China Annual Company Inspection 2023: What You Need to Know

If you are run­ning a com­pa­ny in Chi­na, you need to be aware of the annu­al com­pa­ny inspec­tion that is manda­to­ry for all reg­is­tered busi­ness­es. The annu­al com­pa­ny inspec­tion is a process of ver­i­fy­ing and report­ing the com­pa­ny’s basic infor­ma­tion, finan­cial sta­tus, tax com­pli­ance, social insur­ance con­tri­bu­tion, and oth­er aspects of its oper­a­tion. The annu­al com­pa­ny inspec­tion aims to ensure that the com­pa­ny is fol­low­ing the laws and reg­u­la­tions of Chi­na, and to pro­tect the inter­ests of the share­hold­ers, cred­i­tors, employ­ees, and the public.

The annu­al com­pa­ny inspec­tion is usu­al­ly con­duct­ed between March and June every year. The com­pa­ny needs to sub­mit its annu­al report and rel­e­vant doc­u­ments to var­i­ous author­i­ties, such as the State Admin­is­tra­tion for Mar­ket Reg­u­la­tion (SAMR), the State Tax­a­tion Admin­is­tra­tion (STA), the Min­istry of Com­merce (MOF­COM), the State Admin­is­tra­tion of For­eign Exchange (SAFE), and the local social insur­ance bureau. The com­pa­ny also needs to update its infor­ma­tion on the Nation­al Enter­prise Cred­it Infor­ma­tion Pub­lic­i­ty Sys­tem (NECIPS), an online plat­form that dis­clos­es the com­pa­ny’s basic infor­ma­tion, annu­al report, admin­is­tra­tive penal­ties, abnor­mal oper­a­tions, and oth­er cred­it records.

The annu­al com­pa­ny inspec­tion is not only a legal oblig­a­tion, but also an oppor­tu­ni­ty for the com­pa­ny to review its per­for­mance, iden­ti­fy its strengths and weak­ness­es, and plan for its future devel­op­ment. A com­pa­ny that pass­es the annu­al com­pa­ny inspec­tion can enjoy var­i­ous ben­e­fits, such as main­tain­ing its good rep­u­ta­tion, avoid­ing penal­ties and fines, apply­ing for gov­ern­ment sub­si­dies and incen­tives, obtain­ing bank loans and financ­ing, par­tic­i­pat­ing in pub­lic bid­ding and pro­cure­ment, and expand­ing its mar­ket share. A com­pa­ny that fails the annu­al com­pa­ny inspec­tion will face seri­ous con­se­quences, such as los­ing its busi­ness license, being black­list­ed or restrict­ed from doing busi­ness, being sub­ject to admin­is­tra­tive sanc­tions or legal actions, los­ing its cus­tomers and part­ners, and dam­ag­ing its brand image.

In this arti­cle, we will explain what you need to know about the annu­al com­pa­ny inspec­tion in Chi­na in 2023, includ­ing the time­line, the require­ments, the pro­ce­dures, and the tips for pass­ing it successfully.

Timeline of China Annual Company Inspection 2023

The time­line of Chi­na annu­al com­pa­ny inspec­tion 2023 is as follows:

