WFO ENTERPRISE PRESENTATION
Overview
Incentives to which SZ is exclusively entitled
Business Scope
Registered and paid-up capital
Taxation
Annual Return
Employment
Term And Termination
Documents Required
Our Service
How to Begin
WFOE means wholly foreign owned enterprise. If you want to invest in Shenzhe China, you don't just turn to the relevant government departments for so many certificates and formalities, but turn to HKCFM. At HKCFM we don't just give service, we are familiar with authorities' formalities. We are able to finish the formation of your company to your satisfaction.
OVERVIEW OF WFOE
The Wholly Foreign Owned Enterprise(WFOE) is a Limited liability company wholly owned by the foreign investor(s). In China, WFOEs were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology into China. However, with China's entry into the WTO, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well. Back
Incentives to which SZ is exclusively entitled
As well as a set of nationally applicable preferences, foreign investors in Shenzhen enjoy a package of exclusive incentives:
1. While corporate income tax stands at 15%, a three percentage of local income tax is also exempted.
2. Export companies at the expiration of tax exemption and reduction period enjoy a reduced rate of 10% for income tax provided the export volume accounts for 70% of the total industrial output. Local enterprises using state-of-the-art technology at the expiration of tax exemption and reduction period are entitled to a reduced tax rate of 10% for a 3-year extension.
3. Foreign invested operations engaged in high-tech industries are free of income tax for 2 years and enjoy half reduction for the ensuing 8 years. Having successfully absorbed the related technologies and started production, the high-tech projects are given3 years of income tax exemption on the profit hitherto made regardless of previous tax incentives.
4. The VAT of high-tech businesses (projects) with foreign investment is computed against last year's figure and 50% of the local portion of the newly added VAT shall be returned to the enterprise by the municipal financial department.
5. Newly-established foreign invested enterprises with an export orientation need only pay half of the land use fee for industrial purposes. The same is true of certified projects involving update technology for a span of 5 years. As for the land used by high-tech businesses (projects) no fee is collected from the transfer of land-use rights.
6. The manufacturing and operation sites newly built or purchased by high-tech enterprises are free of property tax for 5 years. Other projects enjoy a 3-year exemption from property tax.
7. Technological achievements counted as contribution by companies with limited liability can take up as large a proportion as 35% of its registered capital pending certification of high-tech status by the Municipal Bureau of Science and Technology.
8. Overseas-based Chinese students and professionals intent on starting technology-intensive entities in Shenzhen may transcend the residence inadequacies of the shareholder. Payment of registered capital can take the form of installments in two years in cases where it fails to be an once-off placement.
9. Encouraging domestic and overseas venture investment bodies to make their presence in Shenzhen. Given local registration and a minimum investment ratio of 70 percent in the hi-tech sector, such investment entities are entitled to all the tax holidays and other incentives enjoyed by the hi-tech firms. A 3 percent to 5 percent of the year?|s total profit can be withdrawn as risk compensation fee to make up for the loss incurred during the previous year and the current year. The remaining amount of the risk compensation fee is settled on an annual basis provided the sum does not exceed 10 percent of the net assets of the company.
10. H-tech companies run by foreign investors (including those from HK, Macao and Taiwan) can be registered as domestic-funded ones if their capital contribution is below 25 percent of the registered capital.
11. Foreign investment in the local service sector exceeding US$ 5 million with a business tenure of at least 10 years is entitled to income tax exemption for the first profit-making year and half reduction for the second and third years.
12. Foreign banks or sino-foreign equity joint venture banks in Shenzhen are exempt from business tax for 5 years commencing on the date of opening.
13. Goods made and sold locally are free of VAT in the production process.
14. Goods imported by foreign invested enterprises engaged in export processing businesses are exempt from import-related VAT and consumption tax.
15. Processing businesses undertaken by enterprises or commercial entities with import-export license and certified qualifications for processing and assembly operation are free of consumption tax as well as VAT levied on the industrial fees.
16. Industrial fees derived from processing businesses by commercial entities for all types of processing enterprises are free of VAT and consumption tax.
17. Bonded processing enterprises with export priority are, upon approval by the Customs office, permitted to set up bonded factories for processing trade. Imported facilities for the processing, assembly and production of export goods for foreign investors are allowed deferral in going through formalities for import taxation. Imported materials used for processing finished products for export enjoy exemption from tariffs and VAT.
