China WFOE Taxation services
Hotline: 86-755-82143348, Email:amyhuang@citilinkia.com
China Wholly Foreign Owned Enterprise (China WFOE) is an independent China legal entity registered with only foreign capital under the laws of China. The Board of directors (if any) and legal representative are appointed by the foreign parent company. The WFOE is governed by the China company laws and regulations. The WFOE is similar to a limited liability company in Hong Kong. Legally, the minimum capital to be registered can be as low as USD15, 000 (RMB100, 000). However, the registered capital is usually much higher than this. The registered capital is dependent upon the WFOE type (business scope) and other practical reasons.
Taxes
WFOE pays enterprise income tax (and other turnover taxes if applicable). The tax rate has been leveled with local Chinese companies at 25% of the net profits. The tax is usually paid on a quarterly basis to the State tax bureau.
There are still some cities giving out tax concessions to encouraged industries or export-oriented industries to pay enterprise income tax at a reduced rate at 15%. However, these tax incentives are getting more difficult to obtain as the qualification process becomes much more stringent.
The individual income tax of the employees of the WFOE must be deducted and withheld from the salary payment on a monthly basis. The employer is obliged to deduct tax at source and paid to the Local tax bureau.
Taxation of a Wholly Foreign-Owned Enterprise
There is a great variety of different taxes in China, and a WFOE may have to file various different types of tax return, monthly, quarterly or annually, covering Enterprise Income Tax, Value Added Tax, Business Tax, Consumption Tax, Stamp Duty, Land Appreciation Tax, Withholding Tax (on foreign remittances), and, if there are employees, Income Tax and social security contributions, which are withheld from pay on a 'PAYE' basis.
The headline rate of taxation for a WFOE on its profits is 25%, the same as for Chinese-owned companies since 2008. Some companies may be able to take advantage of a 15% tax rate if they have successfully 'grandfathered' their previous status; and there are regional and national incentive schemes in particular sectors which allow for lower rates.
Contact Us
If you have further queries, don’t hesitate to contact Tannet anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net or www.shenzhen-company.net , or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143348 or emailing to amyhuang@citilinkia.com.