Q&A about Import & Export Right of China Trading WFOE

Application for import & export right/license of trading Wholly Foreign Owned Enterprise(WFOE/WOFE) in China can be called a necessary certificate of China trading companies. Many enterprises have a smattering knowledge of the policies and laws related to import & export right certificate of China trading WFOEs, today, we simply share the experience with you about several conditions the enterprises often encounter and hope to help the entrepreneurs!


No.1 Q: Our company did not apply for import & export right at the beginning, but now plans to carry out international trade, how shall we additionally apply for import & export right?

A: If you want to engage in foreign trade business, you must apply for import & export right. Although you can look for a foreign trade agency, we sincerely do not recommend you to do so since it only throws more money away and the profit is taken away by the others, you’d better to apply for import & export right, which is once for all. However, the formalities of handling export rebates are tedious and complex, if you are not familiar with the process, you’d better find an agency so as to avoid waste of unnecessary time and manpower.

The process of applying for import & export right is as follows:

• Handle the filing registration formalities for foreign trade operator with the foreign trade and economic cooperation department to obtain the import & export qualification.
• Add the operation scope “import & export of goods, technologies and agency for import & export” with the industrial and commercial bureau.
• Register in the Customs and enter the Customs system to obtain the Customs import & export code for use of customs clearance in case of import and export.
• Carve a “Special Seal for Customs Clearance”.
• File with the Entry-Exit Inspection and Quarantine Bureau and obtain the quarantine filing code.
• File and handle approval of IC card in the China E-Port Data Center, Hangzhou Branch, network the data of several departments such as customs department, quarantine department, State Administration of Foreign Exchange and State Administration of Taxation for use of import payment and export application verification sheet, foreign exchange collection and tax reimbursement.
• Obtain the permit for opening foreign exchange account in the provincial administration of foreign exchange and file for export.
• Handle formalities for tax reimbursement registration in the provincial SAT

No.2. Q: Is it required to pay any expenses for applying for import & export right?

A: The formalities for applying for import & export right are extremely tedious and complex, and generally, various expenses sum up to be several Thousands Yuan, which differs, we suggest that you’d better apply for and handle through an agency, which is worry-free and convenient, and you can input more efforts to developing company business.


No.3. Q: What qualifications does application for import & export right require?

A: The following are the conditions to be possessed by the enterprises for applying for import & export right (with no limit on registered capital, and small-scale taxpayer can also apply):
1. Has obtained business license;
2. Has handled tax registration with the SAT and local taxation bureau and legally pay taxes;
3. Has handled organization code certificate.



Import & export right is the qualification of the import & export enterprises for carrying out import & export business, whose handling requires a relatively complex approval process, the enterprises planning to apply for import & export must obtain the approval from relevant departments such as Bureau of Commerce, the Customs, Inspection and Quarantine, Administration of Foreign Exchange and E-Port, and obtaining the approval certificate of the above departments indicates that the company possesses the right of self-support of import & export. The enterprises having import & export right can engage in the import & export business independently by themselves. Whether to engage in the import & export business immediately is determined by the enterprises themselves. Unlike before, the import & export right may be canceled for those having obtained the foreign trade right but having no certain import & export performance.

Application documents:

• Original of the original and duplicate of the business license;
• Original of organization code certificate;
• Original of the original and duplicate of the SAT;
• Original of permit of opening bank;
• Copy of Articles of Association of the company;
• Original of ID card of legal representative;
• Copy of ID card of financial staff and customs declarer;
• Official seal of the company and private seal of legal person;
• Original of lease contract;
• Original of approval certificate (foreign trade company shall provide);
• Office phone, fax and e-mail of the company;
• Accurate English translation of the name and address of the company;
• Customs declarer certificate, Customs declarer card and foreign exchange auditor (do not need to provide if not available);
• The original shall be submitted for those items not indicating submitting the copy. The submitted copy shall be checked with the original, if the original can not be submitted, it shall be indicated with “consistent with the original” with official seal affixed by the company.

No.4. Q: What certificate shall be handled for sales of imported food?

A: Sanitary certificate shall be issued by the entry-exit inspection and quarantine when imported food is imported, and the seller shall handle permit for food circulation.


No.5. Q: What formalities shall be handled for adding the import & export operation right?

A: No pre-approval is required, you can directly go to the market supervision administration department for handling change registration of operation scope. Only the laws, administrative regulations and the decisions of the State Council can stipulate the licensed business items, and other rules and regulations, normative documents, etc. can not.


No.6. Q: Can newly-built enterprises operate import & export tax reimbursement exemption business?

