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Procedures on setting up a Rep Office in PRC China
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1
Formation of a Foreign
Representative Office in China
Professor Shen Wei
Summer 2015
26 August 2015 2
FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
Introduction
I. Formation of a Foreign Representative Office
II. Procedures for Formation of a Foreign Representative Office
III. Representatives and Employees
IV. Accounting and Taxation
V. Post-registration Matters
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
I. Formation of a Foreign Representative Office
A foreign entity’s representative office is permitted to engage in
“indirect operational activities in China” and may represent the foreign
entity within the scope of activities of such entity, which may include
business liaison, product introduction, market research, information
gathering and technological exchange.
The representative office of a foreign entity in China does not have
independent legal person status under PRC law. A foreign entity which
establishes a representative office in China must undertake legal
liability for all operational activities conducted by the representative
office.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
II. Procedures for Formation of a Foreign Representative Office
Registration with Local AIC
Generally, there is no capital requirement for a foreign company to set up a
representative office.
The establishment of a representative office of a foreign company only
requires the registration of the representative office with the local
Administration of Industry and Commerce (“AIC”). The registration
process is fairly straightforward. However, the local AIC may look more
closely on new companies without an operating history, and support and
explanation may be needed.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
II. Procedures for Formation of a Foreign Representative Office (cont’d)
Agent
A licensed agent shall be appointed to submit the application documents
and conduct the registration formalities on behalf of the applicant with the
local AIC.
If required, the agent will also assist in the completion of the post-
registration matters.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
II. Procedures for Formation of a Foreign Representative Office (cont’d)
Documentation
A Checklist of the Application Documents for the Formation of a Foreign
Representative Office will be provided at the end of this presentation as
Annex A.
Local AIC requires that all the required documents be accompanied by a
Chinese translation if they are in a language other than Chinese.
Legal Address
The representative office must have a legal address before it can be
registered.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
II. Procedures for Formation of a Foreign Representative Office (cont’d)
Timing
The timing of the registration process depends on how quickly the
application package can be prepared and submitted in a form acceptable to
the local AIC.
If the application documents are satisfactory to the local AIC, the local AIC
will complete the registration and issue a Business Registration Certificate
for the representative office within ten (10) working days of its receipt of
the application documents.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
III. Representatives and Employees
A Foreign Representative Office must designate and register a chief
representative. The Representative Office may choose to designate
one or more representatives for the representative office.
There is no restriction on the nationality of the chief representative or
other representatives. However, if the Representative Office wishes to
designate a PRC citizen who is not an overseas permanent resident to
be the chief representative or a representative, it must entrust a local
foreign enterprise labor service company to employ such individual.
More specifically, representative offices in China are generally required
to hire local staff through a labor service company.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
IV. Accounting and Taxation
Accounting Units
Under PRC law and practice, each representative office in the PRC is
treated as an independent accounting unit.
Taxation
The representative office is subject to the corporate income tax and
business tax in China. The representative office shall register with and pay
tax to the local taxation bureau.
In addition, individuals who act as representatives and who are “resident”
in China will be subject to individual income tax in the PRC.
26 August 2015 10
FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
V. Post-registration Matters
Once the Business Registration Certificate for the representative office
and representative certificates for the representatives have been
obtained, the following additional registrations and administrative
matters must be handled to enable representative office to commence
its operation:
Office Seal
The representative office must obtain an approval for an office seal from
the local Public Security Bureau (“PSB”). With the local PSB’s approval,
the office can make the seal at an authorized location.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
V. Post-registration Matters (cont’d)
Organization Code Certificate
As the next step, the representative office shall apply with the Technology Supervisory Bureau for an Organization Code Certificate. The office will be required to present the Organization Code Certificate in the subsequent post-registration formalities.
Statistics Certificate
The representative office shall apply for a Statistics Certificate with the local Statistics Bureau.
Bank Account
The representative office is permitted to open foreign currency and Renminbi accounts. To open foreign currency accounts, the office must apply for a Foreign Exchange Account Use Certificate with the local Administration for Foreign Exchange.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
V. Post-registration Matters (cont’d)
Tax Registration
The office must make tax registrations with the local Tax Bureau and obtain
Tax Registration Certificates.
Customs
The office must register with the local Customs Office. The office will be
issued a customs certificate, which must be presented whenever
conducting transactions with the Customs.
Once the office has this certificate, it can prepare the customs declaration
forms necessary for import of equipment and supplies for the office and for
its representative personnel.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
V. Post-registration Matters (cont’d)
Representative Personnel
Employment Permit. If the chief representative or any other representative is an
expatriate, he or she must apply for an Employment Permit at the local Labor Bureau.
Visa. Each expatriate representative must obtain a visa in order to live and work long
term in China.
Health Certification. Expatriate representatives must go to the local Health and
Quarantine Service (the “HQS”), as soon as possible after entering China to obtain
the health certification.
