Navigating though complex business system  in China

1. Choos­ing Com­pa­ny Name
   Please pro­vide 3–5 Eng­lish names, we can help to trans­late and choose appro­pri­ate Chi­nese name/​character equiv­a­lent. There final deci­sion of the reg­is­tered name is up to the Busi­ness Reg­is­tra­tion Office, so the choic­es pro­vid­ed should be well thought through.
2. Define Busi­ness Scope
   Busi­ness scope depends on the oper­at­ing indus­try & ser­vices pro­vid­ed by the com­pa­ny, we can pro­vide you with the sam­ple list for rel­e­vant indus­tries exam­ples of scope: Trad­ing / Busi­ness Con­sult­ing / Cul­tur­al and Cre­ative Ser­vices / Design Ser­vices / Health Con­sult­ing / Sports event etc. You should include all cur­rent and future busi­ness activ­i­ties, since that infor­ma­tion is pub­licly acces­si­ble in the Com­pa­ny Reg­is­tra­tion Sys­tem. Please con­tact us for more details.
3. Choose Reg­is­tered Capital
   Reg­is­tered cap­i­tal amount will be shown on your Busi­ness License and will be a proof of the abil­i­ty for finan­cial respon­si­bil­i­ty as a Com­pa­ny — accept­ed cur­ren­cies are: RMB/USD/EUR, etc. Reg­is­tered Cap­i­tal is a sub­scrip­tion based sys­tem, which does not require to have an imme­di­ate invest­ment, but should be col­lect­ed over peri­od of time, 30 years or longer.

After successful verification of the Company Information & Collection of the data, the next step is to apply for a Chinese Business License & Official Stamps.

To suc­cess­ful­ly apply for a busi­ness license, you need to pass the name + infor­ma­tion col­lec­tion steps.

The busi­ness should have as well the loca­tion — in this case YouWin can pro­vide you with the list of the office part­ners tai­lored to your needs: from shared desk space office — which is per­fect for a start­up, con­sult­ing or art-relat­ed com­pa­nies, to ded­i­cat­ed office space. Feel free to con­tact us if you need any suggestions.

After the doc­u­ments are col­lect­ed — we will help you to go thought the ver­i­fi­ca­tion process. The gen­er­al tim­ing of the whole process which result in obtain­ing busi­ness license is as follows:

• Step 1: Com­pa­ny Name Approval (approx. 3 work­ing days)
• Step 2: Com­pa­ny Reg­is­tra­tion Address (approx. 2 work­ing days)
  *reg­is­tra­tion address can be dif­fer­ent that the com­pa­ny office address, it is bound to the dis­trict tax office
• Step 3: Pre­pare the nec­es­sary list of the doc­u­ments for sign­ing (approx. 1 work­ing day)
  *YouWin will pro­vide the doc­u­ment list & exam­ples based on your com­pa­ny type
• Step 4: Doc­u­ments sub­mis­sion includ­ing Pass­port of the Legal Own­er of the Com­pa­ny (approx. 1 work­ing day)
• Step 5: Busi­ness License Col­lec­tion & Issu­ing of the Offi­cial Com­pa­ny Stamps (approx. 5 work­ing days)
  *to legalise all the con­tracts and com­pa­ny legal doc­u­ments, Chi­nese Com­pa­nies have offi­cial “red” stamps that are required not only for labour con­tracts, but also the clients con­tracts, accou­t­ning oper­a­tions and oth­er gov­ern­ment required documents

Open­ing a Com­pa­ny Offi­cial Bank Account is a necce­sary step after optain­ing Busi­ness License to ensure the prop­er oper­a­tion of the com­pa­ny. There are sev­er­al types of the accounts that can be reg­is­tered based on the Com­pa­ny Oper­a­tional needs: 