A: Newly-built enterprises can directly apply for import & export right, it has no special requirements for fund and other aspects, however, it requires that the operation scope in the business license of the enterprise shall possess import & export-related content. An agency can be entrusted to handle application for import & export right and tax reimbursement exemption.


No.7. Q: How many relevant certificates shall be applied for application for import & export right?

A: 5 certificates shall be applied for, including filing registration form of foreign trade operator of Bureau of Commerce, filing registration certificate of enterprise self handling declaration for inspection and quarantine, customs clearance registration certificate of import & export consignee and consignor of the Customs, e-port legal person card and operator card, etc. The official cost of production fluctuates along with the commodity price.


No.8. Q: What services does the agency applying for import & export operation right have?

A: The services of the agency include: handle addition of operation scope in the industrial and commercial bureau, handle filing registration of foreign trade operator in Bureau of Commerce, handle registration of enterprise self handling customs clearance in the Customs, handle filing registration in Entry-Exit Inspection and Quarantine Bureau, handle Chinese e-port registration and receive IC card in the E-Port, handle opening of foreign exchange account of current items of domestic institution and cancellation registration of import (export) foreign exchange collection in Administration of Foreign Exchange and handle export tax reimbursement registration in local SAT until import & export right is possessed and self-run import & export business can be carried out.


No.9. Q: How to handle application for import & export right?

A: To apply for import & export right, you shall handle filing registration of foreign trade operator in Bureau of Commerce firstly, with about 7 departments including industrial and commercial department, tax department, the Customs, Entry-Exit Inspection and Quarantine Bureau, E-Port, Administration of Foreign Exchange, etc.
involved.


No.10. Q: Which kind of enterprises can apply for import & export right?

A: Since the Foreign Trade Law was issued in 2014, the national policy for the enterprises to apply for import & export has been completely loosened with no limit on the registered capital and annual import & export amount, those with complete and consistent basic certificates such as business license can apply for import & export right.


No.11. Q: What is the use of import & export right of the company?

A: If you company has import & export right, you can engage in general trade import, hire a customs broker to help you declare at the Customs and apply for export rebates. If you engage in general trade import, generally, you have to pay all customs duties and handle many customs clearance formalities. You can consider Hong Kong express import, so you will not need to handle formalities, directly hiring an agency for customs clearance is OK.

Understanding a China Company's Registration Address in 3 Minutes

One of the keys to registering a China company is the company's registration address. Why does a company in China need a registration address? Today, in order to help you sort it out, we will help you find out what you need to know about the company's registered address in 3 minutes!



 The birth process of a company is very similar to that of a baby. For example, after babies are born, various types of information are needed to establish the baby’s identity. One of them is the home address of the baby. When a legal person is “born” (that is, when a company is established), it also needs it’s “home address”, and this address is called a “company registration address”.

If you do not have a registered address, your company will be difficult to produce. So when creating a company, you must have a registered address. What do you need to pay attention to regarding the company's registered address?

A. There can only be one registered address

China’s law clearly stipulates that there can be only one corporate address. Therefore, in the case of multiple offices, one of them should be established as the main office according to the nature of the business handled by each office.  And, the main office should be used as the registered address. 

B. There are different rules for different cities for which type of buildings can be used as the registered address of the company.

1. The rule in most cities is that only property with the words “commercial”, “office building”, “integrated” and “shopping exhibition” written on the real estate license will be allowed to register as the company’s address.  Most of the time residential houses cannot be used as the registered address of the company(e.g.Beijing).

2. Some urban residential houses can be used to register any industry company(such as some western cities).

3. Some urban residential areas can only be used as registered and designated industry companies.

4. Coastal developed cities such as Shenzhen and Guangzhou are allowed to use residential areas as the registered address of the company, but they need the consent of the property or local residents' committees or even neighbors.

5, Tianjin and other cities using residential houses on the bottom floor of the housing for commercial purposes can also apply for a company registered address, but the industry will be limited.  Companies involved in catering, entertainment, Internet cafes, etc. are not allowed.

In fact, it depends mainly on the specific conditions of the city in which your company is located. The more entrepreneurship is encouraged, the more relaxed the conditions for a company to establish a business in the company's registered address will be.

C. Both suburban industrial parks and urban incubators may serve as places for registered companies.

Some cities want to encourage entrepreneurship, but the release of residential houses as a registered address brings other problems. Therefore, another scheme is adopted. Some economic zones and development zones are approved around the urban areas, such as the Chongming Economic Zone in Shanghai. , Baoshan Economic Park, etc., and entrepreneurs can apply to the park to start a business. Company registration in an industrial park provides a virtual address for companies to register. This address can be used free of charge for a long time. In addition to providing the company's registered address, these development zones can provide more convenient services.