Residence Permit. Each expatriate representative must apply for a Residence Permit
at the local PSB. In the application, the chief representative or the representative
must present his or her passport with a valid visa and health certification issued by
the HQS as well as the representative certificate and registration certificate.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
Annex A:
Documents Checklist for Registration of a Foreign Enterprise’s
(the “Applicant”) Representative Office
No Document Title Original Copy Document Contents & Requirements
1. The Applicant’s Certificate of Incorporation Notarized and
authenticated
original or copy
1. The original or copy of the applicant’s certificate of
incorporation shall be notarized in the jurisdiction
where the Applicant is established to be an
authentic document, and be authenticated by the
embassy or consulate of PRC in that jurisdiction.
2. The certificate in a foreign language shall be
accompanied by a Chinese translation which the
Applicant’s corporate seal should be affixed to or
where the Applicant does not have a corporate
seal, signed by the Chairman of CEO of the
Applicant.
2. Signature specimen of the Chairman or CEO
of the Applicant who will execute application
documents for the purpose of establishment of
the representative office.
Notarized and
authenticated
original
1. The specimen shall be notarized in the jurisdiction
where the Applicant is established, and be
authenticated by the embassy or consulate of PRC
in that jurisdiction.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
Documents Checklist for Registration of a Foreign Enterprise’s
(the “Applicant”) Representative Office (cont’d)
No Document Title Original Copy Document Contents & Requirements
3. Bank Reference Letter Notarized Original 1. The execution of the bank reference letter shall be
notarized in the jurisdiction where the Applicant is
established, and be authenticated by the embassy
or consulate of PRC in that jurisdiction.
2. The letter in a foreign language shall be
accompanied by a Chinese translation which the
Applicant’s corporate seal should be affixed to or
where the Applicant does not have a corporate
seal, signed by the Chairman of CEO of the
Applicant.
3. The letter shall state the name and address of the
Applicant, the date of the Applicant’s opening
accounts with the bank, the account number and
(positive) comments on the Applicant’s
creditworthiness.
4. A signature of the authorized bank officer and a
bank stamp are required.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
Documents Checklist for Registration of a Foreign Enterprise’s
(the “Applicant”) Representative Office (cont’d)
No Document Title Original Copy Document Contents & Requirements
4. Appointment Letter to appoint the Chief
Representative and, if applicable other
representatives
Original 1. The letter should be signed by the Chairman of the
Board or the CEO of the Applicant, whose name
and position and the date of the appointment shall
be stated.
2. If the Applicant has a corporate seal, the letter
shall be affixed to such a seal.
3. The Appointment Letter shall be executed in both
Chinese and English if the Applicant is not
established in Japan, Hong Kong SAR, Macao
SAR or Taiwan.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
Documents Checklist for Registration of a Foreign Enterprise’s
(the “Applicant”) Representative Office (cont’d)
No Document Title Original Copy Document Contents & Requirements
5. Documents relating to the
Representative(s)
Resume Original 1. The resume shall be provided in a prescribed form
and signed by the Chief Representative.
Identification
Documents
Notarized Original 1. The identification documents shall be the passport
(including the visa page) for a foreigner, the ID
card and mainland entry pass for a Taiwan, Macao
or Hong Kong resident, or the PRC passport and
the overseas permanent residence document for a
PRC national having the status of overseas
permanent resident.
2. Where the representative is a foreigner, the copy
of his/her passport shall be notarized in the
jurisdiction where the Applicant is established to be
a true copy, and be authenticated by the embassy
or consulate of PRC in that jurisdiction.
Photo Original One, one or two-inch, photo.
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FORMATION OF A FOREIGN REPRESENTATIVE OFFICE IN CHINA
Documents Checklist for Registration of a Foreign Enterprise’s
(the “Applicant”) Representative Office (cont’d)
No Document Title Original Copy Document Contents & Requirements
6. Documents for Office Premises Original The lease term shall be no less than one year,
and the Office Lease Contract shall bear the seal
of registration affixed by the local Real Estate
Leasing Administrative Department
7. Power of Attorney to authorize the registration
agent to handle the application
Two Original The Power of Attorney is in a prescribed form
and should be executed by the Chairman of
Board or the CEO of the Applicant.
8. Application Form for Establishment of
Representative Offices of Foreign Enterprises
Original 1. The application shall be in a prescribed
form and will be completed by the
registration agent.
2. The completed application form shall be
signed by the Chairman of Board or the
CEO of the Applicant and by the Chief
Representative on the specific pages.
Notes:
1. The official letterhead of the Applicant should indicate the Applicant’s name.
2. All the documents notarized and authenticated shall be prepared in no less than two sets.
3. Unless otherwise indicated, only one set of the above documents shall be submitted.
4. The registration authority may request the Applicant to supplement documents to support the application.
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