HRO China Home: Human Resource Outsourcing (HRO) Leader in China

Service

Wholly Owned by Foreign Enterprise (WOFE)

Initial Capital

Chinese government requires initial capital for the setup of the company. The capital is neither deposit nor payment to government, but the property of the Chinese company to be established. The usage of the capital can be salary payment to employees, rent payment, materials purchase, and all the costs and expenses in relation to China company's business operation.

In Chinese corporate law, the minimum capital is set to be 30,000 RMB if there is more than one investor and 100,000 RMB if there is only one investor. However, in practice the minimum amount of capital required can be very different in different cities and based on different business natures. For example, the rule in Beijing is different from the rule in Shanghai; the capital required for a trading company is different from the requirement for a consulting company. So the minimum capital should be judged case by case. Nowadays 140,000 USD become to a secured level in most places to form foreign invested company. However, for some industries there are special requirements on capitals. For example, it requires 1 million USD for foreign forwarding companies.

The capital should be transferred from the investor's bank account directly to the company's account. It's allowed to only transfer 20% of the total capital with 3 months after the business license is issued, and transfer the rest 80% within 2 years according to the regulation. However, in some cities this rule does not work as the local government can sometimes have their own rules.

We take care of all the registration procedure saving you a lot of time. Typically, one WOFE includes registration at 13 different Examination and Approval Departments. We are experienced in all the application requirements making sure that your WOFE is correctly registered according to all latest legislations.

Office

Before the application, you need a real office to show you have a place to work. The office must be located in a commercial office building, and cannot be the residential apartment. Company registration department will judge this based on the property certificate of the room.

You need a lease contract with the landlord (or the property certificate if you bought the office). In some cities the contract is required to be certified in the notary office. HRO China provides service of helping our clients to locate their offices.

Business Scope

You need to fix a business scope, and your business in the future must follow this scope. If you want to enlarge the scope in the future, you must submit the application to relevant authorities, and get all your business certificates revised. So it's very important to make a list of all the products or services that your business is about.

Taxation

Enterprise Income Tax: this tax applies to all enterprises in China. It is levied by 25% based on the gross profit. Income tax payable = (total income – total deductible expenses) * 25%.

VAT (Value Added Tax): this tax applies to product trading and manufacturing enterprises based on the value added to the product in the procedure of transaction. There are 3 different rates for VAT:

0 rate applies to exported goods, except for goods otherwise ruled such as gold, rare earth metal ores, metallic silicon etc.
The rate of 13% applies to the following goods: agricultural products, edible vegetable oil and food grains, tap water, heating, air conditioning, hot water, coal gas, books, newspapers, feeds, etc.
Goods other than those mentioned above, and services of processing, repairs, and replacement are subject to the rate of 17%.

VAT payable = output tax – input tax = selling price * 17% (or 13% depending on the product) – buying price * 17% (or 13% depending on product) = (selling price – buying price) * 17% or 13%

Business tax: this tax applies to service oriented business in China based on the sales value. The tax rate is 5%. Business tax payable = sales * 5%.

Who is paying what?

All enterprises are paying income tax. Trading and manufacturing enterprises are paying VAT in addition but no business tax if there is no income generated in terms of service. Service providing companies are paying business tax but no VAT.

Procedure of the setup

The procedures can be quite different among different Chinese cities. The following procedure is a basic flow that most cities adopt. However, there might be more requirements on certification or registration in some places other than below mentioning. The time consumption is also quite different (could be from 2 months to 6 months city by city, case by case).

Name check (a Chinese name is compulsory)
to get the approval certificate from Foreign Trade & Economic Relations Commission
to apply Business License from Administration of Industry & Commerce
to get the organization code certificate
to apply for foreign currency registration certificate
to open a temporary foreign currency bank account for capital injection
to process the capital verification report
to get the certificate from Tax Bureau
to open an RMB bank account so that you can exchange your foreign currency from your foreign current account to RMB account, this account will be the main business account of your company in the future.
to apply the financial registration license from Financial Bureau
to get the registration certificate from Statistical Bureau

Corporation Types

WOFE Advertising Corporation Registration
WOFE Architecture Enterprises Registration
WOFE Bank Registration
WOFE Book and Magazine by Stage Corporation Registration
WOFE City Planning Service Enterprises Registration
WOFE Commercial Corporation Registration
WOFE Conference Exhibit Corporation Registration
WOFE Consultation Corporation Registration
WOFE Corporation Registration
WOFE Direct-selling Corporation Registration
WOFE Financing Leasing Companies Registration
WOFE Food and Beverages Corporation Registration
WOFE Freight Agency Corporation Registration
WOFE High-tech Enterprise Registration
WOFE Insurance Corporation Registration
WOFE Manufacturing Corporation Registration
WOFE Logistic Functions Enterprises Registration
WOFE Printing Enterprises Registration
WOFE Research and Development Center Registration
WOFE Travel Agency Registration