Setting up Representative Office in Wuhan China, Wuhan Rep Office Registration Procedure

Setting up Representative Office in Wuhan

 

 

Wuhan, the capital of Hubei province,is the most populous city in central China. In 2015 it has a population of 10.60 million residing in three distinct districts (Hankou, Hanyang, and Wuchang), commonly known as “The Three Towns of Wuhan”. The city is recognized as the political, economic, financial, cultural, educational, and transportation centre of central China.


While Wuhan has for decades been a traditional base for manufacturing, it has also become one of the areas promoting modern industrial change. Wuhan consists of three national development zones, four scientific and technologic development parks, over 350 research institutes, 1,656 hi-tech enterprises, numerous enterprise incubators and investments from 230 Fortune Global 500 firms – enabling the city to offer globally competitive strengths in most business fields. By combining traditional industries such as automobile manufacturing, the starting point of China's economic liberalization, with new hi-tech industries in places like the Optics Valley, Wuhan is positioning itself as one of the most progressive business cities in all of Asia.

For more information about Wuhan, please visit https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/international-business/csg-china-research-report-on-investment-environment-of-wuhan-en-2013.pdf

http://files.chinagoabroad.com/Public/uploads/content/files/201709/Factsheet_Hubei%20and%20Wuhan_30082017_0.pdf

http://english.wh.gov.cn/

When investors have plans on establishing representative office in Wuhan, it is better for them to acquire more information in order to run a successful business in Wuhan China.

 

A representative office (RO) is an office of a foreign parent company, set up in China for business liaison activities carried out on behalf of its parent company. An RO is an observation gallery for a foreign company before it makes an actual investment in China and is not considered to be an independent legal entity.

 

Advantages of RO

-An RO can handle market research, sourcing, project investigation for parent company. It does not need a registered capital injection.

 - The parent company can enter into contracts with its suppliers /customers in China in its own name.

 Disadvantages of RO

 - An RO may not carry out direct revenue earning business activities. For example, it cannot enter into purchase/sales contracts and cannot receive payments for services, issue invoices or repatriate monies overseas.

 - Local staff can only be hired via government admitted agents.

 - Expenses still attract tax liability despite of not making revenue. The Tax Authority normally deems "taxable income" base on expenditure amount of the RO. The estimated effective tax base of RO is approximately 15% of its expenses.

 

Tax Liabilities

An RO is required to apply tax filling quarterly and inspection annually. RO is liable for Business Tax and Foreign Enterprise Income Tax. The calculation formula of an RO’s monthly tax due is as follows:

 - Business Tax = Monthly RO Expenses/0.8*5%

 - Foreign Enterprise Income Tax= Monthly RO Expenses/0.8*15%*25%

  (0.8=1-the deemed profit rate15%- business tax rate5%)

 

RO in Wuhan can be approved by tax bureau to enjoy tax exemption or based on revenue, if:

 - The parent company is a non-profit organization, such as Foreign Governmental Organization or Quasi-Governmental Organization or Association.

 - The parent company is a manufacturing entity.

 - The parent company is a law firm or CPA firm.

 [Approval from relevant Tax Authority is required.]

 

Registration Procedure

 Step 1 Apply for Registration Certificate, Chief  Representative Certificate, General Representative Certificate(s)

 Unlike a foreign investment entity, usually RO is not required to apply for Approval Letter and Approval Certificate from Wuhan Foreign Economic Relation and Trade Commission. RO needs to register and apply for three certificates from Wuhan Administration of Industry and Commerce (SAIC). They are:

 (1) Registration Certificate

 (2) Chief Representative Certificate

 (3) General Representative Certificate(s).

 

In accordance with Chinese regulations, RO should deploy its Chief Representative and general representatives. After the RO is set up, it may provide supporting documentation for the representatives (if they are expatriate) to apply for Z Visa (Work Visa), Employment Permit and Residence Permit.

 

Step 2 Carving RO seal, financial seal, and chief representative seal

 

Step 3 Apply for Organization Code Registration Certificate

 

This is purely a procedural step. Wuhan Technology Quality Supervise Bureau will issue certificates within 1-3 working days.

 

Step 4 Apply for Tax Registration Certificate

 

Once your Organization Code Certificate is approved then you may proceed with applications to the local tax authority. Together with Registration Certificate and other documents, the formal application form affixed with seals should be submitted to the authority for their examination and approval.

 

Step 5 Apply for Foreign Exchange Registration Certificate

 

Having obtained Tax Registration Certificate and Foreign Exchange Registration Certificate, you may open a foreign currency bank account and a RMB bank account.

 

Step 6 Apply for the Statistics Registration Certificate

 

 Step 7 Apply for the Customs Registration Certificate

 

Application Documents

  - Certificate of Incorporation of the parent company;

  - Bank reference letter of the parent company;

 - Articles of Association of parent company;

  - Appointment letters and resumes of all representatives;

 (all above docs should be certified by the Chinese Embassy or Consulate in your country)

 - A written application for the establishment of the proposed RO;

 - Rental contract and the landlord’s rental permit.

 

Set Up a Representative Office in Wuhan is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls, Since 2006, Tommy China Business Consulting has been focusing on consulting services for our clients to Setting up a Representative Office (RO) in Wuhan.

 

 

 Please visit http://www.tommyconsulting.com/CorporateFormation.html

 Email: tomlee@tommyconsulting.com, Skype: tomleeli

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