Of course, there are also many agencies in the urban areas that provide similar services, that is, incubators and centralized office areas, such as Peking University Science and Technology Park, Joint Venture Office, etc. In the incubator or centralized office area, a desk may be used as a company registered address, which greatly increases the amount of limited commercial premises to provide more registered addresses, and also reduces the cost of company registration. After registering with these addresses, companies may work in other locations.


Comparison of the advantages and disadvantages between the registered address of a park and the registered address of an urban area:

1. In the case of companies entering a park, the park will provide some supporting services for bookkeeping. Urban companies need to book or outsource themselves. Incubators and centralized office areas also have bookkeeping services, but they need to be renewed each year.
2. The taxation in the park area is similar to the urban area in terms of tax returns.
3. Regarding taxation, a few parks can collect taxes, which is very convenient for the company.
4. In terms of tax return, in general, the tax return of the park is higher than that of the urban area.
5. The the case of the company needing to move, the park is more convenient.

D. To establish the company's registered address you need to prepare the following documents for the local industrial and commercial bureau.

If it is your own real estate, you need a photocopy of your real estate license and a copy of your own ID card;

If you are renting a house, you need a copy of the real estate permit, signed by the landlord, a copy of the landlord's ID, a lease contract signed and sealed by both parties, and a rental invoice;

If you rent an office building under a certain company name, you need a photocopy of the real estate certificate, stamped by the company's official seal, a copy of the company's business license, a lease contract signed and sealed by both parties, and a rental invoice.

E. The procedures for changing the registered address need to be reported to the industrial and commercial bureau in order to relocate to a new place.

1. Take the relevant documents of the place to be relocated to the Industrial and Commercial Bureau to apply for a change of business license. The Registration Authority of the place to be moved in will issue a Notice of Enterprise Relocation after a preliminary examination has been passed.
2. Hold on to the documents from the Industrial and Commercial Bureau to be transfered. The registration office of the evacuation area will send the registered files to the place of registration by postal mail.
3. The documents will be moved to the Industrial and Commercial Bureau to obtain a new business license.
4. Change the organization code certificate.
5. Change the tax registration certificate.

For more information, please contact Tommy China Business Consulting . 

China WFOE Formation: Business Scope Explanation

When you forming a Wholly Foreign Owned Enterprise (WFOE or WOFE) in China, you will encounter the business scope. The China company business scope is very much different from any other countries and must conform to the laws and regulations governing companies, as well as in accordance with national economic and business classifications.

A. Understanding of a China WFOE's Scope of Business

1. The scope of the business word limit

The pages of a company’s business license are limited.  As a result, regarding the written word count of the scope of business, there must be requirements.  Normally, that requirement is around 100 words.

2. Permitted industry crossover (inter-trade)

People often think that the business scope of the company must be the same as the company name, but that is not so. Business operations may exceed the industry attributes of the company name.

For example, Tommy China Business Consulting ., in addition to business services such as business consulting, business management consulting, and advertising planning, may also have product sales or import and export business.

In other words, the company's business scope can span multiple industries.

3. May increase or decrease business scope items

After the registration of the company is completed, and day-to-day business activities have normalized, the business scope can be increased or decreased at any time.  The procedures for changing the company must be followed.

4. Special attributes of the business scopes of foreign-funded enterprises

Since China still adopts an approval system for foreign-funded enterprises, there are certain restrictions on products or services that correspond to certain industries. Therefore, foreign-funded enterprises operating products or services in certain industries require more stringent approvals.

For example, the management of agricultural products and resource products needs approval from the Ministry of Commerce of the People's Republic of China.

The business scope of foreign-funded enterprises can refer to the “Foreign Investment Industry Catalog”.

5. Special industry products or services require the approval of industry authorities

In general, ordinary product sales or consulting services can be accepted directly by the industry and commerce bureau and registered with industry and commerce. However, a product or service that belongs to a pre-approved project needs to be approved by the competent authority of the industry before it can handle the business license.

For example, to operate food retail, you need to go to the health department to get a  “Food Hygiene Permit”.  You also must first go to the Bureau of Work Safety to obtain a “Dangerous Goods Business Permit” if you are dealing in the trading of dangerous goods.  And finally, you must first go to the liquor monopoly to sell alcoholic beverages. That Office handles the "Wine Wholesale License."

