people walking along shanghai, china

Answers to Common Questions about Company Registration in China

You have probably heard or read about companies that went to China and are now respected global brands making a lot of profits annually.

It is true, and you can also achieve similar levels of success. However, most people have a lot of questions, such as, “What are different forms of companies that one can open in China?” and “What documents are needed?” 

5 Frequently Asked Questions about Company Registration in China

To help you make up your mind about company formation in China, this post provides all the answers that you need.

1. Is it Possible to Enjoy Lower Tax Rates for Your Chinese Company? 

One of the reasons why China has become very attractive to investors is because of different tax incentives.

If you want to enjoy lower tax rates, there are three things that you can do. 

  • Go for company formation in areas away from coastal cities. 

  • Open your business in the encouraged areas. 

  • Using free economic areas for your business to enjoy more economic incentives. 

2. What Options Do You Have when Registering a Company in China? 

There are a number of companies that you can incorporate in China. The most preferred option is the wholly foreign-owned enterprise (WFOE) because it provides investors with full control over their businesses.

Here is a list of the most common types of companies you can register in China Kong

  • Wholly foreign-owned enterprise (WFOE). 

  • Joint venture (JV). 

  • Representative Office (RO)

3. What is Company Scope and Why is It So Important During Company Formation in China? 

To promote fast economic growth, China puts a lot of emphasis on the areas with the potential to promote faster growth. For example, companies in the manufacturing niche receive a lot of support because they have the potential to employ many people and promote growth in other areas of the economy.

Consider Checking the Catalog of Foreign Investment Industries to make the right decision about the scope of your company. 

4. What is the Simplest Method of Registering a Company in China?

It is true that registering a company in China can be lengthy and complicated because one needs to deal with multiple departments.

However, this should not prevent you from expanding to China. The simpler and more convenient method of registering a company in China is using an agency. The firm of experts will work with you to: 

  • Pick the company formation of choice, and prepare the documents for incorporation. 

  • Apply for the approval certificate, and business license. 

  • Register with the Public Security Bureau, and Tax Bureau.

  • Assist you to craft good strategies for success in China.

5. What are the Different Tax Obligations for Companies in China? 

China takes matters of taxes with a lot of seriousness. Here are the main tax obligations for companies operating in China. 

  • 25% corporate income tax (tax on profits). You might enjoy lower rates for opening a business in the encouraged areas. 

  • 3-5% transaction tax, also known as turnover tax. 

  • Value-added tax. Note that this tax varies from 3% to 9% depending on the industry. 

  • Custom duties. These are taxes levied on goods imported to or exported from China. 

  • Individual income tax, which is charged on dividends levied by business partners and staff salaries. 

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