Hong Kong and Chinese Companies

Start a business

Apply for a work visa

Hong Kong Company Advantage of HK company

1.No Foreign Exchange Control like China

2.Build up your international Brand

3.Easy to maintain the company

4.Low tax 16.5 % of profit tax

5.No limited on company name

6.Easy to access to China especially Shenzhen to do business

Hong Kong Company Notes

1. It takes 10 working days to finish the whole process.

2. After 18 months of newly-setup company, the IRS will issue tax return form to you

3. HK company needs to file annual return every year

4. HK company can file zero declaration or do bookkeeping and audit report for tax filing.

Requirements

Company Registration Documents required• Shareholder’s passport Copy• Resident Proof

• If there is english address in your passport, no need to provide;

• If not, you need to provide electricity bill, bank statement etc at least 3 months as resident proof

Reminder: at least one individual director

HK Bank Account

1. Open Bank account documents required

2. Initial deposit: hkd10,000 （ Cash or Cheque）3. Certificate of incorporation--CI (original）4. Business registration certificate--BR (original）5. Register documents---NC1 (original）6. A memorandum and articles of association (English origina

l）7. Director's passport (original）8. Resident Proof

9. Leave your communication address for receiving bank letter or relative issue.

Chinese Companies

Company Types of Foreign Investment in China

1. Representative Office (RO)

2. Wholly Owned Foreign Enterprise (WOFE)

3. Joint Venture (JV) aka Sino-Foreign Investment Company

Company FunctionsRO : To set up standpoint to liaison with supplier,QC, Technical support,

customer service, marketing research within China on behalf of parent company; Can not Issue China Invoice (fapiao 发票 ) ； Employees need to sign contact through third party human resources company along with RO; No need to deposit investment capital into China.

WOFE: it is a limited entity which can issue China Invoice(fapiao发票 );Can perform most kinds of industry . For detail, please review the attachment of Catalogue of industries for Guiding Foreign Investment; WOFE can also be a plant to manufacture but need to apply for environment protection permit first. Need to deposit certain amount investment capital based on the business nature.

JV : The same function of WOFE. Only difference is the shareholder will be Chinese and Foreign individual or corporate.

Requirements of RORO requirement: The parent company must be established for over 2 years

Documents needed:

1.1 Notarization of Parent company(If it is HK company, it can be notarized by HK lawyer in HK;If it is other foreign company, need to notarize in Local China embassy in that foreign countries) and Chief representative’s passport （ director of RO ）

1.2 Rental contact and Leasing certificate (at least one year period)

1.3 Bank reference letter issued by the parent company’s bank

1.4 Chief Representative’s picture X2

Reminder: Process Time: Within 3 weeks. The fastest time will be 5 working days.

Requirements of WOFEWOFE: No special requirements. The shareholder can be Individual or

Corporate.

Documents:

1.1 Notarization of Parent company( If it is HK company, it can be notarized by HK lawyer in HK;If it is other foreign company, need to notarize in Local China embassy in that foreign countries) . If the shareholder is individual , he/she can notarize his/her passport in China Embassy in his/her country Or he /she needs to show up in some government department with his/her passport.

1.2 Rental contact and Leasing certificate (at least one year period)

1.3 Bank reference letter issued by the parent company’s bank

1.4 Audit Report(If the parent company has been set up for over 2 years)

Reminder: Process Time: within 1.5 -2 month.

Requirement of JVThe same procedure as WOFE but the foreign share of parent company needs to be

at least 25%

Option 2 ： The domestic china company transfer share to foreign individual or corporate。

Documents ：

2.1 Domestic China company: All company documents including business license, organization code certificate, taxation certificate, leasing certificate, stamp

2.2 Bank reference letter of Domestic China company

2.3 Audit report of Domestic China company

2.4 Foreign investor ‘s notarization documents

2.5 Bank reference letter of Foreign investor

Capital InvestmentRO ： No need to deposit the capital investment. However, for monthly bookkeeping and

tax filing, the parent company needs to deposit certain tax amount and operation fund into the RO bank account.

WOFE/JV: After company registration is done, you need to open bank account in China. Usually it takes 10-15 working days to open basic account and capital verification account based on different banks. Basic account is for company operation such as: purchase good, pay salary etc. Capital verification account is for foreign investor to deposit the registration capital . Then CPA needs to issue capital verification report and update the license.

Reminder:

To deposit the registration capital can be one –off or by installments. If by installments, the first installments is at least 15% of total registration capital. However, I suggest you should deposit 20% because some of the government department might request 20%..

For Service WOFE/JV, the registration capital is RMB100,000; For trading WOFE/JV, the registration capital is RMB500,000. For manufacture WOFE/JV , it is RMB1,000,000

The RMB 100,000 should be deposited one-off

RO Tax

• Income =Expense/0.8• Business Tax=Income*5%• Enterprise Income Tax=Income *0.15%*25%• Urban Construction Tax= Business Tax*7%• Education Tax=Business Tax * 3%• Embankment Tax=Income *0.01%

WOFE/JV Tax

Income Tax=Income *25%

VAT= 3% or 17%

Business Tax=Income*5%

Urban Construction Tax= Business Tax or VAT*7%

Education Tax=Business Tax or VAT * 3%

Embankment Tax=Income *0.01%

Most of the WOFE will have VAT tax but some of them will pay business Tax such as: restaurant , travel agent, real estate etc

Tax Notes

• After company is registration , the VAT tax is 3% as small scale tax payer. When you succeed in applying for general tax payer, then the VAT tax is 17%(WOFE Trading)

• For Service WOFE, small scale taxpayer VAT is 3%, As general tax payer, the VAT shall be 6%, 11% based on the business filed .

• The function to apply for the general taxpayer is to apply for tax refund.

Work Permit and Resident PermitAs Foreigners working in China, you need to apply for the work permit and resident permit.

The procedure will be as follows:

1. Open the employment online system of the company 5 working days

2. Submit online data and apply for the employment permit 3 working days

3. Apply for the invitation letter(3 month valid), 7 working days

4. Back to home country to apply for Z visa (one-month valid after enter China)

5. Apply for the work permit 1 working day

6. Make appointment for the interview (based on Public Security Bureau system’s schedule)

7. Approved by Public Security Bureau then submit the resident permit

Total Process time will be around 2 months.

Documents Required1. Company Business License

2. Organization Code Certificate

3. Company Stamp

4. Company Leasing Certificate

5. Applicant’s passport

6. 2-inch blue picture and picture receipt

7. Health Report

8. Temporary Resident Form for Visitor

9. Applicant's Education Diploma (Bachelor above)

10.Resume

Contact: Chester, Mobile/Wechat/Whatsap: 86 13510115828

Email:Chester@aronbest.com