• Jan­u­ary 1 – Feb­ru­ary 28: The com­pa­ny needs to pre­pare its finan­cial state­ments for the year 2022 and have them audit­ed by a qual­i­fied account­ing firm. The audit report is one of the main doc­u­ments required for the annu­al com­pa­ny inspection.
• March 1 – May 31: The com­pa­ny needs to sub­mit its annu­al report and rel­e­vant doc­u­ments to SAMR through NECIPS. The annu­al report should include infor­ma­tion such as the com­pa­ny’s basic infor­ma­tion, busi­ness scope, reg­is­tered cap­i­tal, share­hold­ers, direc­tors, super­vi­sors, senior man­agers, employ­ees, assets, lia­bil­i­ties, income, expens­es, prof­its, tax­es paid, social insur­ance con­tri­bu­tion, for­eign exchange trans­ac­tions, for­eign invest­ment sit­u­a­tion, etc. The rel­e­vant doc­u­ments should include the audit report, tax fil­ing forms, social insur­ance pay­ment cer­tifi­cates, for­eign exchange reg­is­tra­tion cer­tifi­cates, for­eign invest­ment approval doc­u­ments, etc.
• June 1 – June 30: The com­pa­ny needs to vis­it the annu­al inspec­tion office and sub­mit the hard­copy doc­u­ments as required by SAMR for final check and approval. The hard­copy doc­u­ments should be con­sis­tent with the online sub­mis­sion. The annu­al inspec­tion office will issue a con­fir­ma­tion let­ter or a notice of rec­ti­fi­ca­tion to the com­pa­ny after review­ing the documents.
• July 1 – Decem­ber 31: The com­pa­ny needs to com­plete any rec­ti­fi­ca­tion or improve­ment mea­sures as instruct­ed by SAMR with­in a spec­i­fied peri­od. The com­pa­ny also needs to sub­mit its annu­al report and rel­e­vant doc­u­ments to oth­er author­i­ties such as STA, MOF­COM, SAFE, and the local social insur­ance bureau accord­ing to their respec­tive dead­lines and procedures.

The time­line of Chi­na annu­al com­pa­ny inspec­tion 2023 may vary depend­ing on the type and loca­tion of the com­pa­ny. For example:

• For­eign-invest­ed enter­pris­es (FIEs) may need to sub­mit their annu­al report and rel­e­vant doc­u­ments to MOF­COM before April 30 through an online sys­tem called Enter­prise Over­seas Invest­ment Infor­ma­tion Report­ing Sys­tem (EOI­IRS).
• FIEs that are engaged in for­eign exchange trans­ac­tions may need to sub­mit their annu­al report and rel­e­vant doc­u­ments to SAFE before May 31 through an online sys­tem called For­eign Exchange Reg­is­tra­tion Sys­tem (FER).
• Com­pa­nies that are locat­ed in free trade zones (FTZs) or pilot free trade zones (PFTZs) may enjoy sim­pli­fied or stream­lined pro­ce­dures for the annu­al com­pa­ny inspection.

The com­pa­ny should con­sult with the local author­i­ties or pro­fes­sion­al ser­vice providers to con­firm the exact time­line and require­ments for the annu­al com­pa­ny inspec­tion in 2023.

Requirements of China Annual Company Inspection 2023

The require­ments of Chi­na annu­al com­pa­ny inspec­tion 2023 are as follows:

• Finan­cial audit: The com­pa­ny needs to have its finan­cial state­ments for the year 2022 audit­ed by a qual­i­fied account­ing firm. The audit report should com­ply with the Chi­nese Account­ing Stan­dards (CAS) and the Chi­nese Audit­ing Stan­dards (CAS). The audit report should also include an opin­ion on the com­pa­ny’s inter­nal con­trol sys­tem and com­pli­ance with laws and regulations.
• Tax fil­ing: The com­pa­ny needs to file its tax returns for the year 2022 with STA and pay any tax­es due. The tax fil­ing should com­ply with the Chi­nese Tax Law and the rel­e­vant tax reg­u­la­tions. The tax fil­ing should also include infor­ma­tion on the com­pa­ny’s income, expens­es, prof­its, loss­es, deduc­tions, exemp­tions, incen­tives, etc.
• Social insur­ance con­tri­bu­tion: The com­pa­ny needs to pay its social insur­ance con­tri­bu­tion for its employ­ees to the local social insur­ance bureau. The social insur­ance con­tri­bu­tion should com­ply with the Chi­nese Social Insur­ance Law and the rel­e­vant social insur­ance reg­u­la­tions. The social insur­ance con­tri­bu­tion should also include infor­ma­tion on the com­pa­ny’s pay­roll, head­count, social insur­ance base, social insur­ance rate, etc.
• For­eign exchange reg­is­tra­tion: The com­pa­ny needs to reg­is­ter its for­eign exchange trans­ac­tions with SAFE and obtain any nec­es­sary approvals or per­mits. The for­eign exchange reg­is­tra­tion should com­ply with the Chi­nese For­eign Exchange Con­trol Reg­u­la­tions and the rel­e­vant for­eign exchange reg­u­la­tions. The for­eign exchange reg­is­tra­tion should also include infor­ma­tion on the com­pa­ny’s for­eign exchange receipts, pay­ments, bal­ances, etc.
• For­eign invest­ment report­ing: The com­pa­ny needs to report its for­eign invest­ment sit­u­a­tion to MOF­COM and obtain any nec­es­sary approvals or per­mits. The for­eign invest­ment report­ing should com­ply with the Chi­nese For­eign Invest­ment Law and the rel­e­vant for­eign invest­ment reg­u­la­tions. The for­eign invest­ment report­ing should also include infor­ma­tion on the com­pa­ny’s for­eign investors, invest­ment amount, invest­ment form, invest­ment pur­pose, etc.

