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Introduction to WFOE
The Wholly Foreign Owned
Enterprise (WFOE) is a Limited liability company wholly owned by the
foreign investor(s). In China, WFOEs were originally conceived for
encouraged manufacturing activities that were either export
orientated or introduced advanced technology. However, with China's
entry into the WTO, these conditions were gradually abolished and
the WFOE is increasingly being used for service providers such as a
variety of consulting and management services, software development
and trading as well.
Business Scope of WFOE
One of the most
important issues covered in the project documentation is the
business scope of the WFOE. Business scope is narrowly defined for
all businesses in China and the WFOE can only conduct business
within its approved business scope, which ultimately appears on the
business license. Any amendments to the business scope require
further application and approval. Inevitably, there is a negotiation
with the approval authorities to approve as broad a business scope
as is permitted. General business scope usually includes, investment
consulting, international economic consulting, trade information
consulting, marketing and promotion consulting, corporate management
consulting, technology consulting, manufacturing, etc.
Registered and Paid Up
Capital
For the WFO enterprises,
the minimum amount of registered capital required is RMB1,000,000
(about US$140,500), Under the Company Laws, the paid-up capital is
equal to registered capital, Investors or shareholders must pay for
the shares subscribed and deposit the money into a specified bank
account. The amount of share capital so deposited should be audited
by a firm of certified public accountants.
General Tax Information
The corporate tax rates
range from15% to 31%, depending on the places where the company is
registered. Shenzhen is among the lowest in the region. All
enterprises are required to report to the Tax Administration
Department monthly. You are welcome to contact us for more
information.
Annual Return
Any limited companies in
Shenzhen should summit annual return to the relevant authorities.
The annual cost is about US$300. Any company will be subject be to a
fine if the Annual Return is not submitted in a timely manner.
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