B. The "Company Law" Provisions of the Scope of Business

1. The business scope of the company is regulated by the company's articles of incorporation. The company cannot apply for registration beyond the business scope stipulated in the articles of association.

2. The business scope of the company must be legally registered. That is to say, the business scope of the company is subject to the approval of the registration authority. The company shall engage in business activities within the scope of business approved by the registration authority.

3. Projects within the company's business scope that fall within the limits of laws and administrative regulations must be approved according to law before being registered.

C. China WFOE Business Scope Considerations

  TCBC organizes its business scope for in the following categories

Service company business scope

1. China Service WFOE
Corporate image planning, technical services in the field of computer science, computer network engineering, technical services in the field of communications, technical services in the field of biochemical engineering, computer graphic design and production, exhibition services, photography services, market research, translation services, etiquette services, Public relations activities planning, cleaning services, wedding etiquette services, catering management, municipal engineering supporting services, property management, real estate development, logistics, freight forwarding, shipping services, maritime consulting services, and house repairs.

2. China Consultation WFOE

Real estate information consulting, financial consulting, investment consulting, business consulting, travel consulting, financial consulting, housekeeping consulting, labor consulting, investment management consulting, investment management, corporate management consulting, corporate marketing consulting, human resources consulting, education information consulting, legal Information consultation, book information consultation, medical information consultation, medical equipment technology information consultation, medical treatment, kitchen product use service consultation, culture and art consultation, car rental, automobile investment consulting, etc.

According to the relevant provisions of China's existing "Company Law", the company's business scope is determined by the company itself and is regulated by the company's rules and regulations.

How to Legally Avoid Taxes with a Hong Kong Company?

In China, many companies and individuals choose to register a company in Hong Kong. One of their main purposes is to avoid tax.

China domestic companies need to pay more taxes, which is a big expense for small businesses and individuals. Once the companies are registered, even if they do not operate and have no any income, they must pay a variety of different taxes every month, such as business tax, stamp tax, etc. Even if the companies bankrupt, they have to pay the cancellation fee, and they also need to pay stamp tax according to the companies’ registered capital. Therefore, it is necessary to open a Hong Kong company to avoid taxation. The tax avoidance here is reasonable tax avoidance, not tax evasion, so there is no legal risk.

How to avoid taxation after registering a Hong Kong company?

1. Use the Hong Kong bank account applied by a Hong Kong company. The business account of the Hong Kong company has no limitation of foreign exchange, and if there are no Hong Kong clients, you do not need to pay tax only by an application made by the company, because the policy of Hong Kong is "territorial source taxation".

2. If you have a company on the mainland, you can use the name of a Hong Kong company to talk about business. If the customer does not want a company in mainland China, then you can use a Hong Kong company account to receive remittances, so that there will be no business tax.

3. For export trade, you can use the Hong Kong company to get a cut of the discount, and this part also has no tax in the offshore company.

4. Usually there are many customers operating in this way: after registering a Hong Kong company, they receive orders from overseas by name of the Hong Kong company. Assuming that the order amount is USD100, 000 and if the amount to the domestic factory for production export is USD70, 000 you can ask customer to pay the money into your Hong Kong company account. Then we can pay the cost of USD70, 000 back to the domestic factory to complete the write-off and your Hong Kong company has already earned USD30, 000 in profits. As long as the profits earned by Hong Kong company do not come from Hong Kong's mainland, they can be reasonably tax-free and no need to pay profits tax to the Hong Kong Government.

5. The reasonable matter is to make reasonable tax avoidance through the loopholes in the national tax laws and regulations.

In practice, there are different tax avoidance methods for different objects of taxation. One of the basic methods is to use related transactions to take the form of transfer pricing, that is, affiliated companies implement products or non-products transfer in higher or lower than the normal market price to jointly obtain more profits. In this transfer, the transfer price of products is according to the wishes of both parties in order to pay less tax.

6. Operate through a Hong Kong company, and then make account by an accountant, to minimize the net profit, and pay less tax.

7. Apply for zero declaration directly, that is, zero declare goods for duty. In this way, less tax will be generated and the effect of reasonable tax avoidance will be achieved.

Reasonable tax avoidance is very important for a company, and according to the statement of an economist: Without tax avoidance, 95 percent of China's enterprises will go bankrupt. Thus it can be seen how important tax avoidance is. As long as use well of Hong Kong companies, and the different policies between China and Hong Kong, it is very simple to get a reasonable tax avoidance.

If any questions, welcome to contact TCBC.