Hong Kong SMEs Hit Record Growth: CPA Australia Data
The Hong Kong Special Administrative Region is witnessing an unprecedented surge in the small and medium-sized enterprise (SME) segment. According to the annual survey conducted by CPA Australia, 68% of respondents reported positive business momentum in 2025 — the strongest performance in a decade. 2026 Outlook: Historic Confidence Highs Business sentiment remains robust in the […]
The Hong Kong Special Administrative Region is witnessing an unprecedented surge in the small and medium-sized enterprise (SME) segment. According to the annual survey conducted by CPA Australia, 68% of respondents reported positive business momentum in 2025 — the strongest performance in a decade. 2026 Outlook: Historic Confidence Highs Business sentiment remains robust in the medium term. The survey revealed record expectations: 71% of SME representatives plan to scale operations in 2026, while 76% forecast accelerated economic growth for Hong Kong itself. These figures represent the highest levels ever recorded in the history of this study. Three Pillars of Success for Hong Kong SMEs Experts identified key factors driving sustainable growth: • Financial stability. Hong Kong ranked first among all surveyed markets on this metric, demonstrating exemplary capital and reserve management. • Technology investments. 64% of enterprises attribute profitability gains to digital infrastructure spending. Artificial intelligence receives particular focus: 40% of local entrepreneurs are already allocating resources to AI-based solutions. • Cybersecurity strengthening. Notable progress has been made in digital hygiene: the share of companies suffering losses from cyber incidents dropped from 72% to 43% in 2025. Challenges Requiring Attention Despite the overall positive outlook, respondents highlighted two systemic issues: → Rising labour costs. For 42% of companies, increased payroll expenses became the primary operational challenge (up from 35% a year earlier). → Cyber risks. Information security threats continue to concern nearly 60% of survey participants — significantly above the sample average of 42%. Hong Kong’s SME sector is entering a phase of confident post-crisis recovery, underpinned by financial discipline and accelerated digitalisation. Record business optimism for 2026 reflects high entrepreneur confidence in the SAR’s economic policy. Meanwhile, the ability to effectively mitigate workforce and technological risks will be key to sustaining and accelerating current growth momentum.
Hong Kong Maintains Position in Global Financial Rankings, Securing Top-3 Status Among World Centers
According to the 39th edition of the prestigious Global Financial Centres Index (GFCI), Hong Kong has confirmed its status as one of the key nodes in the global financial system, retaining third place worldwide with a final score of 765 points. Narrow Gap with Global Leaders The competition at the top of the ranking remains […]
According to the 39th edition of the prestigious Global Financial Centres Index (GFCI), Hong Kong has confirmed its status as one of the key nodes in the global financial system, retaining third place worldwide with a final score of 765 points. Narrow Gap with Global Leaders The competition at the top of the ranking remains extremely tight. The margin between Hong Kong and the list leaders is measured in single digits: just two points behind first-place New York, and one point behind second-place London. Meanwhile, the Special Administrative Region continues to dominate the Asia-Pacific region, outpacing its closest regional competitor — Singapore. A detailed breakdown of sectoral sub-indices highlights the strengths of Hong Kong’s financial ecosystem: Leadership in Core Financial Segments World No. 1: Banking, insurance, and financial technologies (FinTech); Second place globally: Investment and asset management; Fourth place: Quality of government regulation and institutional environment; Sixth place: Professional services and trading infrastructure. Growth Outlook: Rising Influence in the Medium Term The current GFCI edition conducted a comprehensive assessment of 120 financial centers worldwide. Based on surveys of international experts and market participants, Hong Kong was included in the shortlist of jurisdictions whose role in the global financial architecture is expected to strengthen over the next 2–3 years. Stable retention of third place in the global rankings, dominance in the high-tech FinTech segment, and high scores across key industrial sectors confirm that Hong Kong possesses fundamental resilience. Even amid intensifying geopolitical and economic competition, the city continues to adapt to new challenges while maintaining its appeal for international investors, banks, and technology companies.
Corporate Income Tax (CIT) in China: Principles, Rates, and Compliance
Corporate Income Tax (CIT), also referred to as Enterprise Income Tax (EIT), is the main direct tax for most companies earning income in China. The legal basis is the Law of the People’s Republic of China “On Corporate Income Tax”, which regulates in detail the procedure for determining and taxing profits. Calculation principle and tax […]
Corporate Income Tax (CIT), also referred to as Enterprise Income Tax (EIT), is the main direct tax for most companies earning income in China. The legal basis is the Law of the People’s Republic of China “On Corporate Income Tax”, which regulates in detail the procedure for determining and taxing profits. Calculation principle and tax base CIT is levied on the company’s net profit for the financial year, which is the difference between total revenues and allowable deductible expenses. Thus, the taxable base is adjusted gross income after taking into account all reasonable and documented costs, as well as losses carried forward from previous periods. Key rates and benefits The basic (standard) CIT rate is 25%. However, the system provides for an extensive network of preferences aimed at stimulating technological development and regional growth: Nationwide benefits: For high-tech enterprises (HNTEs) and new type of maintenance enterprises, the rate is reduced to 15%. Small, low-profit businesses can apply an effective rate of 5% or 10% to a portion of their annual profits. Regional Benefits: Special Administrative Zones (e.g. Hainan Free Trade Port, Shanghai Lingang New Zone, Qianhai Cooperation Zone) offer incentive companies with real economic activity (operational substance) a rate of 15% for a certain period. <img fetchpriority="high" decoding="async" width="1190" height="1657" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-key-corporate-income-tax-cit-rates-and-benefits-in-china.webp" alt="" class="wp-image-33886" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-key-corporate-income-tax-cit-rates-and-benefits-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-key-corporate-income-tax-cit-rates-and-benefits-in-china-215x300.webp 215w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-key-corporate-income-tax-cit-rates-and-benefits-in-china-735x1024.webp 735w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-key-corporate-income-tax-cit-rates-and-benefits-in-china-768x1069.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-key-corporate-income-tax-cit-rates-and-benefits-in-china-1103x1536.webp 1103w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-key-corporate-income-tax-cit-rates-and-benefits-in-china-108x150.webp 108w" sizes="(max-width: 1190px) 100vw, 1190px" /> Taxpayer status and sources of income The Chinese tax system sets its own rules of the game, and the first move in it is to accurately determine your place on the board. The key to understanding everything that follows is the answer to the question: to whom and from what? The answer forms two contrasting worlds of taxation: one for those who are inextricably linked to China’s economy, and the other for those who interact with it at a distance. The fate of your income – global or strictly local, the ability to offset taxes paid abroad, and the very mechanism of calculation – is all predetermined by a single, but fundamental distinction: Tax Resident Enterprise (TRE) or Non-Tax Resident Enterprise (non-TRE). These are not just formal labels, but fundamentally different regimes that set the trajectory of your tax liability. Tax Resident Enterprises (TRE) in China This category includes enterprises registered in accordance with the legislation of the People’s Republic of China or having actual management bodies in China. TREE are subject to the principle of worldwide taxation and are required to declare all global profits received. To prevent double taxation, Chinese law provides for a mechanism for offsetting foreign taxes paid abroad on income of foreign origin. However, the amount of credit is limited to the amount of tax that would be payable in China on the same amount of income. Tax calculated at the applicable tax rates <img decoding="async" width="1190" height="1864" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-the-company-is-registered-in-the-prc-or-the-management-is-located-in-china.webp" alt="" class="wp-image-33901" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-the-company-is-registered-in-the-prc-or-the-management-is-located-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-the-company-is-registered-in-the-prc-or-the-management-is-located-in-china-192x300.webp 192w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-the-company-is-registered-in-the-prc-or-the-management-is-located-in-china-654x1024.webp 654w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-the-company-is-registered-in-the-prc-or-the-management-is-located-in-china-768x1203.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-the-company-is-registered-in-the-prc-or-the-management-is-located-in-china-981x1536.webp 981w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-the-company-is-registered-in-the-prc-or-the-management-is-located-in-china-96x150.webp 96w" sizes="(max-width: 1190px) 100vw, 1190px" /> Non-Tax Resident Enterprises (non-TRE) in China Enterprises that do not meet the residency criteria are taxed only on income of Chinese origin. In this case, a graded approach is applied: If there is a permanent establishment (PE) in China: The profits derived through this PE, as well as income received outside it, but effectively related to the activities of this PE, are subject to taxation. In the absence of a WHT: Tax is withheld at source (withholding tax, WHT) on passive income (dividends, interest, royalties, rental income, share transfer), generally at a rate of 10%, unless otherwise provided by the applicable double taxation treaty. An important feature of the system is the impossibility of consolidating the financial results of companies belonging to the group for tax purposes. Each legal entity calculates and pays the tax independently. <img decoding="async" width="1190" height="2071" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-a-company-not-registered-in-the-prc-and-without-actual-management-in-the-territory-of-china-tax-is-paid-only-on-income-of-chinese-origin.webp" alt="" class="wp-image-33916" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-a-company-not-registered-in-the-prc-and-without-actual-management-in-the-territory-of-china-tax-is-paid-only-on-income-of-chinese-origin.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-a-company-not-registered-in-the-prc-and-without-actual-management-in-the-territory-of-china-tax-is-paid-only-on-income-of-chinese-origin-172x300.webp 172w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-a-company-not-registered-in-the-prc-and-without-actual-management-in-the-territory-of-china-tax-is-paid-only-on-income-of-chinese-origin-588x1024.webp 588w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-a-company-not-registered-in-the-prc-and-without-actual-management-in-the-territory-of-china-tax-is-paid-only-on-income-of-chinese-origin-768x1337.