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:

Creating Physical Presence & Capital Requirements for Cyprus Shell Company Crackdown

Creating Physical Presence & Capital Requirements for Cyprus Shell Company Crackdown

Recently, the Cyprus Central Bank issued guidance to banks & credit institutions, advising them of the new mandatory refusal to take on new clients or to continue servicing existing accounts with so-called shell or letter-box companies.

How the UK is Combating Offshore Culture & How it Could be Doing More

How the UK is Combating Offshore Culture & How it Could be Doing More

Typical tax haven destinations such as BVI, Jersey and Switzerland have always been in the spotlight from profiting off of helping clients circumvent legislation in their jurisdiction of residence for decades.

Nevis: The Offshore Tax Haven Nation of the World

Nevis: The Offshore Tax Haven Nation of the World

In the world of offshore, Nevis specialises in letting its clients create corporations with greater anonymity than almost anywhere else on earth. Since 2012, the island’s financial services sector has grown exponentially, as those wishing to retain anonymity relocated to a place that promises just that. However, with ever-expanding counter legislation cropping up globally, how can Nevis continue to host such controversial services?

Expert Opinion on Cyprus’ New Borrower Incentives to Reduce the Islands NPLs

Expert Opinion on Cyprus’ New Borrower Incentives to Reduce the Islands NPLs

The Cyprus Ministry of Finance has released a statement regarding the IMF (the International Monetary Fund) & the European Commission is recommending Bills regarding the islands longstanding issue with Non-Performing Loans.

Keeping Europe Up-to-date with the Latest Legal & Financial Technology

Keeping Europe Up-to-date with the Latest Legal & Financial Technology

The financial world is undergoing a technological revolution, with approximately 3 trillion financial deals entered into using digital ledger technology (DLT) and smart contracts within the next five years.

FATCA: Foreign Financial Institutions & NFFE’s

FATCA: Foreign Financial Institutions & NFFE’s

The Foreign Account Tax Compliance Act (FATCA), which was passed as part of the HIRE Act, was implemented to able foreign financial Institutions and certain other non-financial foreign entities to report on the foreign assets held by their US-based account holders or be subject to withholding tax on the relevant payments.

ICOs: A Smart Business Decision or Just a Risky Investment?

ICOs: A Smart Business Decision or Just a Risky Investment?

There are many financial experts voicing their concerns over ICOs being too much of a risky investment, however should we be so quick to dismiss ICOs as a legitimate vehicle? ICOs can be used as a substitute for Venture Capital funding due to parallels in the phase of company’s lifespan and risk profiles, which give potential opportunities for future start-ups and companies.

How Initial Coin Offerings Differ from Initial Public Offerings

How Initial Coin Offerings Differ from Initial Public Offerings

Since the hectic and intense ecosphere of the cryptocurrency ventures conception, a new sphere has caught investors’ attention from all over the world, being coined ICOs or Initial Coin Offerings.