system and highlighted the intertwined relations between the Communist Party and the judiciary.
China is said to be increasing its green efforts. This is achieved as mentioned by theMinistry of Finance who is to permit an increased allocation of funds of 407.3 billion yuan to ecology and environmental protection in 2020.
With severe air pollution issues, the choking smog in China leaves its residents with great difficulty in breathing.
Find out more about how to register company in China
Contact us to know more about how to start a business in China. Our dedicated and experienced team will revert within the next 24 hours and answer all your queries.
What is the best business in China?
China has the third-largest consumer market in the world. Given that is currently the fastest-growing consumer market as well, this makes the domestic consumer goods market relatively attractive for new entrants.
Apart from consumer goods, it also holds the most patents, trademarks and creative goods exports, along with two of the top five science and technology clusters in the world, making it a good place to enter the high-tech manufacturing and development industries.
How much does it cost to start a business in China?
While there are no paid-up capital requirements for the process, Tetra Consultants will recommend setting aside at least US$5,000 as your paid-up capital to fund your overhead expenditures as well as initial deposit for starting a corporate bank account.
As for Tetra Consultants’ engagement fees, this depends on the exact services required from Tetra Consultants. Our fees are inclusive of government fees and all fees will be clearly stated in our engagement letter prior to the start of the engagement. Tetra Consultants believes in transparency with our valued clients and there are no hidden fees.
How to check company registration in China?
You can conduct a search for your company registration number using the ICP Registration Query.
How do I get a business license in China?
Companies can make their application at the State Administration for Industry and Commerce.
Is private ownership of land allowed in China?
No it is not allowed. However, companies can obtain transferable land-use rights.
When is VAT registration compulsory?
It is compulsory when companies exceed US$3,100 (RMB20,000) in taxable supplies.
Can anyone start a business in China?
Yes, anyone, even foreigners can incorporate in China. In July 2020, China repealed most of its protectionist foreign ownership limits in the financial sector, and allowed full foreign ownership in securities, fund management, futures and life insurance companies.
However, the Special Administrative Measures for the Access of Foreign Investment still apply, and some sectors still face restrictions on the nationality of the owners and investors allowed. Industries in the Free Trade Pilot Zones also have similar restrictions on 30 sectors. Certain sectors such as agriculture, rare earth mining or domestic transport require Chinese companies to have a controlling stake.
How do I register my business name in China?
You can check the availability of your preferred company name and reserve it with the China Registrar of Companies.