The require­ments of Chi­na annu­al com­pa­ny inspec­tion 2023 may vary depend­ing on the type and loca­tion of the com­pa­ny. For example,

• FIEs may need to pro­vide addi­tion­al doc­u­ments such as the cer­tifi­cate of approval, the busi­ness license, the arti­cles of asso­ci­a­tion, the cap­i­tal ver­i­fi­ca­tion report, the board res­o­lu­tion, etc.
• FIEs that are engaged in restrict­ed or pro­hib­it­ed indus­tries may need to obtain spe­cial approvals or per­mits from rel­e­vant author­i­ties such as NDRC, MIIT, MEE, etc.
• Com­pa­nies that are locat­ed in FTZs or PFTZs may enjoy pref­er­en­tial poli­cies or incen­tives such as low­er tax rates, sim­pli­fied pro­ce­dures, relaxed restric­tions, etc.

The com­pa­ny should con­sult with the local author­i­ties or pro­fes­sion­al ser­vice providers to con­firm the exact require­ments and doc­u­ments for the annu­al com­pa­ny inspec­tion in 2023.

Procedures of China Annual Company Inspection 2023

The pro­ce­dures of Chi­na annu­al com­pa­ny inspec­tion 2023 are as follows:

1. Pre­pare finan­cial state­ments and audit report: The com­pa­ny needs to pre­pare its finan­cial state­ments for the year 2022 accord­ing to CAS and have them audit­ed by a qual­i­fied account­ing firm accord­ing to CAS. The audit report should include an opin­ion on the com­pa­ny’s finan­cial posi­tion, finan­cial per­for­mance, cash flows, inter­nal con­trol sys­tem, and com­pli­ance with laws and regulations.
2. File tax returns and pay tax­es: The com­pa­ny needs to file its tax returns for the year 2022 with STA and pay any tax­es due. The tax fil­ing should include infor­ma­tion on the com­pa­ny’s income, expens­es, prof­its, loss­es, deduc­tions, exemp­tions, incen­tives, etc. The com­pa­ny should also obtain tax fil­ing forms and tax pay­ment cer­tifi­cates from STA.
3. Pay social insur­ance con­tri­bu­tion: The com­pa­ny needs to pay its social insur­ance con­tri­bu­tion for its employ­ees to the local social insur­ance bureau. The social insur­ance con­tri­bu­tion should include infor­ma­tion on the com­pa­ny’s pay­roll, head­count, social insur­ance base, social insur­ance rate, etc. The com­pa­ny should also obtain social insur­ance pay­ment cer­tifi­cates from the local social insur­ance bureau.
4. Reg­is­ter for­eign exchange trans­ac­tions: The com­pa­ny needs to reg­is­ter its for­eign exchange trans­ac­tions with SAFE and obtain any nec­es­sary approvals or per­mits. The for­eign exchange reg­is­tra­tion should include infor­ma­tion on the com­pa­ny’s for­eign exchange receipts, pay­ments, bal­ances, etc. The com­pa­ny should also obtain for­eign exchange reg­is­tra­tion cer­tifi­cates from SAFE.
5. Report for­eign invest­ment sit­u­a­tion: The com­pa­ny needs to report its for­eign invest­ment sit­u­a­tion to MOF­COM and obtain any nec­es­sary approvals or per­mits. The for­eign invest­ment report­ing should include infor­ma­tion on the com­pa­ny’s for­eign investors, invest­ment amount, invest­ment form, invest­ment pur­pose, etc. The com­pa­ny should also obtain for­eign invest­ment approval doc­u­ments from MOFCOM.
