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Hong Kong (HK)

Beijing

Shanghai
email info@AsiaBS.com

Forming Companies

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China Company

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Representative Office

China Representative Office (RO)

 Pros & Cons

Pros
  • Least capital injection required. As RO is not a legal entity, actually no minimum share capital is required.
  • Can handle market research, sourcing, project investigation for mother company, who in turn to execute trading function.
  • Can hire local staff.
Cons
  • Limitation in activity. No trading or invoicing is allowed.
  • Local staff should be hired via government admitted agents.
  • Although not profit center, cost expenses still attract tax liability.

 Setup Key Points

  • Takes around 1 month to apply.
  • A Chief Representative (CR) is to be appointed
  • Company should be able to present bank reference letter;
  • An office premise rental agreement (or ownership document) which is valid for foreign investor use. The term should be at least 12 months long.

 Documents Required

Applicant company's
  • Certificate of Incorporation
  • Members Register
  • Directors Register
  • Last filed return to Company Registry
  • Last filed return to Tax Department
  • Company / business profile and reason of setting up RO
  • Minutes of Board Meeting to setup RO
  • Minutes of Board Meeting to authorize Chief Representative
  • Bank reference letter
Chief Representative's
  • Passport copy
  • Photos
  • Resume
Application letter
  • One to Foreign Economic Relations & Trade Commission
  • Another one to Administrative Council of Industry & Commerce

 Tax Implications

Although a RO is not to conduct business, it attracts tax on
  • Chief Representative and local staff's Individual Income Tax (IIT)
  • Business Tax base on monthly operational expenses (BT)
  • Income Tax base on annual operational expenses (IT)

IIT above depends on salary amount while BT & IT roughly amounts to 10% of annual operational expenses.

Rough elaboration on BT & IT payable
  • Business Tax = Deemed Turnover x 5%
    Total Expenses = Deemed Turnover x 85%
    Deemed Turnover = Total Expenses / 85%
    Business Tax = (Total Expenses / 85%) x 5%
    Income Tax = Deemed Profit x 25%
    Deemed Profit = Deemed Turnover x 10%
    Deemed Turnover = Total Expenses / 85%
    Income Tax = (Total Expenses / 85%) x 10% x 25%
    Business Tax + Income Tax = (Total Expenses / 85%) x (5% + 10% x 25%)
    Business Tax + Income Tax = (Total Expenses / 85%) x 7.5%
Therefore
  • Business Tax + Income Tax = Total Expenses x 9.2%

 Setup Cost

Varies according to client's situation and requirement. Our service ranges from basic registration to post-registration handling. Please contact us for quotation.

 Maintenance Cost

License renewal
RO license has to be applied again once permit is expired. Maximum 3 years approval will be granted and depends on rental lease terms.

Accounting, tax filing and auditing
  • Tax filing has to be done on monthly and annual basis.
  • Moreover, there are statutory audit on the expenses account and foreign currency bank account.
  • Service fee for monthly accounting and tax filing starts from Rmb 2,500 while annual audit starts from Rmb 5,000.
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AsiaBS - Asia Business Service Limited
  • Professional Qualified Accountants (ACCA, HKICPA) in Hong Kong
  • providing services of
    • Hong Kong Company Formation (Form Company), Incorporation, Business Startup, Limited Company and Unlimited Company Formation, Sole Proprietor, Partnership

    • China Company Formation : Wholly Foreign Owned Enterprise (WFOE) Joint Venture (JV), Representative Office (RO)
    • Offshore Company Formation : BVI, Samoa, Seychelles, Marshall Islands
    • Company Bank Account opening in Hong Kong : HSBC etc.
    • Company Secretary, Nominee Shareholder, Director, Annual Maintenance, Accounting, Auditing, Taxation, Tax filing, Tax planning
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