Questions:

A foreign company was settled in Shenzhen, management is planning to extend its business to the other provinces in China, is it necessary to set up a new company? If yes, what methods and what different between different methods? Any limitation with this consideration might imply?

Analysis:

First at all, the consideration should be able if the Shenzhen company is able to not to extend its branches or subsidiaries. If the Shenzhen Company is a branch, it is not able to be a mother company to extend its subsidiaries or further branches.

Is it necessary to set up an institute out of Shenzhen mainly depends on following situations are met or not.

A. Is it necessary to recruit local staff when business will extend to?

B. No office requirement for Shenzhen employees to support in the new areas new business will extend to.

C. No specific invoice requirement from local clients.

If one of above meets, registration in new business area needs to be considered; otherwise, it could just be handled by Shenzhen Company.

There are two main methods for a Shenzhen Company to set up an institute out of Shenzhen that is a branch or a subsidiary. The subsidiary is a legal enterprise that is entitled to sign contract and operate business with third parties and bear related legal responsibilities. It has capital requirement, a new company and business scope shall be re-described and verified; a branch is not a legal enterprise, it could be just a supporting department so there is no capital requirement and business scope consideration.

Based on the latest regulation, both subsidiary and branch shall prepare bookkeeping properly to record its operations; the branch except paying the Turnover tax in local taxation department, the Corporate Income Tax will be separated among local and state tax departments in complying with regulations. That is a subsidiary’s duty to complete its tax liability in its registered location.

Value from our services:

Proper method will be advised based on the specific situation of a client’s operation, developing plans and the full infrastructure along with tax planning concept, cooperate and arrange the registration process in an effective manner, design a suitable information flow. In order to keep the financial tasks are handled in an efficient way, outsourcing or on-side supports are tailored to meet client’s specific needs.

Research:

In a business expending process, our research is developed on how to monitor an effective financial information flow and the security of company assets. Besides, the proper method to take the financial tasks is also a key area for our research, including outsourcing, process Financial Sharing Centre or build up local financial team.