6. Sub­mit annu­al report and rel­e­vant doc­u­ments to SAMR through NECIPS: The com­pa­ny needs to sub­mit its annu­al report and rel­e­vant doc­u­ments to SAMR through NECIPS. The annu­al report should include infor­ma­tion such as the com­pa­ny’s basic infor­ma­tion, busi­ness scope, reg­is­tered cap­i­tal, share­hold­ers, direc­tors, super­vi­sors, senior man­agers, employ­ees, assets, lia­bil­i­ties, income, expens­es, prof­its, tax­es paid, social insur­ance con­tri­bu­tion, for­eign exchange trans­ac­tions, for­eign invest­ment sit­u­a­tion, etc. The rel­e­vant doc­u­ments should include the audit report, tax fil­ing forms, tax pay­ment cer­tifi­cates, social insur­ance pay­ment cer­tifi­cates, for­eign exchange reg­is­tra­tion cer­tifi­cates, for­eign invest­ment approval doc­u­ments, etc.
7. Vis­it the annu­al inspec­tion office and sub­mit the hard­copy doc­u­ments as required by SAMR for final check and approval: The com­pa­ny needs to vis­it the annu­al inspec­tion office and sub­mit the hard­copy doc­u­ments as required by SAMR for final check and approval. The hard­copy doc­u­ments should be con­sis­tent with the online sub­mis­sion. The annu­al inspec­tion office will issue a con­fir­ma­tion let­ter or a notice of rec­ti­fi­ca­tion to the com­pa­ny after review­ing the documents.
8. Com­plete any rec­ti­fi­ca­tion or improve­ment mea­sures as instruct­ed by SAMR with­in a spec­i­fied peri­od: The com­pa­ny needs to com­plete any rec­ti­fi­ca­tion or improve­ment mea­sures as instruct­ed by SAMR with­in a spec­i­fied peri­od. The rec­ti­fi­ca­tion or improve­ment mea­sures may include cor­rect­ing errors or omis­sions in the annu­al report or rel­e­vant doc­u­ments, pro­vid­ing addi­tion­al infor­ma­tion or evi­dence, improv­ing inter­nal con­trol sys­tem or com­pli­ance lev­el, etc.
9. Sub­mit annu­al report and rel­e­vant doc­u­ments to oth­er author­i­ties such as STA, MOF­COM, SAFE, and the local social insur­ance bureau accord­ing to their respec­tive dead­lines and pro­ce­dures: The com­pa­ny needs to sub­mit its annu­al report and rel­e­vant doc­u­ments to oth­er author­i­ties such as STA, MOF­COM, SAFE, and the local social insur­ance bureau accord­ing to their respec­tive dead­lines and pro­ce­dures. The annu­al report and rel­e­vant doc­u­ments may vary depend­ing on the type and loca­tion of the com­pa­ny and the require­ments of each authority.
   

The pro­ce­dures of Chi­na annu­al com­pa­ny inspec­tion 2023 may vary depend­ing on the type and loca­tion of the com­pa­ny. For example,

• FIEs may need to fol­low dif­fer­ent pro­ce­dures for for­eign exchange reg­is­tra­tion and for­eign invest­ment report­ing than domes­tic companies.
• FIEs that are engaged in restrict­ed or pro­hib­it­ed indus­tries may need to fol­low addi­tion­al pro­ce­dures for obtain­ing spe­cial approvals or per­mits from rel­e­vant author­i­ties such as NDRC, MIIT, MEE, etc.
• Com­pa­nies that are locat­ed in FTZs or PFTZs may enjoy sim­pli­fied or stream­lined pro­ce­dures for the annu­al com­pa­ny inspec­tion than com­pa­nies in oth­er areas.

