Forming Companies

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China Company

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Representative Office

China government decree new "RO regulations for foreign enterprises" will be effect on March - 1, 2011. And main different between current and new regulation is here.

For Representative Office (RO) setup, mother company needs to be at least 2 years old.
And, below cost and fee are examples and applicable only to big cities like Shanghai (SH) and Beijing (BJ). Please contact us for further detail. Thank You.
 
Tax Implications
Although a RO is not to conduct business, it attracts tax on
  • Chief Representative, general representative and local staff's Individual Income Tax (IIT) on monthly income;
  • Business Tax (BT) base on quarterly operational expenses;
  • Income Tax (IT) base on quarterly operational expenses;
  • Additional Tax base on quarterly Business Tax (BT).
Rough elaboration on BT & IT payable
  • Business Tax = Deemed Turnover x 5%
    Total Expenses = Deemed Turnover x 80%
    Deemed Turnover = Total Expenses / 80%
    Business Tax = (Total Expenses / 80%) x 5%
    Income Tax = Deemed Profit x 25%
    Deemed Profit = Deemed Turnover x 15%
    Income Tax = (Total Expenses / 80%) x 15% x 25%
    Business Tax + Income Tax = (Total Expenses / 80%) x (5% + 15% x 25%)
    Business Tax + Income Tax = (Total Expenses / 80%) x 8.75%
    Therefore, Business Tax + Income Tax = Total Expenses x 11%
Additional Tax
  1. River Tax = Business Tax x 1%
    Urban Maintenance and Construction Tax = Business Tax x 7%
    Education Surcharge = Business Tax x 3%
     
  Important
  • These tax rate are examples and applicable only to Shanghai;
  • For other regional, please contact us for detail.
  
     
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