18. The foreign business community in Shenzhen have long had access to national treatment. In the production of goods not restricted by State quota or permits, foreign invested entities are free to determine readjust the market share of domestic and overseas sales according to actual needs. They have the same standards in paying the utility bill with their domestic-funded counterparts. Foreign staffs working and living in Shenzhen enjoy equal service and are charged at the same rate with local citizens when it comes to renting or purchasing houses, seeking medical consultation or visiting scenic attractions. Back
BUSINESS SCOPE
One of the most important issues covered in the project documentation is the business scope of the WFOE. Business scope is narrowly defined for all businesses in China and the WFOE can only conduct business within its approved business scope, which ultimately appears on the business license. Amending the business scope requires further application and approval. Inevitably, there is a negotiation with the approval authorities to approve as broad a business scope as is permitted. General business scope usually includes, investment consulting, international economic consulting, trade information consulting, marketing and promotion consulting, corporate management consulting, technology consulting, manufacturing, etc. Back
REGISTERED AND PAID-UP CAPITAL
For the WFO enterprises, the registered capital is required as much as RMB1,000,000(about USD130,000), In China the paid-up capital is equal to registered capital, Investors or shareholders must pay the their shares to the specific bank, which should be audited by the certified public accountant. Back
GENERAL TAX INFORMATION
In Shenzhen the corporate tax ranges from15% to 31%, depending on different regions, and Shenzhen, Zhuhai , the Special Economic Zones are among the lowest in the region, The profit tax is only 15%. In China, tax system is more complex , any enterprises are required to report to the Tax Administration Department monthly. If you like more information, you are welcome to contact us for more information. Back
ANNUAL RETURN
Any limited companies in Shenzhen should summit annual return to the relevant authorities. The annual cost is about USD500. If we fail to do so, we may be subject to a fine. Back
EMPLOYMENT
Employment is a privilage in China. China occupies one quarter of the world population, So China provides cheap labor, which can lower our cost. Back
TERM AND TERMINATION
In China, terms of 15 to 30 years are typical for a manufacturing WFOE (although some may have a longer term). It is also possible to obtain extensions of the WFOE's duration. For projects in which the amount of investment is large, or the construction period is long and the return on investment low, projects producing sophisticated products using advanced or key technology provided by the foreign partner, or for projects producing internationally competitive products, the term of WFOE may be extended to 50 years. With special approval from the State Council, the term may be even longer than 50 years.
The WFOE may be terminated under certain conditions, for example, the inability of the WFOE to operate due to heavy losses, in the occurrence of an event of force majeure, etc. Back
REQUIREMENTS FOR RELEVANT APPLICATION FORMALITIES
If we want to set up a WFOE IN Shenzhen, we should offer the following documents:
1. A project proposal and feasibility study report ( in print and under the company seal) ;
2. Original copies of the application paper and the resolution by the Chairman of the Board of the foreign investor (in printed form signed by members of the Board and with company chop)
3. Copies of the business licenses or certificates of incorporation of the foreign investor (usually with the permission chop from the government department.).
4. An original copy of leasing agreement with chop of the Housing Department.
5. Directors name list of board or management institution name list, importing equipment list.
6. An original copy of the corporate ratification paper (2 copies in duplicate).
7. Two original bank credibility letters for the foreign investors, stating a 7-digits bank balances, issued within 6 months in both English and Chinese language.
8. A copy of the approval paper for corporate formation and other papers for company alterations (the original are required for check-up).
9. Notice of enterprise's name confirmation appraised by the Industry & Commerce Administrative Bureau.
10. Contracts and charter versions (signed by legal representative or Bailor).
11. Two photos of the legal person of WFOE.
12. An application form for company alteration.
13. A copy of the stub of corporate certificate of approval.
14. Whole set of materials for application of project establishment and approval documents(original)for project establishment. Back
PROCEDURES
1. Drafting application papers, standard articles of association, standard feasibility study, and providing samples for necessary documents such as board resolution, bank reference letter, etc., The application papers and resolution should be signed by the Chairman of the Board (in printed form with company chop)
2. Obtaining approval and relevant certificate by Foreign Economic and Trade Bureau
3. Researching and obtaining approval for the company name of WFOE from Industrial and commercial registration office.
4. Obtaining approval or certificates from various authorities such as the Planning Bureau, the Foreign Economic and Trade Bureau, the Industrial And Commercial Registration Office, the Statistics Bureau, the National Taxation Administration Bureau, the Local Taxation Administration Bureau, the Public Security Department, the Environmental Protection Bureau. the foreign Exchange Administration Bureau and the Customs etc.
5. Opening necessary bank accounts, obtaining a report of corporate capital verification issued by a Chinese certified public accountant(CPA). Be ready with the original copy for check-up.
6. Obtaining the necessary work permits and resident permits for the legal representatives, etc. Back
SERVICE AND PAYMENT
At HKCFM, we are able to offer all services required for establishing a Wholly Foreign Owned Enterprise on a reasonable price and high quality basis. We provide the services as follows at a price of USD2000;
HOW TO BEGIN
Download and fill in the application form, fax or email to us. When we receive your request, we'll send you a confirmation letter for your final decision. At this time you pay 50% down payment, and we begin to process your application. Back |