1. Basic Chi­nese Com­pa­ny Bank Account
   —this account type is nec­es­sary to legal­ly oper­ate in Chi­na. Com­pa­ny can have only 1 offi­cial bank account. This account is con­nect­ed to the nation-wide tax sys­tem, and the deduc­tion of the tax­es and gov­ern­ment fees are done auto­mat­i­cal­ly via bank­ing sys­tem. This Bank Account Oper­ates in CNY (RMB) and any for­eign cur­ren­cy oper­a­tions are exchanged automatically.
2. For­eign Cur­ren­cy Chi­nese Com­pa­ny Bank Account
   —addi­tion­al bank account that let you to oper­ate in for­eign cur­ren­cy with­out a need of the instant exchange. If major­i­ty of your oper­a­tions are done in for­eign cur­ren­cy, this type of Chi­nese Com­pa­ny Bank Account let you to oper­ate, store and receive the for­eign pay­ments with­out cur­ren­cy exchange cost.
3. Cap­i­tal Account
   When you plan to invest or trans­fer the cap­i­tal for run­ning of the com­pa­ny (often at the begin­ing of the set­ting up busi­ness), you should open the Chi­nese Com­pa­ny Cap­i­tal Account. The invest­ed cap­i­tal amount will be kept sep­a­rate­ly in this account, and when there is a need for the insert of the invest­ment cap­i­tal, Com­pa­ny can trans­fer the required amount to the basic account.

The Process: 

1. Pre­pare required list of doc­u­ments (we will pro­vide you a guide & doc­u­ment list).
2. Sched­ule appoint­ment with the bank (we will set­up the date and time for the reg­is­tra­tion process)
3. Pass the office ver­i­fi­ca­tion process (usu­al­ly Bank Rep­re­sen­ta­tive will vis­it reg­is­tered office loca­tion to ver­i­fy the oper­a­tion of the Company)
4. Sub­mit the Appli­ca­tion in Bank

Time Dura­tion: approx. 5 work­ing days for each account.

Each monthChinese Companies are required to submit:
VAT Tax, Corporate Tax, Personal Income Tax.

Our bookkeeping service includes:

1. Prepa­ra­tion & main­te­nance of the account­ing books
2. Invoice col­lec­tion & maintenance
3. Cost col­lec­tion & expense calculation
4. Month­ly reminders for the doc­u­ments submission
5. Finan­cial report prepa­ra­tion (Chi­nese & Eng­lish ver­sion available)
6. Bank month­ly state­ment col­lec­tion & verification
   *Chi­nese com­pa­ny need to sub­mit the offi­cial bank state­ment report togeth­er with the tax, we can help you to col­lect all the infor­ma­tion need­ed, so there is no need for the rep­re­sen­ta­tive to go to the Bank Branch in person

Service Benefits:

• Each client account will have ded­i­cat­ed accoun­tant for direct con­tact & process management
• High effi­cien­cy ser­vice — the process­es and reminders are deliv­ered in time­ly man­ner, usu­al­ly with­in the same day
• Stay­ing up-to-date with the lat­est pol­i­cy updates for Com­pa­nies – any changes in the taxrates, pay­ments or com­pa­ny oper­a­tionpoli­cies are com­mu­ni­cat­ed bilin­gual­ly – with expla­na­tion if needed
• Cus­tom tax & advi­so­ry — we pro­vide you with cus­tom tax advi­so­ry and cost man­age­ment to improve the over­all rev­enue and cost plan­ning for your long-term operations

Understanding Chinese Invoicing System can be challenging at first: there are 2 types of the Chinese Invoices, General VAT Invoice and Special VAT Invoice.

General Chinese VAT Invoice

Gen­er­al VAT Invoice, also called Stan­dard Fapiao (增值税普通发票) is an invoice usu­al­ly issued by small–scale tax­pay­ers. This invoice have a reduced tax rate, and it resem­bles receipt in for­eign coun­tries. Its for­mat is the same as the Spe­cial VAT Invoice, but the tax is cal­cu­lat­ed dif­fer­ent­ly. With the Gen­er­al Invoice, the VAT tax is not used to claim the Input VAT cred­it to off­set the VAT at the end of the month. Those invoic­es are pop­u­lar among small busi­ness­es and enter­pris­es, and are issued if the com­pa­ny does not exceed 5 mln RMB year­ly. In case of the Gen­er­al Chi­nese VAT Invoice, the tax amount is paid at the end of the tax peri­od, usu­al­ly month­ly or quar­ter­ly. Gen­er­al VAT Invoice is espe­cial­ly use­ful for start­up and small busi­ness, since it have reduced tax rate. It is a per­fect solu­tion for small busi­ness, that can have low­er tax bur­den in the first years or operation.

