The latest from China & Hong Kong

Quick answer: Foreign shareholders registering a company in China must provide authenticated identity and corporate documents. Since 7 November 2023, when the Apostille Convention took effect in mainland China, documents from other member countries need only notarisation and an apostille (the Apostille China route), without consular legalisation. Documents from non-member countries still require legalisation, and Hong Kong documents follow a separate attestation route. Docume

Quick answer: Holding a China WFOE through a Hong Kong holding company can reduce withholding tax on dividends from 10% to 5% under the Mainland–Hong Kong tax arrangement, and makes regional restructuring easier. The reduced rate only applies if the Hong Kong company is the genuine beneficial owner with real substance. Set up the Hong Kong company first, because it becomes the WFOE's shareholder. Many foreign groups put a Hong Kong company between the parent and the China WFO

Quick answer: The accounting cost for a WFOE in China is driven mainly by transaction volume, meaning the number of bank transactions, fapiao and expense claims each month. Other factors are VAT status, payroll headcount, cross-border payments and the reporting your head office needs. Annual work, such as the statutory audit and corporate income tax reconciliation, is usually priced separately. A clear quote should show both. Founders comparing China accounting quotes often f

Quick answer: You can change your China accountant at any time, but the safest point is right after a month's tax filings are submitted, or after the annual audit and CIT reconciliation. A good handover transfers original accounting records, electronic tax bureau access, e-fapiao settings, bank tools and payroll data, and checks for open issues before the new firm files anything. Many foreign owners stay with an accountant they are unhappy with because they fear a missed fili

The fourth phase of China's Golden Tax System has been operational since 2022, and it represents a fundamentally different approach to tax administration than the phases that came before it. Where earlier phases focused on building a comprehensive national database of invoices, Phase Four is built to actively analyse that data, cross referencing it against contracts, payment records, banking information and, increasingly, logistics data. What is actually being matched In prac

Foreign investors who set up a WFOE with a straightforward plan to distribute profit each year are often surprised, the first time they actually try to pay a dividend, to learn that not all of the company's after tax profit is available for distribution. Chinese company law requires every foreign invested enterprise to set aside a portion of its profit into a statutory reserve fund before anything can be paid out to shareholders. How the calculation works The requirement is t

China's Personal Information Protection Law has always set out three lawful mechanisms for moving personal information outside the country: a CAC security assessment, a standard contract with the overseas recipient, or third party certification. For several years, the certification route existed on paper without detailed implementing rules. That changed with the Measures for Certification of Cross-Border Personal Information Transfer, issued jointly by the Cyberspace Administ

Shenzhen's Qianhai Shenzhen Hong Kong Modern Services Industry Cooperation Zone and Guangzhou's Nansha zone both offer foreign investors a reduced 15 percent corporate income tax rate against the standard 25 percent national rate, provided the enterprise fits the relevant encouraged industries catalogue and can demonstrate genuine operational substance inside the zone. That substance test typically looks at where management, staff, finance and assets are actually based, not j

Not every foreign investor wants to fund a Chinese subsidiary purely through registered capital, particularly given the five year deadline to pay in subscribed capital under the current Company Law. A foreign shareholder loan, sometimes referred to as a WFOE loan, offers a way to inject working capital or fund expansion without diluting ownership or committing further equity, and it constitutes external debt for the Chinese entity. Registration is not optional Every foreign s

China's outbound investment regime has just been substantially rewritten. The Regulations on Outbound Investment, approved by the State Council in April 2026 and effective from 1 July 2026, replace a framework that had historically been split between the National Development and Reform Commission and the Ministry of Commerce, with limited coordination between the two. The new regulation consolidates this into what it calls full process, classified and graded supervision, exte

From 1 January 2026, the implementation regulations for China's VAT Law came into force, and with them the fully digitalised e-fapiao took on explicit statutory standing as the sole legal invoice format. The hardware based tax control devices that businesses previously relied on to issue paper fapiao have been retired. Invoices are now generated directly through a company's electronic tax bureau account, or through an integrated third party platform, and are synchronised with

Alongside dividends, many foreign groups move value out of a Chinese subsidiary through royalties for the use of trademarks, patents, proprietary technology or copyrighted material. Structured correctly, royalty payments are deductible business expenses for the Chinese entity, which makes them an attractive complement to dividend planning. Structured carelessly, they attract close scrutiny from both the tax authorities and customs. How the tax sits Royalties paid to a foreign

Profit that looks healthy in a WFOE's management accounts cannot leave China on request. It has to survive a completed annual audit, a settled tax position, and a foreign exchange filing before a bank will process the remittance. Founders who leave this planning until they actually need the cash often find that years of intercompany invoicing and undocumented transactions become the obstacle. Before any dividend can be declared, the company must have made good any prior year

A wholly foreign owned enterprise in China does not cease to exist because it stops trading. Until it is formally deregistered, it continues to carry tax, accounting, annual reporting, banking and corporate record obligations, whether or not it has any active business. Closing a WFOE properly is a legal process involving several government authorities, and treating it as an administrative formality is one of the more expensive mistakes a foreign investor can make. Since SAMR

Every company in China, foreign-invested ones included, runs on an annual compliance cycle that is more demanding than many founders expect. It is not a single tax return. It is an audit, a reconciliation of the year corporate income tax, and a set of annual filings, all falling within a defined window early in the year. Miss the window and the company standing suffers in ways that are slow and awkward to repair. The three things that happen each year The annual cycle bundles

Accounting software has become genuinely good, and it is tempting to conclude that a small China entity can run its finances on a subscription alone. Software handles the mechanical parts well. What it cannot do is exercise judgement, take responsibility, or deal with the authorities on the company behalf. Those are exactly the things a China finance function most needs, and they are why an appointed finance manager remains valuable even for a lean operation. What software do

Before you wire a deposit to a Chinese supplier or sign with a new partner, there is a basic check worth doing that costs nothing but time. China maintains a single official, free, public database of company registration information, known by its initials GSXT. It is the canonical source, and every commercial lookup service ultimately draws from it. Knowing how to read it, and knowing what it does and does not prove, is a small skill that prevents large mistakes. What GSXT is

For most of the history of China Company Law, a company had to have a supervisor or a board of supervisors, a role meant to monitor the directors and senior management. For foreign companies this was often an awkward requirement, filled by whoever was available and rarely active. The 2024 Company Law reworked this, giving companies more flexibility and, for smaller ones, the option to do without a supervisor entirely. Understanding the new choices matters, because the default

Paying an employee in China is not simply a matter of transferring a salary. Around that salary sits a system of mandatory social insurance and housing fund contributions, split between employer and employee, calculated on rules that vary by location and change over time. For a foreign company, getting this right is both a legal duty and a reputational one, because employees notice quickly when their contributions are wrong. The two halves of the payroll A China payroll has a

The first real decision in setting up a wholly foreign-owned company in China is not how to register but what to register. The business scope you choose determines which licences you need, how long setup takes, and what you are legally allowed to do once you are running. Getting it wrong is expensive to fix, because changing the scope later means going back through parts of the registration process. The three most common profiles are consulting, trading, and manufacturing, an