Hello Everyone,

I have set up my company in HongKong 1 year and half ago. I'm planning to set up my representative office (RO) soon in Shanghai. It would be a small office with 2 to 4 employees.
I guess that my case in very commun also I would like to use your own experience and get the following infos :
- What is the cost of the business license at the begining? and for the renewal?.
- I'm going to use a local company for the procedure with the Chinese tax dept. How much that company would charge?.
- For the monthly tax payment, should I recruit a accountant full time or do you think that the company who is going to set up the RO for me can do it as well?.
Case 1 : What is the average cost for a accountant who can speak english?.
Case 2 : How much the company will charge for monthly taxe declaration?.
- Similar question but this time for the payment of the employee insurance such as the health insurance. I guess that company can do it as well. How much they would charge for that?.
- The monthly tax payment is 10% on all the office's expenses, correct?.

Final question !.
My business account in HK is at the HSBC hk. Recently, it is possible to receive payment from mainland in RMB. There is as well HSBC now in China. I guess I should open a business account for my RO in Shanghai in one of the agencies. My question is : Does HSBC is charging Bank charges for money transfert from my Business account in HK to the one in China mainland?.

If you have any tips for saving cost, you are, of course, very welcome !.

Thanks all for your time and for your kind infos.

Alex.

For a starter your RO cannot conduct business transactions through its account, you are limited to receiving money from your parent company (HK) and paying rent/utilities/taxes etc.

Hi Cylon, thanks for your post. I'm already aware of that.

the latest requirement is that when you set up a RO in China, you need to prove that your HK company has subsisted more than two years.

Therefore..... you may have to wait till you can set up a RO here.

If you want to know more about RO rules, please contact me. Get yourself really acquainted with the legal environment before you set it up.

Hi Doroto,

Thanks for your information. I'm aware of that as well.

How can I contact you?. I hope to get the answers I'm looking for actually for free if possible. But, you are really welcome to introduce your service and cost. It could be interesting.

Keep in touch.

Alex.

Hello leidelaohu,

thanks for your tip. do you know other kind of company type which could be more interesting then?...and which are legual!.

thanks!.

I might sound a bit paranoiac but do you think we can talk about some "black issue" over here...??

Hi Alex,

I am a certified public accountant and registered tax agent. I think my LOCAL accounting firm can help you on this:

1. Just like the discussion list above, it is suggested to set up a WOFE not a RO in Shanhgai. There are many benefits for you to set up a WOFE not a RO.

2. To get the businesee license of the WOFE, you need to pay RMB20,000 at least.However,it depends on what kind of business you are going to run in China.

3. For the monthly tax filing, if there is no so many business transactions every month,we can do this for you. It would be more cost efficient for you.

Case 1 : What is the average cost for a accountant who can speak english?.

You need to pay at least 10,000 per month to get a good one.

Case 2 : How much the company will charge for monthly taxe declaration?. - Similar question but this time for the payment of the employee insurance such as the health insurance. I guess that company can do it as well. How much they would charge for that?.

The price scope is RMB2,000-RMB5,000 for your company's size,depending on how many of the business transactions.

- The monthly tax payment is 10% on all the office's expenses, correct?.
--If you set up a RO, it is about 11% of the expenses. If you set up a WOFE, the business tax is 5% of the revenue. Only if you make a profit, you need to pay EIT( enterprise income tax).

Final question !.
My business account in HK is at the HSBC hk. Recently, it is possible to receive payment from mainland in RMB. There is as well HSBC now in China. I guess I should open a business account for my RO in Shanghai in one of the agencies. My question is : Does HSBC is charging Bank charges for money transfert from my Business account in HK to the one in China mainland?.
Yes.

You can reach me at lucysunsz@hotmail.com or 13482868605.

Case 1 : What is the average cost for a accountant who can speak english?.

You need to pay at least 10,000 per month to get a good one.

Nooooooo way! Expect to pay no more than 5-6k

Good luck.

5% of the gross, as well as income tax on the net ? Typical sh1t.

Well, it is the normal procedure anywhere. You pay 5% BT as you do not pay VAT for services rendered, and income tax for the profit, as everwhere else in the world...

I agree with the accountant, who is gonna pay 10k for an accountant of a small office? But of course, she needs to sell her company's services...

