INTRODUCTION

WFOE is an abbreviation for the Wholly Foreign Owned Enterprise. A Trading WFOE shall have the rights to wholesale, import and export goods and provide related services in China.

Some scope of business, such as food and beverage, medicine, medical equipment, etc. needs special approvals and permits in China while there are business restrictive or forbidden to be running by foreign invested company, such as the fields of rice and cotton trading, book publishing etc.

COMPANY INFORMATION

Requirements for Company Name

• In China, there are restrictions imposed on the company name.
• In the same industry, neither company name nor trade name shall be repeated. Each name is valid only after being verified and reserved by industrial and commercial administrative department.
• The language of company name is in Chinese simplified. If an English name is required, it can be documented in the Memorandum & Articles of Association. 

Name factors shall be considered when naming a company:

The name usually starts with “location”, followed by “merchant” name, followed by “activities” name and the “nature” of entity.  

• With the wording of “municipality”, the approval of municipal department is a must.
• With the wording of “province”, the approval of provincial department is needed.
• With the wording of “China”, the approval of China's Ministry of Commerce is required.

If the company name involves China, province, etc., name approval will consume the company registration processing time.

Registered Capital

For trading and wholesaling, RMB500,000 or above.  The capital has to be subscribed in lump sum as contemplated in the Articles of Association.  It could be paid up within 30 years from the date of issuance of Business License.

Language of Legislation and Corporate documents

Chinese (simplified).

The Shareholder, Director, Supervisor, and Legal Representative

1.   Shareholder:  shall be a company, or a natural person. Preferrably natural person.

2.   Supervisor: If there is only one shareholder, an extra supervisor should be provided. If there are two or more shareholders, one of them can be as the supervisor.

3.   Legal representative: shall be a shareholder, a director, or neither.

Business Scope

The business scope refers to the specific business that the shareholders expect to do locally.  It cannot be few business activities together.  The details of business scope has to be submitted at the incorporation stage.

Ongoing requirement

1.   Bookkeeping and tax: To file the tax return with the state and local tax authority monthly when the tax registration certificate is issued.

2.   Employee’s social security (if any).

3.   Submission of annual report every year.

TAXATION

The taxation system of China has gone through several major reforms during the 40 years of Reform and Opening up.   For a WOFE, taxes shall be paid as follows in general:

FEES

Remarks:

1.   *The fee includes first year service of :

-      Monthly bookkeeping as required by tax authorities (part time).

-      Monthly or quarterly tax return filing with tax authorities as required (part time).

-      CPA annual audit reports for first year’s accounting books and tax payment.

-      First year’s annual reports for government authorities.

2.   The above fee doesn’t include official invoice for tax purpose. If this service is needed, it will be quoted separately.

3.    All documents submission must be in Chinese. The above fee doesn’t include any translation service as official translation agent with its stamp is needed.

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error omission.