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China WFOE
A limited liability company wholly owned by foreign investor(s).

Wholly Foreign Owned Enterprise ("WFOE"), a limited liability company wholly owned by foreign investor(s) with full control over management and operation in China.

Operation flow

Pros and Cons

Pros

  • With separate legal entity in China;
  • Feasible to carry out all business activities (subject to the business scope stated in business licence);
  • Negotiable for tax incentive with local government;
  • Allow to hire local staff;
  • More flexibility in company strategic management.

Cons

  • More complex application process and each step may have profound impact in future development of the company: business scope, financing, tax rates, director board management etc.;
  • Capital injection is required to meet the minimum level for specific industry and in specific territory of China (such as free trade zones and export processing zones). The minimum capital is around USD 140,000;
  • Even though WFOE is limited liability in nature, a legal representative needs to be appointed and take up unlimited liability of the WFOE.

Types of WFOE

TypesMinimum Registered Capital
In Free Trade ZoneRMB 10,000
ConsultancyRMB 100,000 - RMB 500,000
ServicingRMB 100,000 - RMB 500,000
Hi-TechnologyRMB 100,000 - RMB 500,000
Trading / FICE / RetailRMB 500,000 - RMB 1,000,000
Food & BeverageRMB 500,000 - RMB 1,000,000
Manufacturing / ProductionRMB 1,000,000 or USD 140,000
 
Registered capital maybe varied based on the setup location.

Documents requirement (general reference)

Prepared by client

  1. 5 enterprise's name (Chinese) to be prepared for new company
  2. The copies of Business license or certificate of incorporation or Commercial Registration and Brief Introduction of investor
  3. The company introduction
  4. The passport copy of the legal representative of the investor
  5. The resume and four photos (one inch ) for legal representative
  6. The supervisor’s passport copy
  7. Lease Agreement for the WFOE to be established. (Copy,The contract must be for not less than one year) and the property right certificate of the owner(copy with the seal). Certifying the contract by the estate bureau depending on the registration location.
  8. Embassy Certificate : The business license should be certified by Chinese Embassy in investor country. HK company : The HK company’s license certified by Chinese Law service (HK) company
  9. Bank Reference Letter. This letter should be issued by a non-Chinese bank that has business relations with the foreign enterprise with validity of six months.
  10. All documents in foreign language should be translated into Chinese

Prepared by us

  1. The appointment letter of the member of board
  2. The Article of association;
  3. The Feasibility study report : Drawing by us, signing by investor.
    • Business scope & products list
    • The business plan within three years of new company included Sales Quantity & Sales amount for each product, business mode.
    • Organization structure and employee’s quantity.
    • Estimated the total investment value and its assignment, estimated register capital.
  4. Entrustment Agreement
  5. The application for registration form made by Administration for Industry & Commerce

General setup procedure

Incorporation flow
 
Disclaimer: The above procedure in this website is for general reference only; professional advice and case assessment are required prior to any investment decisions. AtrixBusiness, its subsidiaries, proprietor, directors, shareholders and employees accept no responsibility or liability for any loss or damage arising from or related to its use.

Company tax

Tax obligation of WFOE below:

  • Enterprise Income Tax – Standard rate of 25%

Sales Tax (78% of Chinese Tax Revenue) includes:

  • Business Tax (BT) – Ranges from 3% - 5%
  • Value Added Tax (VAT)
  • Consumption Tax

Foreign and local staff's Individual Income Tax (IIT) and etc.

Setup fee and maintenance

The following factors determine the setup cost for starting business in China:

  • Enterprise Type
  • Business Location
  • Business Licence(s) if any
  • Other Services, e.g. Working permission and Visa, HR Supports and etc.

Please select the type of WFOE below for general quotation:

  • Consultancy
  • Wholesale
  • Retailer
  • Manufacturing
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