The important question is what do you plan on doing in China. Depending on your intentions such as manufacture, sell to China, buy goods for resale, etc., there are other options but they are dependent on what your business goals are in China.

Hello all,

thanks for your replies and sorry for my late one.
Actually, my buisness is a design buisness. I sell design to factory. No trade, no resale in mailand...I just want to be able to rent my own office and to recruit people.

I like the WOFE and the 5% taxe on the profit only!. but I don't like the 20Krmb license !. Do you have to renew it and pay the same amount every year?. Does the WOFE license allow you to switch of activity if, for example, one day I want to do some trading business.

If I consider the other side of the "force" , does anyone could advise me a forum where I can look for office sharing and find somone who can take in charge my recruitment?.

No accountant needed for an RO except for the annual filing (and that be done for CNY 4-5K). All the tax/legal and bookkeeping stuff costs about 2-3 hours per month + a few days for all the licence renewals (costs another CNY 3-4K if outsourced). Doing this for a couple of years and never had any issues. Tax is indeed around 11% on all costs, see keep a sizeable chunk of your costs offshore (not so difficult if you do this on declaration basis). Before 2010 it was possible to get taxed on your revenues (which are legally 0, so no tax), but those days are gone now. Most important: make sure you get good relations at the local tax bureau.

Hello edbreejen, thanks for your info.
What do you mean by declaration?. Can you please explain this point?.

If I do a RO, I will be the GM or the legal representative of the RO. right?. Does that mean that I have to receive salary from my HK company as GM of my RO. Is it an obligation?. The point here is to cut the income tax + reducing the total cost of my RO...
if it's a obligation, what is the monthly income limit before I start paying the income tax?

leidelaohu wrote:

scotch wrote:Well, it is the normal procedure anywhere. You pay 5% BT as you do not pay VAT for services rendered, and income tax for the profit, as everwhere else in the world...

Anywhere ? and everywhere ? Not where I come from. We pay income taxes on the profits. No profits, no income taxes. There are certain other fees and taxes you get to pay but nothing based on the gross income. A 5% "business tax" on the gross sounds like a sh1t sandwich

VAT is kind of a crappy deal, in my opinion. But then so are sales taxes

That's the same sh1t as an r/o, which makes the wofe just as rotten a deal.

Well, in Europe there is VAT for sales. Here you have VAT for sales of products and BT for services redered. I don't know if you have anything similar in the States (everywhere meant Europe, sorry...)

thanks pretty for your kind proposal. Right now, I think it is a bit too early for taking some of your precious time to both of you girls. But, I definitely keep your contact info. Once I've made my decision, I ll be pleased to share a drink and learn from your friend's experience.

very best!

AlexCBC wrote:Actually, my buisness is a design buisness. I sell design to factory.

First try waters. Maybe your HK company will enough.

I had no idea that there was no VAT in the States!

VAT, nice European invention...

The package includes office and tax registration, opening bank accounts, work permits, residence visas a year and a tax advisory service for the first time a month, from RMB 18,000 to get your company have etc.Starting registration under foreign control.

background check

here's my experience for your consideration. not sure if it is helpful.

1. cost by agent - 12,000 rmb (varies). they did all the paper and leg work and even recommended a soho (my apt has both housing and business purpose and it is legal)

2. monthly accounting charges - 1500 rmb, no need for accountant, i give them the necessary documents and they do everything else. no other charges here.

3. set up for a WOFE - 5,000 - 6,000 rmb in total, including bank transfer, bank account charges, papers, stamps, documents etc.

4. initial capital set up - 100,000 (depending on business)

i was told by my agent that the RO cannot issue fapiao (official reciepts) so a WOFE is necessary.

i guess you may want to consider buying over another existing dormant company here (risks i know) but save the hassle..

or work with some company to issue the fapiaos and provide the staff..

it is not the cost, it is the hassle and torture at some point in the process. just glad it is finally over and i can get down to business..

Opinion from a professional accountant:

If you set up a WOFE, you can register in a virtual address while actually run your business elsewhere, but it is not OK for a RO.

It is correct that a RO is only allowed to do liaise work in China, therefore it is not allowed to issue fapiao (tax invoice).

There are some certain companies who can provide the working place (1 or 2 desks in their office) and you pay the rental fee.

It is not suggested to buy a dormant company as you don't know how much of the potential liabilities for it is. Anyway, it is not so difficult to get your business license now although there are some procedures you need to follow through.