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-a-company-not-registered-in-the-prc-and-without-actual-management-in-the-territory-of-china-tax-is-paid-only-on-income-of-chinese-origin-883x1536.webp 883w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-a-company-not-registered-in-the-prc-and-without-actual-management-in-the-territory-of-china-tax-is-paid-only-on-income-of-chinese-origin-1177x2048.webp 1177w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-a-company-not-registered-in-the-prc-and-without-actual-management-in-the-territory-of-china-tax-is-paid-only-on-income-of-chinese-origin-86x150.webp 86w" sizes="(max-width: 1190px) 100vw, 1190px" /> China Corporate Income Tax Declaration and Payment Procedure China’s corporate income tax (CIT) administration is based on the principle of prepayments (advances) and final annual calculation. This system ensures a uniform flow of funds to the budget and allows companies to adjust their liabilities based on actual financial results for the reporting period. 1. Advance Payments (Preliminary Declarations) All resident enterprises (TRE), as well as non-residents (non-TRE) with a permanent establishment in China, are required to pay income tax in advance. Frequency and timing: Advance payments are made quarterly. The payment of the tax and the submission of the corresponding quarterly return must be made within 15 days after the end of each quarter. In some cases, in agreement with the tax authorities, payments may be made monthly. Basis of calculation: As a rule, the amount of the advance payment is calculated based on the actual profit received in the reporting quarter. If such calculation is difficult, the tax authority may allow to use as a basis the profit for the same period of the previous year or apply another approved methodology. <img loading="lazy" decoding="async" width="1190" height="1716" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-terms-of-payment-and-filing-of-the-income-tax-return-in-china.webp" alt="" class="wp-image-33932" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-terms-of-payment-and-filing-of-the-income-tax-return-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-terms-of-payment-and-filing-of-the-income-tax-return-in-china-208x300.webp 208w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-terms-of-payment-and-filing-of-the-income-tax-return-in-china-710x1024.webp 710w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-terms-of-payment-and-filing-of-the-income-tax-return-in-china-768x1107.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-terms-of-payment-and-filing-of-the-income-tax-return-in-china-1065x1536.webp 1065w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-terms-of-payment-and-filing-of-the-income-tax-return-in-china-104x150.webp 104w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> 2. Final Annual Declaration and Settlement At the end of the tax year, a final reconciliation of all liabilities is carried out. Deadline for filing: The annual CIT tax return must be filed and the final settlement made within 5 months after the end of the tax year. For most companies whose fiscal year coincides with the calendar year (ending on December 31), this period expires on May 31 of the following year. Content of the declaration: The annual declaration serves to accurately determine the taxable base. It takes into account all statutory adjustments, such as: Application of tax incentives (for example, for high-tech enterprises). Accounting for allowed deductions (advertising, entertainment expenses within the established limits, charity expenses). Carry-over of losses to future periods (within 5 years). Transfer pricing adjustments. Final balance: Based on the results of the annual calculation, the difference between the amount of accrued tax and the advances paid is determined. Underpayment is subject to payment to the budget with payment of late fees. Overpayment is subject to credit against future payments or refunds. <img loading="lazy" decoding="async" width="1190" height="1239" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-china-annual-income-tax-return_-final-calculation.webp" alt="" class="wp-image-33948" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-china-annual-income-tax-return_-final-calculation.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-china-annual-income-tax-return_-final-calculation-288x300.webp 288w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-china-annual-income-tax-return_-final-calculation-984x1024.webp 984w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-china-annual-income-tax-return_-final-calculation-768x800.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-china-annual-income-tax-return_-final-calculation-144x150.webp 144w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Features for different categories of taxpayers Small and marginal enterprises For such companies that meet the criteria (annual taxable profit up to 3 million yuan, restrictions on the number of employees and assets), there are preferential effective CIT rates of 5% on part of income up to 1 million yuan and 10% on part from 1 to 3 million yuan. The declaration procedure is similar for them, but the calculation is carried out using reducing coefficients. Precise criteria for small and marginal enterprises Acceptance Value required Notes Annual taxable profit ≤ 3 million Chinese yuan (CNY) Calculated for the tax year. Number of employees ≤ 300 people Total value of assets ≤ 3 million Chinese yuan (CNY) The company must be registered in the PRC and engage in activities that are not on the prohibited or restricted lists. This benefit is valid for the specified period: from January 1, 2023 to December 31, 2027. <img loading="lazy" decoding="async" width="1190" height="1563" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-small-business-in-china_-income-tax-from-only-5.webp" alt="" class="wp-image-33964" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-small-business-in-china_-income-tax-from-only-5.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-small-business-in-china_-income-tax-from-only-5-228x300.webp 228w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-small-business-in-china_-income-tax-from-only-5-780x1024.webp 780w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-small-business-in-china_-income-tax-from-only-5-768x1009.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-small-business-in-china_-income-tax-from-only-5-1169x1536.webp 1169w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-small-business-in-china_-income-tax-from-only-5-114x150.webp 114w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> New and High Technology Enterprises Companies that have the appropriate state certificate apply a preferential CIT rate of 15%. Confirmation of eligibility is a key element of the annual return. In order to obtain the HNTE certificate and apply the 15% rate, the company must meet a number of strict requirements that are regularly specified by the state. The main criteria include: Intellectual Property Right: The Company shall own the exclusive rights to the underlying intellectual property (patents, software, etc.) used in its underlying products (services). This is a key requirement. Field of activity: Activities should relate to one of the 8 key areas supported by the state: • Electronics & Information Technology • Biotechnology and new medicine • Aerospace • Latest by • High-tech service • and Environmental Protection. • New energy equipment • High-tech agriculture. The share of research and development personnel: at least 10% of the total number of employees of the company for the year should be directly involved in research and development (R&D). Share of R&D expenditure: The company must invest in research and development a certain percentage of revenue, which varies depending on the size of the company: • For companies with revenue of up to 50 million yuan – at least 5%. • For companies with revenue from 50 to 200 million yuan – at least 4%. • For companies with revenue of more than 200 million yuan – at least 3%. High-tech revenue share: At least 60% of the company’s total revenue must come from revenues related to its high-tech products or services. <img loading="lazy" decoding="async" width="1190" height="1988" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-new-and-high-tech-enterprises-in-china.webp" alt="" class="wp-image-33980" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-new-and-high-tech-enterprises-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-new-and-high-tech-enterprises-in-china-180x300.webp 180w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-new-and-high-tech-enterprises-in-china-613x1024.webp 613w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-new-and-high-tech-enterprises-in-china-768x1283.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-new-and-high-tech-enterprises-in-china-919x1536.webp 919w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-new-and-high-tech-enterprises-in-china-90x150.webp 90w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Certification and Compliance Procedure for HNTE Status Obtaining the status of a New Type of High-Tech Enterprise (HNTE) is a strictly regulated application procedure that requires thorough preparation and interaction with government agencies. The company does not receive this status automatically on formal grounds; it is assigned based on the results of a comprehensive expert assessment. The certification process includes the following key steps: Internal audit and preparation: The Company conducts a self-assessment for compliance with all 8 criteria, collects and systematizes a voluminous package of documents. This includes proof of ownership of intellectual property (patent certificates), financial statements confirming the level of R&D expenses, personnel documents, a description of the main high-tech products (services) and other materials. Application and examination: The prepared package of documents is submitted to the local Office of Science and Technology (STB), which acts as the main coordinator of the process. The application undergoes a multilevel examination involving specialists from the Ministry of Finance (MOF) and the State Tax Administration (STA). Experts assess both the formal compliance with the criteria and the real innovation activity of the company. Obtaining a certificate: in case of a positive decision of the company, an HNTE Certificate is issued, signed by the three specified departments. This certificate is the only legitimate basis for applying a preferential tax rate. Important aspects of validity and renewal: INTERNATIONAL European Community legislation is applicable as explained in Chapter 2 3-6 months before its expiration, the company is obliged to initiate and undergo a recertification procedure (re-assessment), which is similar in complexity to the primary one. Missing deadlines or failure to recertify lead to loss of status and automatic transition to the standard CIT rate of 25%. Availability of a valid (not expired) certificate is a prerequisite for the application of the 15% rate when filing an annual income tax return for the relevant period. It is mandatory for the tax authorities to check the status of the enterprise at the time of filing the tax return. <img loading="lazy" decoding="async" width="1190" height="2119" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-hnte-certification_-3-steps-to-15-cit.webp" alt="" class="wp-image-33995" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-hnte-certification_-3-steps-to-15-cit.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-hnte-certification_-3-steps-to-15-cit-168x300.webp 168w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-hnte-certification_-3-steps-to-15-cit-575x1024.webp 575w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-hnte-certification_-3-steps-to-15-cit-768x1368.