Special Chinese VAT Invoice

Spe­cial Chi­nese VAT Invoice, also called Spe­cial VAT fapiao (增值税专用发票), is invoice issued by gen­er­al tax­pay­ers. This type of invoice is issued by the Chi­nese TAX Admin­is­tra­tion Bureau (which is a ded­i­cat­ed bureau based on your busi­ness reg­is­tered loca­tion). With Spe­cial VAT Invoice, the VAT the gen­er­al tax­pay­er can claim the Input VAT and use it to off­set the VAT at the end of each month. In case of the paper invoic­es — you have to go direct­ly to the Chi­nese TAX Bureau to claim the invoice, in case of the elec­tron­ic invoic­ing sys­tem, that can be done online — so there are obvi­ous time and man­age­ment ben­e­fits to have the elec­tron­ic invoic­ing sys­tem open for your com­pa­ny. Usu­al­ly issu­ing the Spe­cial VAT invoic­es requires addi­tion­al pro­cess­ing fee for most agen­cies to phys­i­cal­ly col­lect the invoic­es from the Bureau. In case of Spe­cial Chi­nese VAT Fapiao, the tax is paid at the time of the issue — and the tax amount is auto­mat­i­cal­ly deduct­ed from the offi­cial com­pa­ny bank account.

TAX Rates for goods & services in China in 2023:

—for General Taxpayers in China

• 13% — All oth­er tax­able goods and services
• 9% — Retail; enter­tain­ment, hotel; restau­rants; cater­ing ser­vices; real estate and con­struc­tion, tele­pho­ny calls;
  postal; trans­port and logistic
• 6% — Finan­cial ser­vices and insur­ance; tele­pho­ny and inter­net data; IT; tech­nol­o­gy; consulting

—for Small Scale Taxpayers in China

• 1% — Spe­cial reduced TAX rat for small-scale taxpayers

—Additional Tax

*usu­al­ly not applied to For­eign Companies

• 3% — Chi­nese Nation­al Edu­ca­tion Tax
• 2% — Chi­nese Local Edu­ca­tion Tax
• 7%, 5%, 1% — City Main­te­nance & Construction
• 3% — Con­struc­tion Services

—Special Luxury Goods Tax in China

*Con­sump­tion tax applies to pre­scribed nonessen­tial and lux­u­ry or resource-inten­sive goods

• 1%-56% — Includ­ing alco­hol, lux­u­ry cos­met­ics, fuel oil, jew­ellery, motor­cy­cles, motor vehi­cles, petrol, yachts, golf prod­ucts, lux­u­ry watch­es, dis­pos­able wood chop­sticks, tobac­co, cer­tain cell and coat­ing prod­ucts), and it main­ly affects com­pa­nies involved in pro­duc­ing or import­ing these goods. The tax is cal­cu­lat­ed based on the sales val­ue of the goods, the sales vol­ume or a com­bi­na­tion of the two. The pro­por­tion­al con­sump­tion tax rate is from 1% to 56% on the sales rev­enue of the goods. Exports are exempt.

YouWin Consulting Chinese Invoice Service

At YouWin, we can help you to set­up up paper invoic­ing sys­tem (requires spe­cial gov­ern­ment issued invoice machine & main­te­nance fee) or elec­tron­ic invoic­ing sys­tem (one-time open­ing fee for issu­ing both types of invoic­es). Our invoice issu­ing ser­vice ben­e­fits con­sist of:

1. e‑invoice issu­ing (with­in the same work­ing day)
2. paper invoice issu­ing (with­in 3 work­ing days)
3. paper invoice deliv­ery to client office direct­ly (from our office to client office for addi­tion­al deliv­ery fee)
4. ver­i­fi­ca­tion of invoice and bank state­ment con­sis­ten­cy (cross check the amounts and cor­rect if needed)

If you have any ques­tions about the invoic­ing sys­tem in Chi­na, please feel free to con­sult us. We help to opti­mise the issu­ing process and help you to main­tain the prop­er oper­a­tion of the invoic­ing ser­vices, which is both cost effi­cient and organized.

Corporate Online Banking in China operates according to different rules than in other places in the world.

When you set up your com­pa­ny offi­cial bank account, gen­er­al­ly all of the trans­ac­tions have to autho­rized via ded­i­cat­ed USB key. You will have 2 USB Devices Issued: one for cre­at­ing trans­fer, and one for autho­riza­tion.You will have also bank card issued as a for­eign own busi­ness, but that card pre­vents any deduc­tion oper­a­tion, since its pur­pose it most­ly to use as an authen­ti­ca­tion in the bank to print out state­ment — so there is no pos­si­bil­i­ty for some­body to charge your account using your bank card.

