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Company registration in China

The most obvious way for foreigners looking to do business in China is to set up a Wholly Foreign Owned Enterprise, abbreviated as WFOE or WOFE. What is a WOFE ? Under Chinese law, a Wholly Foreign Owned Enterprise is a limited liability company that is fully owned and capitalized by foreign investors and operated without a local (Chinese) partner. This provides you with greater control over your businesses operations, revenue and profit targets. Since it is a separate legal entity, it also limits your liability to the contributions made to the registered capital of the WOFE. A WOFE is the favorable option for an overseas company that wants to that wants to enter the Chinese market.

Required Materials

1.Three to five alternative names for the company, with the Chinese name ending in “有限公司” and the English name ending in “limited”.

2.Identity proof, address proof, and signature samples of shareholders and directors.

3.The minimum registered capital is HK$10,000, and no capital verification is required.

4.A local registered address in Hong Kong.

5.A clear business scope.

6.Appointment of a statutory secretary.

7.Other documents such as the company's articles of association, which are prepared with the assistance of the secretary company.



Registration Time

Normally, it takes about 12-15 months from filing a patent application to getting a certificate.

Submit

Confirm

review

14 days

accept

7 days

The trial

6-9 moths

announcement

3 moths

success

finish

Generally, the name approval is relatively fast.

The time for preparing documents depends on the specific situation. Without special circumstances, the registration can be completed within 1 - 3 working days after submission. If there are special circumstances such as notarization, it may take about one week. The company's registration information can be checked on the government website about 2 hours after successful registration

Taxes to be Paid

1.Corporate Profits Tax: The tax rate for the first HK$2 million of profits is 8.25%, and for the part exceeding HK$2 million, it is 16.5%. No tax is payable if there is no profit.

2.Property Tax: Generally, limited companies can be exempt from property tax for rental income from properties and only need to pay corporate profits tax.

3.Salaries Tax: Income generated in Hong Kong, or obtained from holding any position, being employed, or receiving a pension within the territory of Hong Kong is subject to salaries tax.


Advantages of Establishing a Company

1.Mature trade network, facilitating international trade.

2.Diverse support policies and subsidies.

3.Simple tax system with low tax rates, and without various complex taxes.

4.Free capital flow, no foreign exchange control.

5.High degree of business freedom. Most industries are unrestricted. The requirement for registered capital is low and no actual contribution is required.

6.Enjoy preferential policies for foreign - invested enterprises when investing in the Chinese mainland.

7.Conducive to brand building and enhancing international competitiveness.


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FAQ

  • Q: Problem: The company name is rejected.

    Solution: According to the standards of the Hong Kong Companies Registry, the name cannot be the same as an existing registered company or contain sensitive words. If rejected, submit a new name. Prepare multiple alternatives in advance and avoid using words similar to well - known brands or institutions, as well as those that are misleading.

  • Q: Problem: It is difficult to authenticate the identities of non - Hong Kong resident shareholders or directors.

    Solution: For non - Hong Kong resident shareholders or directors, notarize and authenticate identity documents through local notary offices or law firms, and then submit them to the Hong Kong Companies Registry.

  • Q: Problem: Unclear equity distribution and decision - making mechanisms among shareholders.

    Solution: Before registering the company, shareholders should sign a detailed shareholders' agreement to clarify equity ratios, capital contribution methods, decision - making mechanisms, profit - sharing methods, etc.

  • Q: Problem: Unable to provide a local registered address in Hong Kong.

    Solution: Seek professional secretarial service companies, which usually can provide compliant registered addresses. Ensure the address is real, valid, and suitable for receiving important documents.

  • Q: Problem: Registered address change.

    Solution: Submit an application along with supporting documents to the Companies Registry for address change registration within 15 days after the change.

  • Q: Problem: The registered capital is set too high or too low.

    Solution: Determine the registered capital based on the company's actual business needs, development plans, and factors like business scale.

  • Q: Problem: Subsequent adjustment of registered capital.

    Solution: The registered capital can be adjusted. An increase may require payment of stamp duty, and a decrease must follow strict procedures to protect the interests of creditors.

  • Q: Problem: Lack of understanding of tax policies leading to incorrect or missed tax filings.

    Solution: Hire professional Hong Kong accountants or tax advisors. The company itself should also enhance tax knowledge learning and establish a sound financial management system.

  • Q: Problem: Uncertainty about whether the company's profits are sourced from Hong Kong and thus whether to pay taxes.

    Solution: Consider the nature and characteristics of profit - generating transactions and the location of relevant business activities. Profits generated outside Hong Kong may not be subject to tax, but sufficient evidence should be provided to the tax authority.

  • Q: Problem: Forgetting to conduct the annual company review on time.

    Solution: Set reminders or entrust professional secretarial companies to handle the annual review to avoid fines.

  • Q: Poor - quality secretarial services.

    Solution: Select secretarial companies with qualifications, good reputation, and professionalism. Understand service details before signing the contract. If there are problems, communicate promptly or consider changing the company.