Establish a Representative Office in China
In China,Representative Office (RO) is an office of a foreign parent company,set up in China for business liaison activities carried out on behalf of its parent company.An RO is an observation gallery for a foreign company before it makes an actual investment in China and is not considered to be an independent legal entity.
Representative Office's Advantages:
1.Representative Office can handle market research,sourcing,project investigation for parent Company.It does not need a registered capital injection.
2.The parent company can enter into contracts with its suppliers /customers in China in its own name.
Disadvantages of Representative Office:
1.An RO may not carry out direct revenue earning business activities.For example,it cannot enter into purchase/sales contracts and cannot receive payments for services,issue invoices or repatriate monies overseas.
2.Local staff can only be hired via government admitted agents.
3.Expenses still attract tax liability despite of not making revenue.The Tax Authority normally deems "taxable income" base on expenditure amount of the RO.The estimated effective tax base of RO is approximately 15% of its expenses.
Registration Procedure of Representative Office:
Step 1:Apply for Registration Certificate,Chief Representative Certificate,General Representative Certificate(s).
Unlike a foreign investment entity,usually RO is not required to apply for Approval Letter and Approval Certificate from Shanghai Foreign Economic Relation and Trade Commission.RO needs to register and apply for three certificates from Shanghai Administration of Industry and Commerce (SAIC).They are:
(1) Registration Certificate.
(2) Chief Representative Certificate.
(3) General Representative Certificate(s).
In accordance with Chinese regulations,RO should deploy its Chief Representative and general representatives.After the RO is set up,it may provide supporting documentation for the representatives (if they are expatriate) to apply for Z Visa (Work Visa),Employment Permit and Residence Permit.
Step 2:Carving RO seal,financial seal,and chief representative seal.
Step 3:Apply for Organization Code Registration Certificate.
This is purely a procedural step.Shanghai Technology Quality Supervise Bureau will issue certificates within 1-3 working days.
Step 4:Apply for Tax Registration Certificate.
Once your Organization Code Certificate is approved then you may proceed with applications to the local tax authority.Together with Registration Certificate and other documents,the formal application form affixed with seals should be submitted to the authority for their examination and approval.
Step 5:Apply for Foreign Exchange Registration Certificate.
Having obtained Tax Registration Certificate and Foreign Exchange Registration Certificate,you may open a foreign currency bank account and a RMB bank account.
Step 6:Apply for the Statistics Registration Certificate.
Step 7:Apply for the Customs Registration Certificate.
Application Documents of Representative Office:
1.Certificate of Incorporation of the parent company;
2.Bank reference letter of the parent company;
3.Articles of Association of parent company;
4.Appointment letters and resumes of all representatives;
(all above docs should be certified by the Chinese Embassy or Consulate in your country)
5.A written application for the establishment of the proposed RO;