Usu­al­ly the device that “cre­ates” a trans­fer, is with your account­ing com­pa­ny, and the card as well — those two are used for prop­er account­ing man­age­ment. Its up to com­pa­ny own­er to autho­rize any out­go­ing trans­ac­tions from your cor­po­rate account. To sum­ma­rize: the only way to move funds from and into the com­pa­ny account — you need to use the trans­fer as a method.

One more impor­tant infor­ma­tion about bank­ing sys­tem in Chi­na, is that if you receive the pay­ment in for­eign cur­ren­cy, there is actu­al fund release process with­in each bank, that requires pro­vid­ing addi­tion­al infor­ma­tion for the funds to be exchanged and released to your account (since it is in RMB). This requires reg­u­lar vis­its to bank and sched­ul­ing appoint­ments. We pro­vide ser­vice that can make the process of release eas­i­er for you by vis­it­ing the bank branch and man­ag­ing it on our side. As we stat­ed: it is all about efficiency.

In YouWin, we found that for for­eign based com­pa­nies the issue is to actu­al­ly make a trans­fer — since most of the trans­fer data, branch and addi­tion­al infor­ma­tion have to be done in Chi­nese. And if you have a lot of oper­a­tion with your sup­pli­ers, that can be trou­ble­some. That is why part of our pri­ma­ry ser­vice is to sched­ule, main­tain and set­up trans­fers for your com­pa­ny. At the end of each month, you need to do a month­ly rec­on­cil­i­a­tion and print trans­fer receipt & bank state­ments with the offi­cial bank branch stamp. That is required for prop­er­ly clos­ing the account­ing peri­od. For that the com­pa­ny bank card is used to access and ver­i­fy that information.

Our Benefits for Online Banking Management:

1. Pay­ments (includ­ing the salary, cost & oth­ers) done in the same work­ing day
2. No wast­ing time in the bank to print out the month­ly statements
3. No issue with wrong trans­fer details in Chinese
4. Easy oper­a­tion & communication
5. We help you to main­tain sta­ble rela­tion­ship with your bank also by prop­er­ly struc­tur­iz­ing your trans­fers with descrip­tions, and inform­ing you about any oth­er activ­i­ty or cost regard­ing your bank operation
6. Easy process of release inter­na­tion­al trans­fer funds with addi­tion­al fee

Human Resources (Employees) management in China requires few steps for the registration, maintenance and social insurance payments to function properly.

For each of your for­eign or Chi­nese employ­ee, there is a process to open spe­cial Gov­ern­ment Insur­ance Account. The part of the man­age­ment process is to prop­er­ly edit/​update & add infor­ma­tion to the Chi­nese Com­pa­ny Social Insur­ance Account & Com­pa­ny Hous­ing Fund Account. The sys­tem if ful­ly in Chi­nese, so to bet­ter stream­line the process­es for your com­pa­ny, we can pro­vide you with the serivce to ful­ly man­age the account and changes accord­ing to your com­pa­ny needs and growth.

The social insur­ance in Chi­na rates vary based on the city, but usu­al­ly con­sists of 5 manda­to­ry insur­ance schemes (pen­sion fund, med­ical insur­ance, indus­tri­al injury insur­ance, unem­ploy­ment insur­ance, and mater­ni­ty insur­ance) + a hous­ing fund (only applic­a­ble to Chi­nese employees).

Our Benefits for Managing your Human Resources:

1. Easy process to open and man­age com­pa­ny hous­ing fund
2. Effi­cient edit­ing of the employ­ee infor­ma­tion in the com­pa­ny hous­ing fund system
3. Prop­er cal­cu­la­tion of the spe­cif­ic insur­ance tax month­ly (based on salary & regulations)
4. Salary man­age­ment (adjust­ment of the base salary, noti­fi­ca­tion of the salary changes or any addi­tion­al human resources costs based on Gov­ern­ment regulations)
5. Ded­i­cat­ed con­sul­tant for your HR man­age­ment relat­ed tax & insur­ance accounts

There are 2 obligatory inspections that need to be done yearly to verify that the China based Company operates according to China Law & Regulations:

—Annual Company Operational Inspection

The Annu­al Indus­tri­al and Com­mer­cial Inspec­tion is an annu­al report sub­mit­ted to Com­merce Admin­is­tra­tion Bureau with­in spec­i­fied time lim­it (before end of June every year). That report will include the con­tri­bu­tions made by the share­hold­ers of the com­pa­ny, com­pa­ny assets sta­tus, inven­to­ry, etc. The annu­al report is oblig­a­tory to make sure, that the com­pa­ny oper­ates accord­ing to Law & Reg­u­la­tions of the Chi­nese Com­merce Sys­tem, and com­pa­ny is ful­ly respon­si­ble for the authen­tic­i­ty and legit­i­ma­cy of the report. More­over, the Com­mer­cial Depart­ment of Chi­na will con­duct a ran­dom spot check on the con­tents of the annu­al report pub­lished by the company.

