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Advantages and disadvantages of companies and representative

Advantages and disadvantages of companies and representative


1. Capital

The register a representative office in China isn`t require significant capital investment, the amount transferred to the bank account of the funds may vary depending on your company's needs.

The minimum share capital for an exempt company is U.S. $ 160,000 (for the trading companies or companies in the service sector - about 155,000 dollars). The size of the first installment which will be paid in the first three months of registration is 20% from the total payment of the rest is produced throughout the year.

2. There are some limitations in the choice of location of the representative office (commercial buildings with high rent), while the office may be located in any of the commercial buildings.

3. Representation can not conduct trade activities.

4. The number of foreign employees in the state of representation can not exceed 4 people (one general representative + 3 common representative), Chinese state representative (unlimited employees) must be recruited through a specialized company, which acts as a mediator in the relationship. The monthly payment for each employee for the services of the company is 250 RMB.

The company have a rigth to hire an unlimited number of foreign employees and Chinese employees without recourse to the services of intermediaries. employee for the services of the company is 250 Rmb

5. Taxation to relation with a foreign representation company:

taxation applied on the basis of expenditure representation (rent, phone, etc.), the amount of tax paid is 12% of the total expenditure.


Tax regime related with the Company:

VAT 17%

Income tax (gross annual income, import costs, miscellaneous costs) 25%

Tax exempt businesses with annual revenues of zero or failing businesses.


6. The cost of the annual audit

for the representative office: 4000 RMB (requires proof of existence of a foreign company)

for the company: 8,000 RMB (without appropriate document)


7. The cost of registration

representative office : 17500 RMB

Company: 28000 yuan (including representation services)


8. Accounting cost:

Fees for representative offices: 1600 RMB, the ability to hire part-time

for companies: 1800-2000 RMB, depending on the amount of work as possible hire part-time

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