Register a representative office in Shenzhen is one way to set up a business in this promising city. Choosing the right company structure for your business is an important first step for any company entering the Chinese market. A Representative Office (hereinafter referred to as RO) is an attractive way for foreign investors to enter into Chinese market, as it is easy to set up and has no capital requirements.
Functions of Representative Office
An RO serves as an extension to the parent foreign enterprise and does not form its own separate legal entity. It has no legal personality and is limited in its business scope, as it is forbidden from engaging in any profit-seeking activities, and can only legally engage in:
1. Market research, display and publicity activities that relate to company product or services;
2. Networking activities that relate to company product sales or service provision and domestic procurement and investment.
Prerequisite on Registration
To set up an RO, the overseas parent company must have already been in existence for two years. To setup a business in China, the business must have a relevant lease agreement that can be submitted to the Administration of Industry and Commerce (AIC).
When selecting an office location, investors should be careful to obtain a series of key documents from the landlord to ensure that the building is itself certified to accommodate a business and to lease units to ROs. However, as the RO is technically not a Chinese enterprise, special attention needs to be paid to finding a suitable premise for AIC registration, as businesses RO applicants may be under heightened scrutiny during this process.
How to Register a Representative Office in Shenzhen
Once the required information and documents are submitted to local government, it typically takes at least 2 months to set-up a fully operational RO. The AIC will usually issue an RO Registration Certificate, Chief Representative Certificate, General Representative Certificate within 10-15 working days and then you are required to carve the relevant chops. Moreover, foreign investors should open a Chinese bank account to handle the daily operation in China.
The above-mentioned incorporation procedure could be handled by a professional service agency to avoid exposure to undue risk.
Requirements on Tax Reporting
ROs are usually taxed on gross expenses with the overall tax burden and the deemed profit rate for general RO is 15%. However, these rates may be adjusted by the relevant tax bureau according to the industry.
ROs are required to submit an annual report by June 30 every year providing information on the legal status and standing information of the foreign enterprise, ongoing business activities of the RO, and payment balance audited by their accounting agencies. The registration authorities will issue fines if the RO fails to provide such reports on time or if it provides false information.
Tannet has 20 years of experience in corporate services. We can help foreign investors establish a company in China in the form of wholly foreign owned enterprise (WFOE), joint venture (JV), representative office (RO), foreign invested partnership enterprise (FIPE), etc. We will analyze your actual conditions and help you choose the most suitable business structure.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143512, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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