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-hnte-certification_-3-steps-to-15-cit-863x1536.webp 863w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-hnte-certification_-3-steps-to-15-cit-1150x2048.webp 1150w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-hnte-certification_-3-steps-to-15-cit-84x150.webp 84w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Register Your Business in China with Tax Optimization <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Optimal CIT rate selection <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> HNTE status & incentive support <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> International business structuring Free consultation Additional Tax and Operational Benefits of HNTE In addition to the key benefit in the form of a reduced income tax rate, the HNTE status provides access to other significant preferences: Super Deduction of R&D Expenditure: This is a powerful tool acting in parallel with the reduced rate. The Company has the right to increase the amount of R&D expenses recognized for tax purposes by the coefficient established by law. Current rules: For most HNTEs: Actual R&D costs can be deducted at 200% (i.e. an additional 100% in excess of costs incurred). For enterprises in the field of integrated circuits and machine-tool construction (until 31.12.2027): an increased coefficient of 220% is applied. This mechanism directly reduces the taxable profit before a preferential rate of 15% is applied to it, creating a cumulative effect of tax savings. Regional additions and simplifications: Many Special Administrative Regions and Economic Development Zones (e.g. Shanghai Lingang New Zone, Free Trade Ports) for enterprises already having HNTE status can operate: Additional subsidies or grants from local authorities for research activities. Simplified or expedited procedures for obtaining other types of permits and benefits. In some cases – extended lists of encouraged industries, which allows companies that do not fall under the national criteria to qualify for similar benefits at the regional level. Thus, the status of HNTE serves not only as a tool for reducing the tax rate, but also as a strategic asset that strengthens the company’s market position, gives access to additional financing and simplifies interaction with the innovation ecosystem of China. Its maintenance requires constant attention to compliance with the criteria and timely passage of administrative procedures. <img loading="lazy" decoding="async" width="1190" height="1309" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-hnte-is-not-only-15-cit.webp" alt="" class="wp-image-34010" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-hnte-is-not-only-15-cit.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-hnte-is-not-only-15-cit-273x300.webp 273w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-hnte-is-not-only-15-cit-931x1024.webp 931w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-hnte-is-not-only-15-cit-768x845.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-hnte-is-not-only-15-cit-136x150.webp 136w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Taxation of non-residents without permanent establishment in China For foreign companies that are not tax residents of the PRC (non-TRE) and do not have a permanent establishment (PI) in China, a special regime of taxation of income of Chinese origin is applied. The main mechanism is Withholding Tax (WHT). Key features of the mode: Taxable income: The WHT regime applies to passive (non-commercial) income, in particular: • Dividends • % • Royalties (payments for the use of intellectual property) • Income from the rental of property located in China • Income from the transfer of real estate Base Tax Rate: The standard withholding rate is 10% of the gross disbursement amount before any taxes. Role and responsibility of the agent: A Chinese paying company that makes a payment to a non-resident is recognized as a tax agent (withholding agent). It bears full legal and financial responsibility for: • Correct deduction of the calculated amount of tax from the funds payable to the non-resident. • Timely declaration and transfer of the withheld tax to the state budget. • Maintaining and storing primary documentation confirming the calculation and retention. In case of non-fulfillment of obligations (incomplete retention, late payment), the tax agent is subject to fines, penalties and claims for payment of arrears at his own expense. Agreement rate reduction: The standard rate of 10% may be reduced if a Double Tax Treaty (DTT) is in force between China and the country of residence of the foreign recipient of income. For example, the rates on many contracts for dividends are 5-10%, for royalties – 6-10%. To apply the preferential contractual rate, the foreign recipient of income is required to provide the Chinese agent with an official Tax Residence Certificate issued by the competent authorities of their country and, as a rule, fill out a special form of the PRC tax authority. Practical steps for a Chinese paying company: Recipient Status Identification: Determine whether the recipient of the payment is a PRC tax resident or not. Classification of income: correctly qualify the nature of the payment (dividends, interest, royalties, etc.). Verification of the applicable DTT: establish whether there is a valid agreement with the recipient’s country of residence and determine the rate provided for by it. Request for documents: request from a foreign counterparty a duly issued Certificate of Tax Residence for the application of a reduced rate. Calculation and withholding: calculate the amount of tax to be withheld at the applicable rate (10% or preferential contractual). Declaration and payment: within the established deadline (usually by the 15th day of the following month), file a WHT tax return and transfer the withheld amount to the budget. Payment of the net amount: transfer to a foreign counterparty the amount remaining after tax withholding. Important: Failure to comply with the procedure may lead to reclassification of the payment and additional tax accrual at the standard rate of 10%, as well as to the accrual of penalties. <img loading="lazy" decoding="async" width="1190" height="2077" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-non-resident-with-no-office-in-china_-pay-wht-and-only-with-chinese-income.webp" alt="" class="wp-image-34025" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-non-resident-with-no-office-in-china_-pay-wht-and-only-with-chinese-income.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-non-resident-with-no-office-in-china_-pay-wht-and-only-with-chinese-income-172x300.webp 172w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-non-resident-with-no-office-in-china_-pay-wht-and-only-with-chinese-income-587x1024.webp 587w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-non-resident-with-no-office-in-china_-pay-wht-and-only-with-chinese-income-768x1340.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-non-resident-with-no-office-in-china_-pay-wht-and-only-with-chinese-income-880x1536.webp 880w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-non-resident-with-no-office-in-china_-pay-wht-and-only-with-chinese-income-1173x2048.webp 1173w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-non-resident-with-no-office-in-china_-pay-wht-and-only-with-chinese-income-86x150.webp 86w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> 4. Income Tax Administration: E-Declaration, Timing and Responsibility The income tax administration system (CIT) in China is fully digitalized and characterized by strict procedural deadlines, non-compliance with which entails significant financial and reputational risks. Electronic filing and key requirements All tax returns and reports are submitted exclusively electronically through the official online platform of the State Taxation Administration (STA). This system is integrated with electronic document management, including the system of invoices (fapiao). The taxpayer is fully responsible for meeting the deadlines. Violation of the statutory deadlines for filing a declaration or paying tax leads to the automatic accrual of the following sanctions: Penalty for delay: accrued on the amount of arrears at the rate of 0.05% for each day of delay, starting from the day following the due date. Administrative fines: if the fact of evasion from payment is revealed, the tax authorities have the right to recover a fine in the amount of 50% to 500% of the amount of unpaid tax. Increased attention and audits: Companies with violations fall into the focus of increased tax supervision, which increases the risk of complex on-site inspections. <img loading="lazy" decoding="async" width="1190" height="2328" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-v-kitae-tolko-elektronnye-deklaratsii-1.webp" alt="" class="wp-image-34040" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-v-kitae-tolko-elektronnye-deklaratsii-1.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-v-kitae-tolko-elektronnye-deklaratsii-1-153x300.webp 153w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-v-kitae-tolko-elektronnye-deklaratsii-1-523x1024.webp 523w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-v-kitae-tolko-elektronnye-deklaratsii-1-768x1502.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-v-kitae-tolko-elektronnye-deklaratsii-1-785x1536.webp 785w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-v-kitae-tolko-elektronnye-deklaratsii-1-1047x2048.webp 1047w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-v-kitae-tolko-elektronnye-deklaratsii-1-77x150.webp 77w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Consolidated CIT Declaration and Payment Procedure The procedure is two-step and includes advance payments followed by an annual reconciliation. Stage Deadline Key content and documents Remark Advance payment and quarterly return Within 15 days after the end of the reporting quarter (for most companies). Some large taxpayers may be transferred to monthly advances. 1. Calculation of the advance payment based on the actual profit for the quarter. 2. Submission of quarterly tax return via online system STA.3. Payment of the calculated amount. Advances paid are offset against the final annual commitment. The calculation can be made using the accrual method or the cash method (if allowed). Annual Declaration and Final Settlement (Annual Reconciliation) Within 5 months after the end of the tax year. For the year ending 31 December, the deadline is 31 May of the following year. 1. Final calculation of the annual taxable profit, taking into account all adjustments provided for by law (for example, application of benefits, deductions, transfer of losses) .2. Submission of the Annual Declaration on CIT and a package of supporting documents.3. The audit report from a licensed Chinese audit firm is a mandatory application for a wide range of companies. This is a key stage at which the right to preferential rates is confirmed (a valid HNTE certificate is required, etc.) and reconciliation with the advances paid is carried out. Payment of the total amount or refund Simultaneously with the filing of the annual return. 1. Additional payment of the missing amount of tax (if advances are less than the final obligation) .2. Offsetting overpayments against future periods or processing a refund from the budget. The return procedure can be time-consuming and requires careful justification. Additional requirements and best practices Document retention period: The taxpayer is obliged to keep all primary accounting and tax documentation, including invoices (fapiao), contracts and settlements, for at least 10 years from the end of the relevant tax period. Interconnection with other systems: The data submitted in the CIT declaration are checked by the tax authorities with information from other systems: VAT, payroll, customs. Any discrepancies may give rise to a request. Professional support: Given the complexity of the rules, especially regarding the application of benefits and deductions, as well as the high risks of non-compliance, most foreign companies engage professional tax consultants to prepare an annual return and audit documents before filing with the STA. Strict adherence to the schedule, accuracy of calculations and completeness of documentation are the cornerstones of impeccable tax compliance in China and allow the company not only to avoid sanctions, but also to fully exercise its rights to legitimate tax preferences. China Income Tax Base and Allowed CIT Deductions: Detailed Analysis Determination of taxable profit is a critically important and strictly regulated process within the Chinese fiscal system. The company’s financial obligations directly depend on its accuracy, which requires an impeccable understanding and compliance with legislative norms. Basic algorithm for calculating taxable profit The fundamental formula for determining the tax base is fixed in the legislation and is as follows: Taxable profit = Total gross income – Non-taxable income – Income exempt from taxation – Allowed deductible expenses – Losses carried forward from previous tax periods Each element of this formula is subject to detailed rules of recognition and confirmation. <img loading="lazy" decoding="async" width="1190" height="897" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-how-to-calculate-taxable-profit-in-china_.webp" alt="" class="wp-image-34055" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-how-to-calculate-taxable-profit-in-china_.