The com­pa­ny should con­sult with the local author­i­ties or pro­fes­sion­al ser­vice providers to con­firm the exact pro­ce­dures and steps for the annu­al com­pa­ny inspec­tion in 2023.

Tips for Passing China Annual Company Inspection 2023 Successfully

The tips for pass­ing Chi­na annu­al com­pa­ny inspec­tion 2023 suc­cess­ful­ly are as follows:

• Start prepar­ing ear­ly: The com­pa­ny should start prepar­ing for the annu­al com­pa­ny inspec­tion as ear­ly as pos­si­ble, prefer­ably at the begin­ning of the year. The com­pa­ny should col­lect and orga­nize all the nec­es­sary doc­u­ments and infor­ma­tion, and check for any errors or incon­sis­ten­cies. The com­pa­ny should also hire a qual­i­fied account­ing firm to audit its finan­cial state­ments and pro­vide pro­fes­sion­al advice.
• Fol­low the time­line and require­ments: The com­pa­ny should fol­low the time­line and require­ments of the annu­al com­pa­ny inspec­tion strict­ly, and avoid any delays or omis­sions. The com­pa­ny should sub­mit its annu­al report and rel­e­vant doc­u­ments to the author­i­ties on time, and pay any tax­es or social insur­ance con­tri­bu­tion due. The com­pa­ny should also update its infor­ma­tion on NECIPS prompt­ly, and vis­it the annu­al inspec­tion office as scheduled.
• Com­ply with the laws and reg­u­la­tions: The com­pa­ny should com­ply with the laws and reg­u­la­tions of Chi­na in all aspects of its oper­a­tion, and main­tain a good record of com­pli­ance. The com­pa­ny should also improve its inter­nal con­trol sys­tem and risk man­age­ment, and pre­vent any fraud or mis­con­duct. The com­pa­ny should also coöper­ate with the author­i­ties and pro­vide truth­ful and accu­rate information.
• Com­plete any rec­ti­fi­ca­tion or improve­ment mea­sures: The com­pa­ny should com­plete any rec­ti­fi­ca­tion or improve­ment mea­sures as instruct­ed by SAMR or oth­er author­i­ties with­in a spec­i­fied peri­od, and report the results to the author­i­ties. The com­pa­ny should also learn from its mis­takes and take pre­ven­tive actions to avoid sim­i­lar issues in the future.
• Seek pro­fes­sion­al help: The com­pa­ny should seek pro­fes­sion­al help from ser­vice providers who have exper­tise and expe­ri­ence in Chi­na annu­al com­pa­ny inspec­tion. The ser­vice providers can help the com­pa­ny to pre­pare, sub­mit, and fol­low up on the annu­al report and rel­e­vant doc­u­ments, as well as pro­vide guid­ance and sup­port on any issues or chal­lenges that may arise dur­ing the process.

The tips for pass­ing Chi­na annu­al com­pa­ny inspec­tion 2023 suc­cess­ful­ly can help the com­pa­ny to avoid any penal­ties or fines, main­tain its good rep­u­ta­tion, enjoy var­i­ous ben­e­fits, and plan for its future development.

Frequently Asked Questions about China Annual Company Inspection 2023

Sources:

1. 国务院办公厅关于印发 2021 年政务公开工作要点的通知_政府信息公开专栏
2. Chi­na to Sim­pli­fy Annu­al Inspec­tion of For­eign-invest­ed Firms – Chi​na​.org​.cn
3. 商务部关于印发《外商投资企业年度报告制度》的通知（商资函〔2020〕303 号）_部门规章_中国政府网
4. 国家外汇管理局关于印发《外汇登记管理办法》的通知_国家外汇管理局
5. What US Audit Inspec­tions Mean for Big Four Chi­na: Explained (1)