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Wholly Foreign Owned Enterprises (WFOE)
A Wholly Foreign Owned Enterprise (WFOE) is a Limited Liability Company established in China by foreign investor(s). A WFOE is very much like a LLC in the USA that it requires one member only.
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The registration procedures of a Wholly Foreign Owned Enterprise (WFOE) could be divided into 3 phases: aproval phase, registration phase and post-establishment phase.
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A Wholly Foreign Owned Enterprise (WFOE) could be terminated by way of liquidation or deregistration by its investor(s) or when the conditions of termination in its Articles of Association occurs.
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China Taxation
Under the current tax system in China, there are 25 types of taxes which could be divided into 8 categories. The major ones are Business Tax, Value Added Tax and Enterprise Income Tax. More
Permanent Representative Offices are also liable for Business Tax and Enterprise Income Tax. However, a RO could be exempted from tax if its parent company is in the manufacturing business.
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Any individual who has domicile in China or who has no domicile in China but has resided in China for one year or more shall pay Individual Income Tax on his world-wide income.
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CHINA FOREIGN INVESTMENTS
CITY INFORMATION - SHANGHAI


Registration of Permanent Representative office in Shanghai, China

1     Features of Permanent Representative Offices

1.1    Legal Status of a Permanent Representative Office
The Permanent Representative Office (also known as Resident Representative Office) is a non-legal entity operating representing its parent company foreign comapnies registered outside China, including those registered in Hong Kong, Macau and Taiwan). A Permanent representative office is not allowed to engage itself in business activities, issue invoices on its own, remitting outward, signing sales or purchase contracts, or receiving income from services performed but may act as a liaison and promotion office for its parent company.

1.2    Name of a Permanent Representative Office
The name of the Permanent Representative Office should be in the form of “Name of the Foreign Enterprise + Name of the City + Representative Office (or Office)”. For example, USA New York LLC Shanghai Representative Office.

1.3    Business Address (Registered Office)
Before submitting the documents for application for registration, it is required that the office premise to be used by the Permanent Representative Office be leased and a tenancy agreement concluded. The tenancy agreement could be executed by the Chief Representative of the Permanent Representative Office or the director of the foreign company applying to set up the Permanent Representative Office.

2.    Documents required for the application for Registration of a Permanent Representative Office

The foreign company applying to set up the Permanent Representative Office is responsible for the preparation of the following information and documents:
(1)     Two set of legalised (by Chinese Embassy or Consulate) Business Registration Certificate/Certificate of Incorporation of the applicant company;
(2)     2 original copy of bankers’ reference letter issued in the name of the applicant company and addressed to Shanghai Administration Bureau for Industry and Commerce;
(3)     2 copies of original Tenancy Agreement (lease agreement) of the office premise to be used by the Representative Office; the lease term should not be less than 12 months. The tenancy must be entered into in the name of the parent company, and signed by its legal representative;
(4)     2 Photostat copy of the Certificate of Property Ownership evidencing the landlord owning the property;
(5)    An original certificate of Registration of Real Estate of Shanghai to be used to prove that office site is truly rent by proposed Representative office;
(6)     A brief summary of the operations and business of the applicant company, such as the principal business activities, registered address, contact phone number, name of the applicant company; the address and contact number of the managing director of the applicant company;
(7)    A copy of resume, 8 pictures, passport copy (only the page detailing the particulars of the holder; to be signed and stamped with company chop), Power of Attorney and contact number of the Chief Representative and the address where the Chief Representative will be staying while she/he is China.
If the chief representative is a Chinese citizen, please provide us his/her employment contract with the local foreign service companies or other entities designated by the local government;
(8)    If there is(are) Representative(s) to be stationed in China in addition to the Chief Representative, the resume, 2 pictures, passport copy, contact telephone number of each Representative and the address where the Representative will be staying while she/he is China;

3    Permanent Representative Office Registration and Post-registration Procedures

The procedures for registration of a Permanent Representative Office in Shanghai can be summarised into two steps:

Step 1:    Application for Registration Certificate
The first step is to apply for registration (certificate) with Shanghai Administration Bureau for Industry and Commerce; and once the Permanent Representative Office Registration Certificate is issued, the post-registration procedures as listed in Step 2 below then need to be performed.

Step 2:    Post establishment Registration Procedures
Upon the issuance of the Permanent Representative Office Registration Certificate, we will then perform the post-establishment registration procedures, including:
(1)     Engraving of Office Stamp (after apply for approvasl from the Public Security Department of Shanghai Public Security Bureau)
(2)     Application for State Tax Registration Certificate (Shanghai Taxation Bureau)
(3)     Application for Local Tax Registration Certificate (Shanghai Taxation Bureau)
(4)     Application of “Enterprise Code” and card (from Shanghai Organisation and Institution Identification Code Management Center)
(5)     Application for Registration Certificate of Foreign Exchange (from Shanghai Branch of the State Administration of Foreign Exchange)
(6)     Application for Residence Representative Certificate for Chief Representative
(7)     Opening of bank accounts

Optional Procedures

(8)     Application for Work Permit for (Chief) Representative (applicable to the representative with a citizenship of a foreign country or of Taiwan, Hong Kong and Macau), and
(9)     Apllication for long-time residential permit (from he Exit and Entry Department of Shanghai Public Security Bureau)
(10)     Apllication for the importation of the applicnces for office and personal daily use

4    Time Frame

Procedure Description Working Days
     
1 Application for Permanent Representative Office Registration Certificate 30
2 Application and engraving of stamps 1
3 Application for Residence Representative Certificate for Chief Representative 1
4 Application for Enterprise Code and Card 3
5 Application for State and Local Tax Registrations Certificates 30
6 Opening of bank account 5-10
  TOTAL 8 weeks

For further information or quotations for registration of permanent representative office and other related services, please contact us.

Hong Kong Head Office              Room 803, Futura Plaza, 111 How Ming Street, Kwun Tong, Hong Kong
                                                 TEL +852 2341 1444      FAX +852 2341 1414      E-mail info@bycpa.com

Shenzhen Office   TEL +86 (0755) 82684480 82684483 82684484 FAX +86 (0755) 82684481
Shanghai Office   TEL +86 (021) 64394114 64399276 FAX +86 (021) 64394414
Beijing Office   TEL +86 (010) 68748420 68748422    FAX +86 (010) 68748421  

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