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-how-to-calculate-taxable-profit-in-china_-300x226.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-how-to-calculate-taxable-profit-in-china_-1024x772.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-how-to-calculate-taxable-profit-in-china_-768x579.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-how-to-calculate-taxable-profit-in-china_-199x150.webp 199w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Key methodological principles and requirements Accrual Principle It is a general requirement to recognize income and expenses in the reporting period to which they relate economically, regardless of the date of actual receipt or payment of funds. The cash method of accounting is allowed as an exception only for certain categories of small taxpayers, subject to the established criteria. 2. Documentary Acknowledgement Imperative (Fapiao Requirement) Any deductible expenses to reduce the tax base must be confirmed by official Chinese tax invoices (fapiao). A properly designed fapiao is the only indisputable proof of the validity of a business transaction for the tax authorities. The absence of an appropriate fapiao makes any costs non-deductible, which is a common and costly mistake for international companies that have not adapted their financial processes to Chinese realities. 3. Inventory Valuation Methods The taxpayer has the right to choose one of three legally allowed methods for assessing the cost of sold inventories. Subsequent arbitrary transition between methods without the consent of the tax authorities is not allowed. FIFO: The first units of inventory received are considered first sold. By weighted average cost: The calculation of the cost is based on the averages for the period. Specific identification method: used for unique, piecemeal or high-value assets, when it is possible to accurately track the cost of a particular unit. 4. Unrealized Gains/Losses Gains or losses arising solely from the revaluation of assets or liabilities at fair market value (for example, on financial instruments accounted for through profit or loss – FVTPL) are not recognised for income tax purposes. Taxation of such income (or accounting for losses) occurs only at the time of their actual sale – upon sale of an asset, repayment of a liability or other completion of a transaction. This principle separates accounting from tax accounting and prevents the taxation of “paper” profits. <img loading="lazy" decoding="async" width="1190" height="1967" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/13.-4-key-principles-for-calculating-income-tax-in-china.webp" alt="" class="wp-image-34070" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/13.-4-key-principles-for-calculating-income-tax-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/13.-4-key-principles-for-calculating-income-tax-in-china-181x300.webp 181w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/13.-4-key-principles-for-calculating-income-tax-in-china-620x1024.webp 620w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/13.-4-key-principles-for-calculating-income-tax-in-china-768x1269.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/13.-4-key-principles-for-calculating-income-tax-in-china-929x1536.webp 929w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/13.-4-key-principles-for-calculating-income-tax-in-china-91x150.webp 91w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Features of taxation of specific types of income Income Type Tax regime for CIT Key conditions and notes (clarifications and additions) Dividends between residents (TRE → TRE) Complete freedom. Clarified condition: Exemption applies if the recipient resident continuously owns an interest in the paying company At least 12 months This applies to any shares/stakes, not just exchange shares. Dividends paid to a non-resident (TRE → non-TRE) Withholding at source (WHT) Base rate: 10%. Can be reduced under a Double Tax Treaty (DTT), often to 5-7% if the conditions are met (e.g. ownership share ≥ 25%). Key requirement: the entire amount of the subscribed capital must be paid before dividends are paid. Foreign Income Tax Resident (TRE) Taxable in China 1. Foreign Tax Credit: calculated on a country-by-countrybasis. The amount of credit is limited to the amount of tax payable in China on this income.2. CFC Rules: Apply to undistributed profits of controlled foreign companies if: • Chinese residents own >10% of voting rights, and in total such ownership is ≥ 50%. • The effective CFC tax rate is below 12.5% (50% of the CIT base rate of 25%). • Important exceptions: The rules usually do not apply if the CFC is located in a country from the “white list” of the PRC (for example, the United States, Japan, the United Kingdom, etc.) or if its annual profit before tax does not exceed 5 million yuan (~$720 thousand). Additional clarifications and comments CFC rules: focus on passive income and the “essence” of transactions. Chinese CFC rules primarily target passive income (interest, royalties, dividends) accrued in low-tax jurisdictions without a reasonable commercial purpose. At the same time, in practice, tax authorities rely more on transfer pricing rules to combat base erosion than on CFC rules. The practical aspect of offsetting foreign tax. The offsetting procedure requires careful documentation. The taxpayer must provide Chinese tax authorities with official proof of overseas tax payment. If the foreign tax cannot be offset in the current period, it cannot be carried forward to past or future periods. Dividends to non-residents: compliance. A Chinese taxpayer company is obliged to fulfill the role of a tax agent: to withhold WHT, transfer it to the budget and file reports. To apply the reduced DTT rate, a foreign shareholder must submit a certificate of tax residence of his country to a Chinese company. System of allowed deductions: Regulations and restrictions Chinese law establishes detailed, and often limited, rules for deducting expenses. A. Capital Expenses and Depreciation Chinese tax law establishes detailed rules for the recognition of expenses aimed at forming a uniform tax base. Regulated depreciation methods and terms, as well as special incentive regimes, are key for capital expenditures. The main provisions in the field of depreciation of fixed assets, enshrined in the Law of the People’s Republic of China “On Corporate Income Tax” and by-laws, are systematized in the following table: Aspect Basic rules (standard mode) Special conditions (accelerated depreciation) Temporary incentive measures (until 31.12.2027) Accrual basis The straight-line (linear) method is the main one and is applied by default. The application of the double-decreasing balance method is allowed for certain categories of assets. It does not change the permissible methods, but expands the possibility of their application. Minimum useful lives Established by the Tax Rules for the implementation of the Law: • Buildings, structures: 20 years. • Equipment, transport, production equipment: 10 years. • Vehicles (except railway, water, air): 4 years. • Electronic equipment: 3 years. The period may be reduced, but may not be less than 60% of the minimum period established in the basic rules. For new equipment of manufacturing industries and enterprises engaged in R&D, it is allowed to reduce the depreciation period to 60% of the minimum. Application conditions Applies to all depreciable assets. Permitted for equipment that: 1. It is subject to strong obsolescence due to technologicalprogress.2. Constantly works in conditions of increased vibration, severe corrosion or other corrosive environments. 1. One-time write-off for expenses: for new equipment and tools (except buildings) at a cost of no more than 5 million yuan per unit. Available to businesses in all industries.2. Accelerated depreciation: for new equipment worth more than 5 million yuan (method and term – at the choice of the enterprise within the permitted limits) .3. Special regime for manufacturing industries and R&D: the right to write off new equipment at a time, regardless of its cost. II. The procedural aspect Does not require additional approvals. For the application of accelerated depreciation on common grounds (paragraph 2), prior approval (registration) of the method with the tax authority is required before its use. No special permission of the tax authority is required for the application of temporary incentive measures. The enterprise independently chooses the method when registering the asset, but must be ready to confirm the compliance of the asset with the criteria (new, for production purposes, etc.). KEY FINDINGS AND RECOMMENDATIONS Two accelerated depreciation modes. It is important to distinguish between a permanent special regime (for specific equipment) and a temporary stimulating regime (valid until the end of 2027). The latter, especially the one-time write-off rule, is a powerful tool for tax optimization and cash-flow improvement. Critical importance of documentation. Regardless of the chosen method, the company is obliged to keep a complete and correct record of fixed assets, confirm their initial cost and technical characteristics. For accelerated depreciation on common grounds, a package of coordination documentation with the tax authority is mandatory. Strategic investment planning. Until 2027, enterprises, especially in the manufacturing and scientific and technical industries, should make maximum use of the possibility of a one-time write-off of the cost of new equipment to reduce the tax base of the current period. B. Incentive deductions for R&D Super Deduction of research and development (R&D) costs is one of China’s most powerful tax instruments to stimulate innovation. It allows to significantly reduce the taxable profit by multiplying the actual costs. As a general rule, actual R&D costs incurred that are not capitalized into intangible assets may be deducted at a rate of 200% of their amount. Increased coefficient: for enterprises in the field of integrated circuit production and machine-tool construction in the period 2023-2027, the coefficient is 220%. Capitalized expenses: if R&D expenses have formed an intangible asset, its carrying amount for depreciation purposes can be increased by the same percentage (200% or 220%). Incentive deductions for R&D Aspect Data Clarified and supplemented information Total coefficient for current expenses 200% of the amount of expenses (coefficient 2.0). Confirmed. Actual R&D costs incurred and recorded as expenses of the current period are deducted from the tax base in the amount of 200% of their amount (coefficient 2.0). Increased ratio for priority industries 220% for the production of integrated circuits and machine tools (2023-2027). To be confirmed and clarified. The coefficient of 220% (2.2) is set for enterprises in priority areas, such as the development of integrated circuits and industrial robotics, and is valid at least until the end of 2027. Coefficient for capitalized expenses The book value of intangible assets increases by 200% or 220%. Requires adjustment. If R&D expenses are capitalized and formed an intangible asset, its depreciation base increases to 320% (coefficient 3.2) of the original cost, regardless of what coefficient (2.0 or 2.2) current expenses would be written off. Key aspects for practical application Combination of benefits (Cumulative Benefit): Companies with the status of a high-tech enterprise (HNTE) are entitled to simultaneous application of: Reduced CIT rate of 15%. Super deduction of R&D expenses (200% or 220%). This creates a synergistic effect, making the effective tax burden for innovative companies one of the lowest in the world. 2. Definition and documentation of expenses: The deduction does not apply to all expenses, but only to those directly related to R&D activities and falling under the established categories: Salaries of researchers. The cost of raw materials and materials for experiments. Depreciation of equipment used exclusively in R&D. The cost of third-party R&D services (with restrictions). Other Direct Costs (ODCs): A mandatory requirement is to maintain a separate detailed accounting (auxiliary accounting) of such expenses and the availability of a complete package of primary documents. 