Wholly Foreign Owned Enterprise ("WFOE")
INTRODUCTION TO WFOE
The Wholly Foreign Owned Enterprise (WFOE) is a Limited liability company wholly owned by the foreign investor(s). In China, WFOEs were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology. However, with China's entry into the WTO, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well.
The registered capital of a Wholly Foreign Owned Enterprise (WFOE) should be subscribed and contributed solely by foreign investor(s). A WFOE does not include branches established in China by foreign enterprises and other foreign economic organizations. The Chinese Laws on WFOE do not have a clear definition of the term of "branches". The term of "branches" should include both the branch companies engaged in operational activities and representative offices, which are generally not engaged in direct business activities. Therefore, branches and representative offices set up by foreign enterprises are not WFOE.
DIFFERENT TYPES OF WFOE
Following are different types of WFOE. Commonly,
(1) If the WFOE only be allowed to manufacture here. we can say it's manufacture WFOE.
(2) If the WFOE is allowed to do Consultancy & Service, we call them Consultancy Service WFOE.
(3) If the WFOE is allowed to do Trading, Wholesale, Retail or Franchise in China, we call them Trading WFOE or FICE (Foreign-Invested Commercial Enterprise), you can check " FICE Registration " on the right menu for more information and details about FICE.
ADVANTAGES OF WFOE
The advantages of establishing a WFOE, compared with other types of enterprises, include, but not limited to:
(1) Independence and freedom to implement the worldwide strategies of its parent company without having to consider the involvement of the Chinese partner;
(2) Ability to formally carry out business rather than just function as a representative office and being able to issue invoices to their customers in RMB and receive revenues in RMB;
(3) Capability of converting RMB profits to US dollars for remittance to its parent company outside of China;
(4) Protection of intellectual know-how and technology;
(5) No requirement for Import / Export license for its own products;
(6) Full control of human resources
(7) Greater efficiency in operations, management and future development.
BUSINESS SCOPE
One of the most important issues in WFOE application is business scope. Business scope needs to be defined and the WFOE can only conduct business within its approved business scope, which ultimately appears on the business license. Any amendments to the business scope require further application and approval. Inevitably, there is a negotiation with the approval authorities to approve as broad a business scope as is permitted.
Generally business scope includes investment consulting, international economic consulting, trade information consulting, marketing and promotion consulting, corporate management consulting, technology consulting, manufacturing, etc.
With China's entry into WTO, more and more business is open to WFOE especially in Trading, Wholesale and Retail business.
REGISTERED AND PAID UP CAPITAL
Investment Captial: USD$140,000 is a good idea for all kind of WFOE, it's easy to get approved.
GENERAL TAX INFORMATION
The corporate tax rates range from15% to 31%, depending on the places where the company is registered. Shanghai is among the lowest in the region. All enterprises are required to report to the Tax Administration Department monthly. You are welcome to contact us for more information.
ANNUAL RETURN
Any limited companies in Shanghai should summit annual return to the relevant authorities. The annual cost is about USD300. Any company will be subject be to a fine if the Annual Return is not submitted in a timely manner.
TERMS AND TERMINATION
In China, terms of 15 to 30 years are typical for a manufacturing WFOE (although some may have a longer term). It is also possible to obtain extensions of the WFOE's duration. For projects in which the amount of investment is large, or the construction period is long and the return on investment low, projects producing sophisticated products using advanced or key technology provided by the foreign partner, or for projects producing internationally competitive products, the term of WFOE may be extended to 50 years. With special approval from the State Council, the term may be even longer than 50 years.
The WFOE may be terminated under certain conditions. For example, the inability of the WFOE to operate due to heavy losses, or in the occurrence of an event of force majeure, etc.
Documents Required & Registration Procedure of WFOE |
Condition(s):
[ NEWS! ] USD$13,000 is enough investment capital for Consulting WFOE registration. For more information, Please dail 021-51088535
For the Trading or Manufacture WFOE registration, minmium investment capital suggestion is still 140,000 USD$ (20% in advance and the rest 80% should be ready within 2 years)
Documents Required
The documents required for setting up a WFOE are listed below:
01 |
Copy of Business License of parent foreign company which was certificated by Chinese Embassy (if it's personal investor, then passport copy certificated by Chinese Embassy is enough) |
02 |
The lastest annual audit report from the parent foreign company. The audit report should be in the format as prepared by a Certified Public Accountant (CPA) |
03 |
2 Credit letters from foreign company banker to declare a good credit within at least current 6 month |
04 |
The resume, copy of the passport and 8 pieces of passport size photos of the Legal Representative of the WFOE |
05 |
The parent company's legal representative's passport copy |
06 |
Business scope and how long the WFOE is going to do business in China |
07 |
Brief introduction of the foreign investor(s) including name, address and telephone number |
08 |
Total investment and registered capital and the make up of investment |
09 |
Registered address, leasing contract, certificate of real estate, and certificate for leasing |
The above document is enough to register a Trading & Consulting WFOE, But if you want to register a Manufacture WFOE, you have to prepare following extra documents:
|
01 |
Purpose and estimated investment |
02 |
WFOE's operational structure and number of employees |
03 |
Permission for land use, environment evaluation report |
04 |
Products, size of production, detailed list of equipment, and business plan |
05 |
Environmental protection measures |
06 |
Requirement for utilities such as power and water supply |
Registration Procedures
Foreign companies are not allowed to directly submit the application documents to the relevant authority. They must retain a PRC entity that is authorized or permitted by relevant authorities to act as a sponsor. The sponsor will submit all the documents to the examination and approval authority on behalf of the foreign enterprise. Procedures to set up the Wholly Foreign Owned Enterprise in Shanghai are as following:
01 |
Check and Register Company Name (about 3 days) |
02 |
Apply for Approval Certificate (about 15-30 days) |
03 |
Apply for Business License (about 15 days) |
04 |
Apply for Organization Code License (about 1 day) |
05 |
Register in Shanghai Tax Bureau (about 15 days) |
06 |
Open a RMB bank account (about 3 days) |
07 |
Register Foreign Currency Certificate (about 1 day) |
08 |
Check the registered capital (about 5 days) |
09 |
Obtain Import/Export license and VAT invoice (Optional, Only for Trading WFOE, about 1 month) |
10 |
Register in the shanghai custom (Optional, Only for Trading WFOE, about 5 days) |
Fee for WFOE Registration (Based in Shanghai) |
Government Fee:
Procedures |
Government Fee(RMB) |
Company name approval |
80 |
Company approval |
10 |
Company bulletin |
4000 |
Company registration(base on USD$200,000 captial) |
1333 |
Business IC card |
280 |
Company Seal |
500 |
Organization Code license |
228 |
RMB currency a/c IC card |
250 |
Foreign currency a/c IC card |
250 |
Tax registration |
100 |
Custom registration |
175 |
Check captial(base on USD$200,000 captial) |
3000 |
Statistical license |
20 |
Finance license |
20 |
Total: |
10246RMB (~USD$1280) |
DISCLAIMER: The official registration filing fees above are subject to change without notice. We get our information directly from the government. We do our best to keep our web site up to date. The accurate amount will be billed separately with supporting official receipt issued by the Chinese Government.
Service Fee:
Consulting WFOE Registration Service Fee: USD$1800
Trading WFOE Registration Service Fee: USD$2600
Manufacture WFOE Registration Service Fee: USD$2600
Feel free to contact us if you have any question or need of any assistance.
• Shanghai surf business Consulting Co., Ltd
If you want to get more detailed information about enterprise registration , welcome send a email to us or give us a call directly.
TEL 86 21 61450641 Email: JOHN@RICHIN.HK |