—Annual Tax Settlement & Inspection

After the end of the year, tax shall be levied on the tax­able income of the whole year at the tax rate spec­i­fied in the tax law. In order to ensure the time­ly and bal­anced col­lec­tion of tax­es, the com­pa­ny usu­al­ly pay tax­es in advance via month­ly or quar­ter­ly tax peri­od. The tax will be cal­cu­lat­ed in a year­ly basis, and refund­ed for excess or sup­ple­ments for insuf­fi­cient tax pay­ment. The time­line for the Year­ly Tax Set­tle­ment sub­mis­sion is April every year.

YouWin Provide comprehensive Tax Export Refund Service to help companies to reduce tax burden and speed up growth. For the company to be able to cleaim the refund, we need to go through the following process:

1. Import and export oper­a­tion right [“For­eign Busi­ness Oper­a­tor Fil­ing Reg­is­tra­tion Form”
   or For­eign Invest­ment Approval Receipt]
2. Cus­toms reg­is­tra­tion [Cus­toms reg­is­tra­tion accep­tance receipt]
3. Reg­is­tra­tion of exter­nal management
4. Bank reg­is­tra­tion [Account Open­ing License]
5. Export tax refund (exemp­tion) fil­ing form [Notice of Tax-relat­ed Matters]
6. The first on-site ver­i­fi­ca­tion of export business

Export tax rebate calculation method

Small-scale tax­pay­ers: Exemp­tion - Export sales are exempt from VAT, and the input part is non-cred­itable and non-refund­able.

For­eign trade enter­pris­es: Exemp­tion, refund - export sales are exempt from VAT, and spe­cial VAT invoic­es used for export and cer­ti­fied in the cur­rent peri­od are sub­ject to tax refund.

Pro­duc­tion-ori­ent­ed enter­pris­es: Exemp­tion, cred­it, refund - export sales are exempt from VAT, all input tax in the cur­rent peri­od and the tax payable by the enter­prise in the cur­rent peri­od are deduct­ed, and the inex­haustible part of the tax refund is deduct­ed.

Tax Refund Calculation Example

The state will refund the val­ue-added tax or con­sump­tion tax already paid by the enter­prise in the domes­tic pro­duc­tion and cir­cu­la­tion of the goods declared and depart­ed from the country
For exam­ple: a for­eign trade enter­prise acquires a total of 100 tons of prod­uct A, 10 yuan per ton, a total price and tax of 1130 yuan, (invoice price 1000, out­put 130), all export, price 1500 yuan. Prod­uct A: The refund tax rate is 9%.
Exemp­tion: The export price of 1500 yuan of for­eign trade enter­pris­es is not sub­ject to VAT
Tax refund: The state refunds the tax of for­eign trade enter­pris­es 100 × 10×9% = 90 yuan
(Levy and refund dif­fer­ence 1000 × (13%-9%) = 40 yuan For­eign trade enter­pris­es count costs, for­eign trade enter­pris­es earn
1500−1000−40 yuan = 460 yuan)

*Focus: Details of information required for on-site verification

1. Busi­ness license and com­pa­ny name­plate.
2. Employ­ee list, indi­vid­ual income tax with­hold­ing list, social secu­ri­ty pay­ment notice.
3. If the actu­al place of busi­ness is self-pur­chased, pro­vide a real estate cer­tifi­cate; If it is a lease, pro­vide the lease con­tract, the lessor’s real estate cer­tifi­cate, and the rent invoice.
4. Bal­ance sheet for the lat­est peri­od.
5. The first export busi­ness dec­la­ra­tion form, input invoice, export invoice.
6. Pur­chase and sale con­tracts, pay­ment vouch­ers, domes­tic trans­porta­tion doc­u­ments, freight for­ward­ing vouch­ers (tal­ly costs) cor­re­spond­ing to the first export busi­ness. Customs Clear­ance Fees. Trans­porta­tion costs, etc.), bills of exchange, bills of lad­ing, load­ing bills for export goods (payable to ship­ping com­pa­ny doc­u­ments).