3. Procedural requirements and audit: No prior authorization from the tax authorities is required to apply the deduction. The company independently declares the right to deduction by filling out the relevant sections of the annual tax return. All R&D expenditure documentation must be kept and ready for submission during a desk or on-site tax audit. The tax authorities pay special attention to the validity of attributing costs to R&D. Strategic recommendation: To maximize benefits, companies need to implement internal procedures to accurately identify, account for and document all R&D-related costs. This will ensure the indisputable application of the super deduction and will allow to take full advantage of China’s innovative tax policy. B. Deduction of Finance Costs: The Thin Capitalization Rule Thin capitalization rules control the deduction of interest on loans to prevent artificial replacement of equity with debt financing in order to erode the tax base. These rules apply primarily to debt owed to related parties. Safe debt load (coefficient): For non-financial enterprises: 2:1 (debt to equity ratio). For financial institutions: 5:1. Interest accrued on loans from related parties exceeding the limit calculated at the specified ratios is not deductible in the current period, but can be carried forward. Principles of application of thin capitalization rules: Aspect Principe Clarifications and practical aspects The essence of the rule Limiting the deduction of interest on controlled debt to prevent tax erosion. The rule is aimed at transactions between related parties. Interest on loans from independent banks or financial institutions is generally not subject to these restrictions if the arm’s length principle is observed. Safe ratio (debt/equity) • 2:1 for non-financial businesses • 5:1 for financial institutions The ratio is calculated as the ratio of controlled debt (to related non-resident parties) to the borrower’s equity. Equity for calculation purposes is usually determined on the basis of accounting data. Consequences of exceeding the limit Interest calculated on the amount of excess of the safe ratio is not deductible in the current tax period. • Carry-over: Non-refundable interest can be carried forward and deducted in subsequent tax periods, but for no more than 5 years. • Calculation: Deduction Limit = (Total Controlled Debt Interest Amount) × (Safety Ratio / Actual Debt Ratio). Key Exclusions (Grounds for Total Deduction) Even if the safety factor is exceeded, interest can be deducted completely if certain conditions are met. 1. Arm’s Length Principle: The Company may prepare and provide, at the request of the tax authorities, a Thin Capitalization Special Issue File proving that the terms of the loan comply with marketconditions.2. Lender with a higher tax rate: If the loan is provided by a related party resident in the PRC, whose actual effective income tax rate is higher than that of the borrowing company. D. Limited and regulated operating expenses Cost Category Deduction limit Key Terms Charitable donations ≤ 12% of annual profit before tax The above-limit part can be postponed for the next 3 years. Donations to targeted poverty alleviation projects (2019-2025) are fully deductible (100%). Advertising and promotional expenses ≤ 15% of annual sales revenue (for cosmetics, pharmaceuticals, beverages – ≤ 30%) The above-limit portion can be carried over for an unlimited number of future periods. Complete ban on deductions for the tobacco industry. Entertainment expenses ≤ 60% of actual costs incurred OR ≤ 0.5% of annual revenue (whichever is lower) The above-limit part is not subject to postponement to future periods. Business travel expenses Strictly within the standards established by the Ministry of Finance and THE State Tax Service for different regions and levels of employees. Primary documents (tickets, hotel invoices) are required. Expenses in excess of the norms are not deducted. E. Carry-over of prior years’ losses in China: detailed rules and administrative requirements China’s loss carry-forward policy is a highly regulated instrument that, while providing businesses with the ability to offset future profits, comes with significant constraints and procedural complexities. Carry forward: Allowed for up to 5 years for most businesses. Extended period: for high-tech enterprises (HNTEs) and small technology companies, the transfer period is increased to 10 years. Carry-over: Not allowed under any circumstances. This deduction system, which combines stringent regulations with incentive overdeductions, requires companies to carefully plan their taxes and document all transactions flawlessly. Compliance with limits and conditions is the subject of close attention of tax auditors Aspect General regulation Clarifications, exceptions and administrative requirements Standard rescheduling period 5 years from the year following the year of occurrence of the loss. Confirmed by Article 18 of the Law “On Corporate Income Tax”. Compensation is carried out in chronological order: the earliest losses are first offset. Extended term (10 years) For high-tech enterprises (HNTE) and small technology companies. Strict clarification required: Not all HNTEs are eligible for a 10-year rollover, but a narrower category, the National Tech SME.Tech SME Key Criteria: • Annual revenue ≤ 200 million yuan (~$28 million). • Number of employees ≤ 300 • The book value of assets is ≤ 400 million yuan. Prohibition on backward transfer Completely prohibited. Chinese tax law does not provide for a carry-back loss mechanism. It is not possible to refund or offset the previously paid tax against the losses of the current period. Fundamental constraint Lack of tax consolidation at the group level. Losses can only compensate for future profits of the same legal entity in which they were incurred. Consolidation of financial results within the group of companies is not allowed. Quantitative limit and accounting There is an annual limit on the amount of credit. Detail: 1. Limit of Indemnity: The amount of loss credited in a particular year may not exceed 70% of that year’s taxable profit before deducting the loss. The remaining 30% of profits are taxed in full.2. Mandatory separate accounting: The Company is obliged to maintain and keep a detailed tax register of losses carried forward, broken down by years of occurrence, amounts and history of use. Critical Conclusions and Practical Recommendations Careful verification of eligibility for extended term: Companies with HNTE status should not automatically rely on a 10-year carry-over period. It is necessary to conduct a separate analysis of compliance with the more stringent National Tech SME criteria. Misuse of the 10-year term is a common reason for additional tax charges and fines during audits. Strategic planning with 70% limit: The 70% rule means that even if there are significant carry-over losses, the company will pay CIT annually on at least 30% of its current profits. This factor must be taken into account in financial modeling, investment project evaluation and cash flow management. Administrative discipline as the basis of protection: in the conditions of close attention of the tax authorities to the mechanisms of transferring losses, the presence of properly organized, transparent and easily audited internal tax accounting is not a recommendation, but a prerequisite. The absence of such accounting or its non-compliance with the standards may lead to a complete refusal to recognize losses of previous years and significant financial losses. Thus, the loss carry-over system in China, for all its potential utility, is a complex administrative tool that requires a deep understanding of regulatory intricacies, meticulous documentation, and an integrated approach to tax planning. China Income Tax: Strategic Insights for Effective Tax Planning The profit tax system in China is a complex but structured mechanism that seamlessly combines the fiscal function with industrial and regional policy instruments. Its effective use requires companies not to passively follow the rules, but to take an active strategic approach. The key paradox of the system is the simultaneous operation of two principles: strict formalization (fapiao imperative, deduction limits, detailed procedures) and flexible incentive support (R&D excess deductions, accelerated depreciation, preferential rates). Success is determined by the ability of the company not only to comply with the first, but also to maximize the implementation of the second. Strategic imperatives for different categories of taxpayers: For innovative companies: The central element should be a dual strategy – obtaining the status of High and New Tech Enterprise (HNTE) for a rate of 15% and parallel maximization of the super deduction of R&D costs (200%/220%). Investments in the relevant document flow and internal accounting are paid off by a multiple reduction in the effective tax burden. For enterprises with foreign participation: it is critically important to correctly determine tax residency and the presence of a permanent establishment, which fundamentally affects the amount of liabilities. The structuring of intra-group transactions (loans, royalty payments) requires advance consideration of thin capitalization and transfer pricing rules to protect interest deductions. For all companies: Procedural discipline is a universal requirement. Keeping the deadlines for electronic filing, keeping separate records for preferential deductions (R&D, charity), forming a dossier to confirm the right to benefits (for example, for HNTE status or the application of a reduced WHT rate under the contract) is not a formality, but the basis for reducing risks and exercising tax rights. The general trend of China’s tax policy is obvious: stimulating the transition to an innovative, high-tech and “green” economy. Tax incentives are purposefully concentrated in the areas of R&D, integrated circuit manufacturing, machine tool building, environmental protection, as well as in priority development regions. Thus, income tax in China should be considered not only as a mandatory payment, but also as a tool for strategic management of business value. A deep understanding of the system, proactive planning of operations and impeccable compliance make it possible to transform potential fiscal obligations into a competitive advantage, ensuring sustainable growth in one of the most dynamic economies in the world. Reduce Your Tax Burden & Risks in China <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Corporate Income Tax (CIT) audit <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> WHT & Double Tax Treaty (DTT) review <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Error-free reporting preparation Free consultation China Corporate Income Tax (CIT) FAQ 1. What is the key difference between a tax resident (TRE) and a non-resident (non-TRE) in China, and how does this affect my business? This fundamental difference determines the entire treatment of your taxation. Tax Resident Enterprise (TRE): This category includes companies registered under the laws of the People’s Republic of China, or those whose actual management is located in China. TRE are subject to the principle of worldwide taxation. This means that they are required to declare and pay tax in China on all their profits earned both domestically and abroad. To avoid double taxation with foreign income, a credit for taxes paid abroad (with restrictions) is applied. Non-Tax Resident Enterprise (non-TRE): These are companies that are not registered in China and are managed from abroad. They are taxed only on income of Chinese origin. If a non-TRE has a permanent establishment (office, factory) in China, it pays tax on the profits of that establishment. If there is no permanent establishment, then passive income (dividends, royalties, interest) is subject to withholding tax (usually 10%). An error in determining status can lead to serious tax surcharges, fines, and penalties. For example, if a non-TRE conducts an activity that the tax authorities recognize as a permanent establishment, all profits from that activity may become taxable in China at the full rate. 2. How does the benefit for small and