China is undoubtedly the world's economic center and a haven
for investors. It provides an ideal foothold for companies looking to invest
globally. Also, as a registered company in China, you can enter the expanded
market with government support. However, before starting a business in China,
you must first know about the process of registering a company in China. In
this article we have to discuss about the process for registering a company in
China.
What are the
opportunities for foreigners to start a business in China?
Foreigners may establish a company in China using one of the
following business structures:
The Whole Foreign Company (WFOE) is the most popular and
perhaps the best company Registration option for foreign investors from a legal
point of view. - Joint Ventures
- Representative Offices
- Partnerships
- Private Enterprises
- Private Enterprises
What is the process for registering a company
in China?
Here is the
step-by-step procedure to register a company in China.
1. Select
an institution to initiate the registration process on your behalf.
- The correct interpretation of
company laws in China can be difficult. Therefore, you should choose a
professional agency that will handle the entire business registration process.
- These experts also help with
auditing, tax advice, accounting, and annual financial regulatory requirements.
2. Select your preferred company category.
The Chinese government has classified these industries into
categories to provide faster economic growth. You should also refer to the
Foreign Investment Industry Directory, which is periodically updated by the
government.
3. Application for Company Name Approval
This is a very important step in the company registration
process. You should also ensure that your company name does not conflict with
other operating companies. Therefore, the company name must be approved by the
Ministry of Trade, Industry, and Energy. Also, the entire approval process can
take 2-15 days.
4. Prepare Required Documents
Before starting the business
registration process, you must prepare the following documents. List of Controlling Partners - A list of
Controlling Partners must be provided to the Authority. In addition, they are
the shareholders who hold the controlling interest at the time of company
registration.
- Governance - You must provide the management structure of the
additionally registered company. This includes information about the Board of
Directors, general managers, observers, and legal representatives. In addition,
copies of all directors' passports must be included with this document.
- Proof of Official Address - Proof of valid address for the
company's official headquarters must be provided. Likewise, the authorities
will contact the company at this address if they have any questions about the
company's activities.
- Articles of Incorporation (AoA) - The AoA includes a description of
the business, the scope to which the company intends to operate, how it will be
applied to generate revenue, its governance structure, etc.
- Details of total investment and registered capital - Details of
authorized capital include the current costs of the company. You must indicate
the resources to cover. Similarly, Total Investment represents the sum of
capital and loans it will receive in the future from investors, banks and other
third parties.
- Feasibility Study - A feasibility study report must be submitted to
the authorities along with a detailed business plan. They must also convince
them that the business is viable and that the registered capital is sufficient
to support the operation of the company. In addition, the authorities will not
approve registration if they are not sure of the viability of the company.
5. Application for Approval
Certificate
At this stage, it is necessary to apply for an Approval and
Operating Permit Certificate from the National Bureau of Industry and Commerce
(SAIC) and the Ministry of Commerce (MOFCOM). Additionally, if you work in the
food and beverage, manufacturing, telecommunications, and construction
industries, you will need additional licenses after obtaining your business
certificate.
6. Register with PSB (Public Security Bureau)
Register with PSB to receive company awards. Without Chop,
contracts cannot be verified in China.
7. Registration with the Tax Department
All companies in
China must register with the Tax Department and follow the regulations.
Similarly, the Different types of taxes that apply to this country are:
- Corporate Income Tax: 25% on
profits. However, if you work in a certain “sector of hope,” the percentage
decreases.
- Transaction or Sales Tax: Typically levied in the range of 3-5% of
gross sales.
- Tariff
- VAT (Value Added Tax): currently levied at 3%, 6%, 9% and 13%.
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