A Guide to the Shenzhen Representative Office (RO)
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A Guide to the Shenzhen Representative Office (RO)
Author:xcd   Article source: www.xcdacc.cn  Hits:1011  Add time:2009-5-27  
If you want to invest in Shenzhen China, you don't just turn to the relevant government departments for so many certificates and formalities, but turn to Xinchengda. At Xinchengda we are not only give you tailor-made service for your need, but also for your satisfaction. Xinchengda’s services are business-orientated and value-orientated. XINCHENGDA—serving the world of business, professional and trustworthy.

Shenzhen is the best choice for doing business in China. Situated in the Pearl River Delta, Shenzhen is the first Special Economic Zone since China carried out reform and open-door policy 30 years ago. Shenzhen has an area of 1953 square km’s and a population of more than 10 million. Shenzhen is the best city both for living and working in China as well as the fastest growing city in the world. In Shenzhen you can enjoy the sound infrastructure and the intensive industrial chain for trading, manufacturing and value investment. Since Shenzhen is bordering Hong Kong, you can also take great advantage and opportunity from the “one country, two systems” policy.

A Chinese representative office (RO) is an institute setup in China, representing its parent company for liaison with Chinese counterparts. A RO is not considered to be a separate legal entity. It can not directly engage in business operation. However, through which its parent company can enter into contracts with its supplier/customers in China in its own name, but not under the name of RO. A representative office is popular for those who are willing to enter China at the test period of business and investment.

The Chinese government has a name format for anyone who wants to setup a RO in China, the format is: country (area) + parent company name + Shenzhen Representative Office

1. The RO enjoys a great popularity among foreign investors since its easier setup & management. Unlike foreign investment enterprises ("FIEs"), representative offices are not required to meet stringent requirements for items such as capital injection.
2. The functions of a RO are as follows:
a. It can handle market research, sourcing, project investigation, quality control for parent company, liaison with customers and suppliers
b. It cannot enter into purchase/sales contracts and receive payment for services, issue invoices.
c. A RO can open bank accounts and employ staff for above- mentioned purposes.
d. Apply for work permit and residence permit.
e. A RO is still subject to tax liability, so monthly tax return should be carried out regularly.
f. If a RO is set up in Shanghai, it is qualified to get a car without entrance tax.

1. Copy of the business license or certificate of incorporation of parent company;
2. The original and copy of identification documents (ID card, passport) of representatives, and five color photos;
3. Two original bank reference letters (from investor's bank) indicating foreign investors' credibility, issued within 6 months in both English and Chinese version;
4. Lawyer's legalization or notarization endorsed by local China Embassy or Consulate
5. The lease of commercial office between lesser and lessee. The lessee should be acted by chief representative, or parent company. The lease should be endorsed by local Housing Management Authority.
As for other documents, Xinchengda are ready for providing assistance.

Prepare all the needed documents→ fill out the application form→ sign the agreement with Xinchengda→ pay for the services→ submit all the needed documents→ name reservation→ apply for the business license and work card→ go to the public security bureau for stamp-make→ apply for Organization Code License & card→ apply for Registration license of the Local & National Taxation Bureau.

1: XINCHENGDA package services include:
a. Both original and duplicate copy of business license; b. Registration license of the Local & National Taxation Bureau. c. Seal carving registration card; d. Organization Code License & card (IC card); e. Three stamps.
2: Service charge: RMB6,000 Yuan. Including the government service charge,.
3: Terms of Payment: The applicant can pay by cash, check or T/T to Xinchengda’s bank account before the service begins.
XINCHENGDA can provide a series of business follow-up services such as transfer RO to WFOE, monthly bookkeeping and tax return, annual return services, internal auditing, financial planning and tax layout, China policy & market study. Other services include domain name registration, webpage design, website promotion, China trademark registration, Work Permit, Residence Permit, etc. in order to pave a smoother and wider way for your China business success.

Once all the necessary documents for application are ready for submission, government approval can be got within 10-15 working days.

Although a RO is not to conduct business, it attracts tax as stated below:
1. Individual Income Tax (IIT)
IIT stands for Individual Income Tax which rates from 5% to 45% based on salary income exceeding more than RMB2000 for local employee and RMB 4800 for overseas employee. All the RO staff is subject to IIT if his income exceeds the limit. IIT is calculated according to such a formula: IIT= (income- limit)×rate.
2. Business Tax (BT)
BT stands for business tax which is based on monthly business operational expense, the rough rate is 5% based on your expenses. It is calculated according to the formula like this: BT= expenses/ (1-15%) ×5%.
3. Enterprise Income Tax (EIT)
EIT stands for enterprise income tax which is based on quarterly business operational expenses, the rate is 25%. It is calculated according to the formula: EIT = expenses/ (1-15%) ×10%×25%.
1. Because of language difference, all the documents submitted to the Chinese government should be translated into Chinese and endorsed by the appointed translation agency.
2. Xinchengda is responsible to inform the clients for the collection of the company kit at the designated office. If the client fails to collect the company kit within the mandatory three month period without reasonable excuse, the client will be regarded as forfeiting the right to the registered company; Xinchengda can dispose the company as it wishes.
3. Make sure to get the formal invoice from the lesser after leasing is done.
4. The follow-up services are not included in the service package, and are subject to further charge according to the clients’ requirements.
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