low-profit enterprises work in practice, and what are the exact criteria to be met? It is a powerful tool to support small businesses until the end of 2027. Reduced effective rates are applied instead of the standard rate of 25%. Benefit Criteria: The Company must meet all of the following conditions at the same time: Profit: Annual taxable profit does not exceed 3 million yuan. Personnel: The average number of employees is not more than 300 people. Assets: The total value of assets does not exceed 50 million yuan. The company should not engage in business activities from prohibited or restricted by the state lists. Calculation mechanism: The tax is calculated on a progressive scale: A 5% rate is applied on a part of the annual profit up to 1 million yuan. A 10% rate is applied on part of the profit from 1 to 3 million yuan. Example: if the profit is 2.5 million yuan, the tax will be (1,000,000 * 5%) + (1,500,000 * 10%) = 200,000 yuan. At the standard rate of 25%, the tax would be 625,000 yuan. The savings are 425,000 yuan. 3. What is High and New Tech Enterprise (HNTE) status and how difficult is it to obtain and maintain it? The status of HNTE is an official confirmation that the company is innovative, and the key to reducing the income tax rate to 15%, as well as to other preferences. The company must meet a number of strict criteria, including ownership of key intellectual property, working in a priority high-tech industry, having a certain share of employees in R&D (≥10%), the level of R&D spending on revenue (from 3% to 5%) and the share of high-tech income (≥60%). This is not an automatic procedure. The company must prepare a voluminous package of documents, undergo an internal audit and apply to the local Office of Science and Technology. The application undergoes a multi-level examination with the participation of the tax authorities and the Ministry of Finance. The HNTE certificate is valid for 3 years only. 3-6 months before the expiration date, the company is obliged to undergo a recertification procedure similar to the primary one. Failure or delay leads to the loss of status and the transition to a rate of 25%. The tax authorities must check the availability of a valid certificate when accepting the annual return. 4. Why is a system of invoices (fapiao) critical for deducting expenses, and what other key deduction constraints are there? The Chinese tax system is built on the principle of strict documentary evidence. Any deductible expenses to reduce the tax base must be confirmed by official Chinese tax invoices (fapiao). Checks, foreign invoices, PayPal payments, etc. are not accepted by the tax authorities as a basis for deduction. The absence of a correct fapiao makes expenses non-deductible. Limited deductions: Even with fapiao, many categories of operating expenses have statutory limits: Charity: no more than 12% of annual profit. Advertising expenses: no more than 15% of revenue (for some industries — 30%). Entertainment expenses: are deductible only up to 60% of the actual amount or 0.5% of the revenue (a lower limit applies). Tax planning in China should begin with setting up internal financial processes to require fapiao for all transactions and taking into account industry spending limits. 5. What are the main steps and deadlines for annual income tax compliance? The system is based on advance payments followed by annual reconciliation and is fully digitalized. Quarterly advance payments and declarations: Deadline: you must pay the tax and submit the e-declaration within 15 days after the end of each quarter (for example, for the 1st quarter – before April 15). Basis: Calculation, as a rule, is carried out from the actual profit for the quarter. Final annual declaration and calculation Deadline: The return must be filed and the final settlement made within 5 months after the end of the fiscal year. For the year ending 31 December, the deadline is 31 May of the following year. Table of contents: This is the key stage at which the final tax base is determined, taking into account all benefits (for example, by HNTE status), deductions (including R&D super deduction), loss carry-over (up to 5 years) and adjustments. The declaration is often required to be accompanied by an audit report from a licensed Chinese firm. A reconciliation is made with the advances paid. Any shortfall is paid with penalties, overpayment is credited or refunded. All actions are performed through the online platform of the State Tax Administration (STA). The delay entails the automatic accrual of penalties (0.05% per day) and the risk of fines. Ask a question Corporate Income Tax (CIT) in China
Contribution of Registered Capital to Companies in China: Evolution of Requirements and Strategic Planning After the 2024 Reform
Registered Capital, as stipulated in the company’s constitutional documents and recorded in the register of the State Administration for Market Regulation (SAMR), is not merely a formal figure. It represents a legal obligation of the founders towards the company and its creditors, a fundamental guarantee of the financial soundness of the business entity. The requirements […]
Registered Capital, as stipulated in the company’s constitutional documents and recorded in the register of the State Administration for Market Regulation (SAMR), is not merely a formal figure. It represents a legal obligation of the founders towards the company and its creditors, a fundamental guarantee of the financial soundness of the business entity. The requirements for its contribution in China have undergone a significant transformation, reflecting the pendulum of state policy between stimulating entrepreneurial activity and protecting market stability. Historical Context and Essence of the 2024 Changes Before 2013, China operated under a system requiring founders to contribute capital within strictly defined timelines and with minimum thresholds. The liberal reform of 2013 abolished both the deadlines and minimum amounts for most industries, transferring the process to the discretion of shareholders. This led to a boom in company registrations but also gave rise to risks associated with “shell” companies. The new revision of the PRC Company Law, which came into effect on July 1, 2024, marks a return to a regulated model, but in an updated format. The key innovation is the reinstatement of a fixed maximum term for the full payment of the registered capital. According to the amendments, founders are obligated to fully fulfill their financial obligations, as stipulated in the company’s articles of association, within 5 years from the date of the company’s state registration. This rule is mandatory and aims to strengthen the creditworthiness of businesses from the moment of their establishment. <img loading="lazy" decoding="async" width="1190" height="1805" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-registered-capital-in-china_-evolution-of-rules.webp" alt="" class="wp-image-31230" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-registered-capital-in-china_-evolution-of-rules.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-registered-capital-in-china_-evolution-of-rules-198x300.webp 198w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-registered-capital-in-china_-evolution-of-rules-675x1024.webp 675w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-registered-capital-in-china_-evolution-of-rules-768x1165.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-registered-capital-in-china_-evolution-of-rules-1013x1536.webp 1013w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-registered-capital-in-china_-evolution-of-rules-99x150.webp 99w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Critical Aspects of the New Legal Regime for Registered Capital Contribution in China The five-year limit applies to all forms of limited liability companies and joint-stock companies, unless otherwise expressly stipulated by special laws or regulations of the State Council of the PRC for organizations in highly regulated sectors (financial institutions, insurance companies, securities firms, etc.). The 5-year principle now also applies to capital increase procedures. For an increase registered on or after July 1, 2024, the countdown for making the additional contributions begins from the date of registering the corresponding changes with SAMR. This change transforms the planning approach. The registered capital amount ceases to be a nominal figure “for the future.” It now demands a well-considered calculation based on realistic financial forecasts and a scheduled investment plan for the upcoming five-year horizon. Overestimating the figure can create an unsustainable financial burden, while underestimating it can undermine partner trust, limit opportunities for raising debt financing, and restrict funding for the company in its early development stage. <img loading="lazy" decoding="async" width="1190" height="951" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-registered-capital-in-china_-new-rules-from-july-1-2024.webp" alt="" class="wp-image-31245" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-registered-capital-in-china_-new-rules-from-july-1-2024.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-registered-capital-in-china_-new-rules-from-july-1-2024-300x240.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-registered-capital-in-china_-new-rules-from-july-1-2024-1024x818.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-registered-capital-in-china_-new-rules-from-july-1-2024-768x614.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-registered-capital-in-china_-new-rules-from-july-1-2024-188x150.webp 188w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Transitional Provisions for Existing Companies The legislators have provided a flexible adaptation mechanism for companies registered before the amendments took effect. A transition period has been established for them, aimed at gradually bringing their capital structure into compliance with the new standards. Such companies will need to develop and approve an adjusted capital payment schedule that fits within the remaining period until the expiration of 5 years, counted from July 1, 2024. Specific methodologies and deadlines for submitting adjusted schedules are to be detailed in subsequent regulations from SAMR. Exception for “Mature” Companies: Companies whose registered capital was already fully paid up by July 1, 2024, are not subject to the new deadlines. For them, the previous regime remains in effect. Thus, the new legal regime underscores that registered capital in modern Chinese corporate law is not a passive registry entry, but a dynamic tool for financial planning and an indicator of shareholder seriousness. It requires a responsible and strategic approach throughout the entire lifecycle of the company. <img loading="lazy" decoding="async" width="1190" height="1356" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-risks-of-an-incorrect-choice.webp" alt="" class="wp-image-31260" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-risks-of-an-incorrect-choice.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-risks-of-an-incorrect-choice-263x300.webp 263w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-risks-of-an-incorrect-choice-899x1024.webp 899w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-risks-of-an-incorrect-choice-768x875.