Tax and accounting regulations

A coherent offshore tax planning strategy is essential to maximize the effectiveness of offshore companies. Eltoma can assist by structuring the most tax efficient strategy to satisfy your requirements. Eltoma will guide you as to which jurisdictions offer the best tax structure by identifying the types of tax payable as well as applicable exemptions and incentives. Eltoma will provide tax planning advice that will identify which is the most favourable tax efficient jurisdiction in which to incorporate.

The tax system in China has undergone massive changes in recent years and the Chinese Government. Keeping up to date with compliancy in such a dynamic environment is highly challenging.

Below is a summary of the main taxes to be considered although this is just an basic overview. For a detailed information package regarding tax and accounting regulations in China please contact Eltoma and we can provide the appropriate information for your situation.

There are 2 main taxes for WFOE and Joint Venture Companies in China:

  • Turnover Tax (this includes Business Tax and VAT etc)
  • Business Tax: Based on Turnover Tax the rate of 5-6% applies to the service orientated business.

VAT Tax:

  • Based on the value added part of the products and applied to trading and manufacturing businesses. The rate is around 17%

Income Tax (Corporate Income Tax, Individual Income Tax etc)

  • Corporate Income Tax – based on gross profit. Stands at approximately 25% nationwide.
  • In the Special Economic Zone high technology business are entitled to tax incentives.
  • As of January 1st 2009 industries in middle-western China can now qualify for tax incentives.

Dividend Tax:

  • Currently stands around 20%. The rate however is much lower under the DTA signed between China and other countries such as Hong Kong.

Representative Office Tax:

  • This tax rate is based on expenses and not profit since it is prohibited for Representative Offices to undertake business activities which generate income. From March 2010 the rate is approximately 11%.

Enterprise Income Tax:

  • This is 33% although the rate can be reduced to between 15-24% dependent on the location of the business

Profit Repatriation:

  • WFOE – After tax clearance the profit is allowed to remit out of the country but prior approval from the State Administration of Foreign Exchange is require. Repatriation of the Registered Capital is forbidden during the agreed business term.

International Aspects of Taxation:

  • Double Taxation Treaty – China provides numerous preferential treatments with regards to foreign taxation and has concluded tax treaties with more than 60 countries including; the UK, the USA, France, Australia, Cyprus, the Netherlands, Singapore, Germany, the UAE, Australia and New Zealand amongst others.

Annual Reporting Requirements:

  • Any limited company in China is required to submit an annual audit report to the relevant authorities and an annual examination is required.
  • WFOE - A monthly tax report is required to be submitted to the relevant tax authorities and within 3 months of the end of each calendar year the WFOE must undergo an annual inspection prior to which a local accounting firm must have conducted an audit.
  • Representative Office – A quarterly tax report is required to be submitted to the relevant tax authorities

Take the next step, we are here to help.

Register a China company.
Open a China bank account.

  Resources:

European Commission publishes tax avoidance disclosure directive

European Commission publishes tax avoidance disclosure directive

The EC (European Commission) has published its draft legislation compelling financial service providers or intermediaries to disclose any international tax planning schemes they have encouraged, enabled or assisted in any way.

OECD publishes compliance review for all non-compliant jurisdictions

OECD publishes compliance review for all non-compliant jurisdictions

The OECDs global tax transparency initiative was launched last year in April 2016, with the purpose of encouraging every jurisdiction across the world to commit to implementation of a CRS (Common Reporting Standard) for automatic exchange of information by 2018, and to sign the Multilateral Convention on the exchanging of tax data. A forum on behalf of the OECD has released the results of its review for jurisdictions it considers to be non-compliant.

EU Parliament Committee release findings & recommendations for current offshore taxation measures

EU Parliament Committee release findings & recommendations for current offshore taxation measures

A formal enquiry into the Panamanian law firm Mossack Fonseca has been launched by the European Parliament's Committee, which found gaps in beneficial ownership transparency for trusts and fiduciaries and didn’t meet the EU standard.

2017 G20 summit: Enforcement of taxation highest priority

2017 G20 summit: Enforcement of taxation highest priority

The 2017 G20 leaders’ summit took place in Hamburg last week where the European Commission Council and leaders discussed the priorities and primary projects for the upcoming summit. EC President Jean-Claude Juncker has stated that advancing the global combat against tax evasion is top of the list.

The EC takes action against advocates promoting tax avoidance schemes

The EC takes action against advocates promoting tax avoidance schemes

The European Commission has recommended the implementation of a new regulation regarding companies or intermediaries who promote or design cross-border tax planning schemes will going forward be required to provide full disclosure to the tax authorities of their relevant jurisdiction within five days of offering them to clients.

What are the new Beneficial Ownership reporting requirements for BVI companies?

What are the new Beneficial Ownership reporting requirements for BVI companies?

Going forward, a new regulation will require certain British Virgin Islands companies to gather and retain details of Beneficial Owners with 25% or more of the company’s shareholding rights, with an ongoing requirement to keep the details up to date.

Russian citizens can gain Cyprus tax residency by staying only 60 days on island, whats the catch?

Russian citizens can gain Cyprus tax residency by staying only 60 days on island, whats the catch?

Cyprus is once again working to improve its economic desirability and will be able to increase its alternative business base for Russians with good creditworthiness.

Cyprus tax department releases new guidance on CRS deadlines and the online portal

Cyprus tax department releases new guidance on CRS deadlines and the online portal

The Cyprus Tax Department has released a notification to all Cyprus based Financial Institutions & Service Providers of the new guidance notes on the Automatic Exchange of Financial Account Information and other information relating to the Common Reporting Standard (CRS).