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Powers and responsibilities of Chief Representative of a
Permanent Representative Office
Powers of Chief Representative
The chief representative of a Permanent Representative Office
is the person who is responsible for the daily running
of the Permanent Representative Office (RO). However, Chinese
laws do not clearly specify the limitation of the authorities
of a chief representative or a representative. In the
absence of express statutory provisions, it is not clear
whether or not documents signed by a chief representative
or a representative have binding force upon the foreign
enterprise. Therefore, foreign enterprises should clearly
set forth the authorities of the chief representative
and representatives of a Permanent Representative Office (RO)
in order to avoid, to the greatest extent possible,
situations in which the acts of a chief representative
or a representative have binding force upon the parent
foreign enterprise.
Qualification for Acting as Chief Representative
Permanent Representative Offices (RO) may retain either Chinese
or foreign personnel to act as chief representatives.
Specifically, the
chief representative of the permanent representative office must
meet one of the following qualifications:
(a) he/she is a foreign citizen holding a valid ordinary
passport (excluding foreign students studying in the
PRC);
(b) he/she is a Chinese citizen who has obtained permanent
residence status in a foreign country;
(c) he/she is a compatriot from Hong Kong, Macau or Taiwan
who holds valid documentation; or
(d) he/she is a Chinese citizen (not including Chinese citizens
referred to in paragraph (b) above), in which case the
representative office must entrust an authorised local
service unit to undertake the relevant employment formalities
(see section 8 below). We are not aware of any current
requirement for the duration of stay in China by the
chief representative of a representative office of a
foreign enterprise. It should be noted that the chief
representative and representative(s) cannot concurrently
hold such positions as the chairman of the board of
directors, general manager or manager of other domestic
foreign invested enterprises.
Period of Stay in China
Chinese laws do not provide for the minimum time period
that the chief representatives or representatives must
stay in China except in the case of Permanent Representative Offices
(RO) established by foreign financial institutions.
However, no matter whether or not the chief representatives
or representatives reside in China, the Chinese taxation
authorities always require chief representatives and
representatives to pay PRC individual income tax in
respect of their incomes arising from working for the
Representative Offices (RO). Therefore, no matter whether
or not the chief representatives or representatives
stay in China, foreign enterprises should distinguish
their income arising from their work for the Permanent Representative
Offices (RO) from other incomes.
In the event that the chief representatives or representatives
cannot distinguish their income precisely, the PRC taxation
authorities will determine the income of the chief representatives
or representatives. In this case, the determined salaries
will often be higher than the actual income of the chief
representatives or representatives.
Change of Chief Representative
If
a new representative is to be appointed, a power of
attorney or authorization letter issued by the parent
enterprise must be submitted in addition to other required
documents together with the new representative's resume
when applying for approval of the change. Any change
in foreign personnel or in the local address of such
personnel or in the location of the representative office
requires that the representative office applies at the
local Municipal Public Security Bureau to effect the
necessary changes to the residence permit.
Introduction
to China Permanent Representative Office
Permanent Representative Office Registration Procedures
Legal Status of Permanent Representative Office
Business Scope of Permanent Representative Office
Taxation of Permanent Representative Offices
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