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-risks-of-an-incorrect-choice-132x150.webp 132w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Legal Architecture of the Transition Period and Strategic Management of Registered Capital in Light of the 2024 Reform The corporate law reform, which took effect on July 1, 2024, includes not only new rules for newly established companies but also a complex adaptation mechanism for millions of existing enterprises. The key document detailing this process is the State Council Regulation on the Implementation of the Paid-in Registered Capital System, which establishes a differentiated and phased transition regime. Detailing the Transition Period: From Declarative to Mandatory Implementation The legislator has provided asymmetric approaches for different business forms, acknowledging their distinct nature and the varying responsibilities of founders. Company Type Registration Date Transition Period Requirements Strategic Task for the Company Limited Liability Companies (LLCs) Before July 1, 2024 3-year grace period (July 1, 2024 – June 30, 2027) to align the payment schedule with the 5-year rule, counted from the registration date. 1. Schedule Analysis: Compare existing payment obligations with the new 5-year limit from the registration date. 2. Adjustment: If the remaining payment period under the old articles of association extends beyond July 1, 2029 (5 years from the final date of the transition period), it is mandatory to amend the articles and register a new schedule with SAMR by June 30, 2027. Joint Stock Limited Companies (JSCs) Any date before July 1, 2024 Hard Deadline: Founders (promoters) must fully pay for all subscribed shares by June 30, 2027, regardless of prior agreements. Aligning the financial obligations of founders with the new standards within a tight timeframe, which may require significant reorganization of internal cash flows. Important nuance: For LLCs whose existing payment schedule already fits within the new 5-year limit (counted from their original registration date), formally amending the articles of association is not required. However, conducting an internal audit and obtaining confirmation of compliance is recommended. <img loading="lazy" decoding="async" width="1190" height="1373" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-example-for-an-llc_.webp" alt="" class="wp-image-31275" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-example-for-an-llc_.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-example-for-an-llc_-260x300.webp 260w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-example-for-an-llc_-888x1024.webp 888w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-example-for-an-llc_-768x886.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-example-for-an-llc_-130x150.webp 130w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> We’ll Help You Set the Right Registered Capital in China <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Capital calculation for your business model <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Payment deadline & risk assessment <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> FIE structure support Free consultation Procedure for Amending Registered Capital: From Rigid Control to Subsidiary Liability The company’s right to increase or decrease its registered capital remains, but it is now framed by a set of sanctions for procedural violations, which have been significantly strengthened. Legal Procedure as a Guarantee for Creditors. Any change in capital requires: • A decision by the highest governing body (general meeting of shareholders/participants). • Notification of creditors within the statutory timeframe and granting them the right to demand early fulfillment of obligations or the provision of security (in the case of a capital decrease). • Registration of the changes with SAMR, providing proof of payment (for an increase) or evidence of proper creditor notification (for a decrease). <img loading="lazy" decoding="async" width="1190" height="1152" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-registered-capital-in-china_-new-rules-new-risks.webp" alt="" class="wp-image-31290" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-registered-capital-in-china_-new-rules-new-risks.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-registered-capital-in-china_-new-rules-new-risks-300x290.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-registered-capital-in-china_-new-rules-new-risks-1024x991.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-registered-capital-in-china_-new-rules-new-risks-768x743.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-registered-capital-in-china_-new-rules-new-risks-155x150.webp 155w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> 2. Categorical Prohibition and Its Consequences: “Piercing the Corporate Veil.” It is critically important that the illegal withdrawal of contributed capital (e.g., through sham transactions, interest-free loans to founders, or returning contributions under false pretenses) is no longer considered a mere administrative violation. This action is now qualified as an abuse of the company’s separate legal status to harm the interests of creditors. The consequences are personal and severe: Subsidiary Liability of Founders (Shareholders): Creditors obtain the right to recover the company’s unpaid debts directly from the liable founders, bypassing the company’s limited liability (“piercing the corporate veil”). This is a fundamental blow to a core principle of corporate law. Joint and Several Liability of Management: Directors, supervisors, and senior management who authorized, facilitated, or failed to prevent such a withdrawal bear joint and several liability to the creditors. This makes the corporate officer’s position personally risky for non-compliance with corporate financial norms. <img loading="lazy" decoding="async" width="1190" height="1465" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-prohibited_-withdrawing-capital-disguised-as-_loans_-_repayments_-or-sham-transactions.webp" alt="" class="wp-image-31305" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-prohibited_-withdrawing-capital-disguised-as-_loans_-_repayments_-or-sham-transactions.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-prohibited_-withdrawing-capital-disguised-as-_loans_-_repayments_-or-sham-transactions-244x300.webp 244w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-prohibited_-withdrawing-capital-disguised-as-_loans_-_repayments_-or-sham-transactions-832x1024.webp 832w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-prohibited_-withdrawing-capital-disguised-as-_loans_-_repayments_-or-sham-transactions-768x945.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-prohibited_-withdrawing-capital-disguised-as-_loans_-_repayments_-or-sham-transactions-122x150.webp 122w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Strategic Business Implications Audit and Planning are Top Priority. All companies registered before July 2024 must conduct an audit of their registered capital and payment schedule, comparing them with the new norms. For LLCs, this is a matter of strategic scheduling; for joint-stock companies, it is a matter of urgent full payment. Capital is Not Founders’ Personal Asset. Robust internal financial controls must be established to eliminate any transactions involving contributed capital that could be interpreted as its covert withdrawal. Dividends and shareholder loans must strictly comply with the law and the company’s genuine financial capacity. Risk Has Become Personal. The new rules explicitly shift the consequences of financial abuse from the realm of corporate risk to that of personal financial catastrophe for founders and top managers. Procedural compliance is the only safeguard for personal assets. Thus, the transition period is not merely a technical grace period but a strategic window of opportunity to legitimize and optimize the capital structure for the new reality. In this reality, transparency and the timely contribution of capital have become critical factors not only for business reputation but also for the personal financial security of the company’s beneficiaries. Forms of Registered Capital Contribution: Strategic Choice of Assets Within the Legal Framework of the PRC Contributing to the registered capital of a Chinese company provides investors with flexible options for structuring initial assets. However, this choice is strictly bounded by a legal framework designed to ensure the contributed value is real, liquid, and verifiable, thereby protecting creditor interests and market stability. Monetary Contribution: Efficiency and Unconditional Acceptance A cash contribution (in RMB or foreign currency) is the most predictable and straightforward method. It does not require additional appraisal procedures, minimizes registration timelines, and eliminates subjectivity during SAMR review. For foreign investors, it also represents the most transparent route for currency conversion and cross-border fund transfers. Non-Monetary Contribution: Opportunities and Regulatory Complexities The law permits in-kind contributions, provided they meet two key criteria: Objectively Appraisable: The asset must have a documented, verifiable market value. Legitimately Transferable: Ownership or use rights must be lawful and capable of being transferred to the company without encumbrance. Permitted assets include: • Tangible Assets: Production equipment, real estate, vehicles. • Intangible Assets: • Land Use Rights. • Intellectual Property: patents, trademarks, software copyrights, protected know-how. • Equity interests in other companies. • Creditor’s Rights, assigned via contract. For any non-monetary contribution, a report from a licensed Chinese appraiser is mandatory. SAMR scrutinizes the valuation justification for technologies and IP with particular rigor, requiring detailed descriptions and proof of future economic benefit for the company. Categorically Inadmissible Forms of Contribution The law excludes assets whose value is inseparable from the investor or which are not freely transferable: • Sweat Equity: Promises of future labor, management services, or provision of time. • Goodwill: Cannot be contributed as a standalone asset during company formation. • Administrative Permits: Licenses, quotas, or government approvals—these are not objects of civil rights and cannot be transferred as contributions. <img loading="lazy" decoding="async" width="1190" height="2465" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-how-to-contribute-registered-capital-in-china_-the-three-rules-of-the-game.webp" alt="" class="wp-image-31320" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-how-to-contribute-registered-capital-in-china_-the-three-rules-of-the-game.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-how-to-contribute-registered-capital-in-china_-the-three-rules-of-the-game-145x300.webp 145w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-how-to-contribute-registered-capital-in-china_-the-three-rules-of-the-game-494x1024.webp 494w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-how-to-contribute-registered-capital-in-china_-the-three-rules-of-the-game-768x1591.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-how-to-contribute-registered-capital-in-china_-the-three-rules-of-the-game-742x1536.webp 742w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-how-to-contribute-registered-capital-in-china_-the-three-rules-of-the-game-989x2048.webp 989w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-how-to-contribute-registered-capital-in-china_-the-three-rules-of-the-game-72x150.webp 72w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Comparative Analysis for Strategic Decision-Making Form of Contribution Key Advantage Primary Risk Ideal Use Case Monetary Funds Speed and simplicity of registration. Currency risk for the investor.. Startups, projects requiring rapid launch of operations. Equipment / Real Estate Immediate company outfitting without additional procurement. Risk of overstated book value and subsequent accelerated depreciation. Establishing a production/manufacturing enterprise with specific technological assets. Intellectual Property Capitalization of R&D, creation of royalty streams for the rightsholder. High risk of SAMR rejecting the valuation, difficulty in documentary substantiation. High-tech sector projects where core value lies in patents or unique software. Equity in Other Companies Asset consolidation, restructuring of a corporate group. Dual scrutiny (of the issuer company’s activities and the fairness of the equity valuation). Integrating existing Chinese assets into a new holding structure. Choosing the form of contribution involves a balance between strategic objectives (company outfitting, tax optimization, consolidation) and the goal of minimizing administrative and legal risks. A non-monetary contribution, despite its appeal, transforms the registration process into a longer and more complex one, requiring the engagement of local experts for independent appraisal and legal support. <img loading="lazy" decoding="async" width="1327" height="1728" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-comparison_-what-to-choose_.webp" alt="" class="wp-image-31335" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-comparison_-what-to-choose_.webp 1327w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-comparison_-what-to-choose_-230x300.webp 230w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-comparison_-what-to-choose_-786x1024.webp 786w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-comparison_-what-to-choose_-768x1000.