How to Close Down a Representative Office in Shanghai

Not surprisingly, closing down a representative office in China is a lot more complicated process than its establishment, especially when your representative office hires a lot of staff and expend a big sum of money. It can be an intolerably lengthy process if not handled in a proper way. Usually, it takes several months to shut down a representative, or it can take forever.

The first and also the most critical step to take is tax clearance. You are gonna in big trouble if you cannot prove that you are not evading tax. The tax bureau is exceedingly serious about it.

First, you need to contact the revenue officer, who was designated to manage your rep office's taxation affairs in the process of the establishment of your rep office. A cancellation form will be sent to you from the revenue officer. You should fill out the form, so the tax bureau will know your tax payment history. There are a couple of documents need to be submitted: A board resolution to the closure of representative office with the chairman of board of directors' signature and seal of the holding company together with the cancellation application form signed by the chief representative of the rep office should be submitted to tax bureau. A cancellation application usually includes

1. Time and registered number of approval of the office establishment
2. The operational situation after the establishment
3. Reasons and causes of the office cancellation

Registration certificate (like business license of a company) and cancellation of tax registration certificate (original and copy) should also be provided at the same time.

Those are easy stuff to handle. The toughest and most time-consuming part is the tax audit report made by local CPA (Certified Public Accountant). Below documents needs to be give to the CPA:

1. Photocopy of the receipts of the representative office's tax return and the staff's personal income tax return

Note that: foreign staff's overseas tax return also needs to be given to the local CPA because the fact that some foreign employees might work in their own country. The tax bureau won't levy the tax on their overseas income, usually what they get is a paper approved by overseas CPA proving that the employee has not income in other countries.

2. Bank statement clarifying the rep office's entire payment history in China


3. Accrued expense certificate ( it's a little paper stating your expense to be paid for the cancellation procedures, like the fees charged by the consulting company and relevant authorities)


4. The lease contract of the office( stamp tax worthy of 1/1000 of one year's rent and invoice for the lease payment need to be glued on the contract)

After the submission of those papers, the CPA will work on the tax audit. In case some staff's tax return receipts are missing, an application can be submitted to the district tax bureau and they will give you the receipts. Yet the missing of the representative office's tax return receipts can cause a lot of trouble and you will be asked to repay the tax. You application can never be approved if the tax bureaus officials find you haven't pay sufficient tax or they suspect that you are guilty of tax evasion. Of course you can choose to simply leave China, but the tax bureau will put your company on the blacklist, and you will never be able to return to China and engage in any businesses. If you want to avoid taxation, do it smartly and offer a nice convincing tax audit report. It can take years for the closure of some rep offices with a lame tax audit report.

One month after the approval of the tax audit report, the tax bureau will issue a "notice of cancellation of tax registration".

Now it's time to handle the cancellation online, and like 1 or two weeks later, two cancellation application forms will be sent to you. After being filled out properly, together with the notice of cancellation for tax registration and a statement about the settlement of debts and credits, those two forms will be sent to the district administration of Industry&Commerce. The following documents are also needed.

1. Registration Certificate( e-business license: CD and USB
2. Tax Registration Certificate( original and copy)
3. Organizational Code Certificate( original and copy)
4. Statistics Registration Certificate
5. Alien Employment Permit
6. Work Visa
7. Authorization( in case the chief representative is in China) (Chief representative's signature required) (4 copies)
8. Representative office's written resolution to cancellation (chief representative's signature required) (7 copies)
9. photocopy of the chief representative's passport
10. seal

After all those procedures are finished, the industry & commerce will send you a "notice of the approval of cancellation for registration".

The end of the closure representative office.

Provide by www.PathToChina.com

PTC is an International Business Consulting Firm provides service on helping foreign investors set up businesses in China. You can reach Vincent by vincent@pathtochina.com