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-comparison_-what-to-choose_-1180x1536.webp 1180w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-comparison_-what-to-choose_-115x150.webp 115w" sizes="auto, (max-width: 1327px) 100vw, 1327px" /> Disclosure of Registered Capital Information: Transparency as a Mandatory Element of Corporate Governance As part of the effort to strengthen oversight of registered capital’s authenticity and protect creditor interests, new PRC legislation has introduced strict and timely requirements for the public disclosure of relevant information. This obligation is not a formality but a key element of the corporate accountability and public trust system. Disclosure System: Centralized Public Registry The primary platform for disclosure is the National Enterprise Credit Information Publicity System (accessible at www.gsxt.gov.cn). This resource serves as a unified public dossier for companies, accessible to counterparties, financial institutions, investors, and regulatory bodies. The legal basis for disclosure is the Implementing Provisions of the Company Law, which obligate companies to enter up-to-date data into the system within specified deadlines. Content and Deadlines for Disclosure: Timeliness and Accuracy A company is required to disclose information within 20 working days after the occurrence of any of the following events: Change Category Specific Data to Disclose Practical Significance for Third Parties Scope of Obligations & Fulfillment Changes in the subscribed and paid-in capital amounts. Allows assessment of the gap between obligations and their fulfillment, indicating financial reliability. Asset Structure Changes in the form of capital contribution (cash, equipment, intellectual property, etc.). Provides insight into the liquidity of the company’s assets and its balance sheet structure. Financial Schedule Adjustments to the capital contribution schedule (e.g., under the transitional provisions). Enables forecasting of the company’s future cash flows and assessment of default risks. Shareholder Structure For joint-stock companies – changes in the number of subscribed shares. Reflects changes in the distribution of stakes and shareholder obligations. Strategic Implications and Risks of Non-Disclosure The public nature of the gsxt.gov.cn system turns timely disclosure into a tool for business reputation and risk management. For Partners and Clients: It is the primary source for verifying a counterparty’s credibility. Outdated or contradictory information about capital immediately undermines trust and can be grounds for refusing to enter into a transaction. For Banks and Creditors: Financial institutions are required to check system data when reviewing loan applications. Disclosure violations or negative information can lead to funding rejection or stricter lending terms. For Regulators (SAMR, Tax Authorities): Discrepancies between a company’s internal documents and publicly disclosed information are a direct reason for unannounced inspections, fines, and inclusion of the company on an enhanced monitoring list. Failure to disclose on time or providing false information results in the company being added to an “abnormal operations list,” which blocks numerous administrative procedures, restricts participation in public procurement, and damages its reputation. In the modern Chinese market landscape, the obligation to disclose registered capital information has evolved from a bureaucratic formality into a strategic function for managing reputation and legal risks. Maintaining complete, accurate, and up-to-date information in the public system is a continuous process that directly impacts a company’s operational viability, investment appeal, and creditworthiness. Regular auditing of one’s own data on gsxt.gov.cn should become a standard corporate governance procedure. Shareholder Loans as a Financing Tool for Foreign-Invested Enterprises in China In addition to contributing registered capital, a foreign investor possesses a significant tool for additional financing of its Chinese subsidiary: shareholder loans. This mechanism allows for flexible management of a project’s liquidity. However, it is strictly regulated by corporate, foreign exchange, and critically, tax law norms aimed at preventing base erosion (thin capitalization rules). Two Regulatory Regimes for Debt Financing: Classical vs. Modern Approach The legislation provides companies with a choice between two primary methods for calculating the permissible volume of shareholder loans, necessitating strategic tax planning. Regulatory Regime Essence and Mechanism Practical Application and Limitations Classical Approach: Fixed “Debt-to-Equity” Ratio Establishes a direct maximum ratio between shareholder loans and equity capital (most commonly 2:1 for manufacturing enterprises). Tax Consequence: Interest on loans exceeding the established limit is not recognized as an expense for corporate income tax calculation purposes in China. Simplicity and Predictability. Easy to calculate and understand at the project’s outset. Inflexibility. Does not account for the actual scale and profitability of the business, potentially artificially restricting financing for growing companies. Modern Approach: Tied to Net Asset Value (NAV) The permissible volume of shareholder loans is tied to the company’s equity capital (net assets), calculated based on its financial statements. Formula: Permissible Loan = Net Assets x Coefficient (often 2) – Existing Shareholder Loans. High Flexibility. Allows increasing the borrowing limit as the company grows and becomes capitalized, which is particularly advantageous for profitable enterprises. Dependence on Reporting. Requires quality audits and official confirmation of the net asset amount, complicating the process. Key Recommendation: Choosing the optimal regime is a strategic tax decision that must be made during the project’s financial modeling phase. It directly impacts: Tax Burden: The ability to deduct interest from the taxable base. Balance Sheet Structure: The debt-to-equity ratio. Cost of Financing: The actual effective interest rate on provided loans. Consulting with a Chinese tax advisor to conduct a comparative analysis and formally document the chosen method in the company’s records is mandatory. <img loading="lazy" decoding="async" width="1327" height="1816" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-shareholder-loans-in-china_-two-paths-one-goal-secure-financing.webp" alt="" class="wp-image-31350" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-shareholder-loans-in-china_-two-paths-one-goal-secure-financing.webp 1327w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-shareholder-loans-in-china_-two-paths-one-goal-secure-financing-219x300.webp 219w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-shareholder-loans-in-china_-two-paths-one-goal-secure-financing-748x1024.webp 748w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-shareholder-loans-in-china_-two-paths-one-goal-secure-financing-768x1051.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-shareholder-loans-in-china_-two-paths-one-goal-secure-financing-1122x1536.webp 1122w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-shareholder-loans-in-china_-two-paths-one-goal-secure-financing-110x150.webp 110w" sizes="auto, (max-width: 1327px) 100vw, 1327px" /> Critically Important Additional Conditions Foreign Exchange Regulation. All shareholder loans from a foreign investor are subject to registration with the foreign exchange control system (SAFE). Actual fund transfer is only possible after completing this registration and strictly within the registered amount. Violations result in severe fines and blocked transactions. Arm’s Length Interest Rate. The interest rate set for the loan must align with the market rate for comparable debt instruments. Rates set too low may be reclassified by tax authorities as a disguised dividend payment (subject to withholding tax), while rates set too high may be deemed unjustified expenses. Proper Documentation. The loan must be formalized with a comprehensive credit agreement in Chinese, clearly defining the amount, term, interest rate, interest payment method, and repayment schedule. Shareholder loans are a powerful yet complexly regulated instrument. Their effective use requires not only investor liquidity but also an integrated approach combining corporate financing, tax optimization, and strict compliance with foreign exchange laws. Properly structured debt enhances a project’s financial efficiency, while planning errors can lead to significant fiscal losses and administrative risks. <img loading="lazy" decoding="async" width="1190" height="1771" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-three-mandatory-conditions-for-a-legal-shareholder-loan.webp" alt="" class="wp-image-31365" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-three-mandatory-conditions-for-a-legal-shareholder-loan.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-three-mandatory-conditions-for-a-legal-shareholder-loan-202x300.webp 202w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-three-mandatory-conditions-for-a-legal-shareholder-loan-688x1024.webp 688w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-three-mandatory-conditions-for-a-legal-shareholder-loan-768x1143.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-three-mandatory-conditions-for-a-legal-shareholder-loan-1032x1536.webp 1032w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-three-mandatory-conditions-for-a-legal-shareholder-loan-101x150.webp 101w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Key Principles for Foreign Investors: A Memorandum on Registered Capital in the PRC Registering a company in China requires a clear understanding and strict compliance with the rules for forming registered capital. Remember these five foundational points to minimize risks and launch your business successfully. Aspect Core Principle Practical Advice 1. Payment Deadline 5 years from the registration date is a firm rule for new companies (after July 1, 2024). For existing ones — a transition period until June 30, 2027 to align schedules. Calculate the capital amount based on a realistic 5-year financing plan. Do not inflate the figure “just in case.” 2. Obligation, Not Option Contribution is not a right, but a duty. Delays lead to fines, operational restrictions, and inclusion on the public “abnormal operations list” on gsxt.gov.cn. Treat declared capital as a legally binding financial commitment. 3. Forms of Contribution Permitted: Cash (best), equipment, IP, land use rights, equity in other firms. Prohibited: Labor, goodwill, promises, licenses. Prefer cash contributions. Any other asset requires mandatory independent appraisal in China. 4. Inviolability of Capital Illegally withdrawing contributed capital is forbidden. This leads to “piercing the corporate veil”: founders and directors bear personal (subsidiary) liability for company debts. Contributed funds are company property. Returns to the investor are only possible as dividends or through a legal capital reduction. 5. Public Disclosure Any change in capital (amount, form, schedule) must be disclosed on gsxt.gov.cn within 20 working days. This is the foundation of your public reputation. Appoint a person responsible for regularly updating data in the system. Banks and partners check this information first. 6. Alternative Financing Shareholder loans are possible but subject to caps (2:1 ratio or NAV-based model). Interest exceeding the cap is not deductible for corporate income tax. Consult with a tax advisor in advance to determine the optimal debt financing model for your project. Modern Chinese corporate law makes registered capital a transparent, verifiable obligation, protected from abuse. Strategic capital planning at the outset and meticulous procedural compliance are your best investment in the legal security of your business in China. Engaging qualified local consultants (lawyers, accountants) to manage these processes is not an expense but a necessary condition for mitigating systemic risks. Reduce Risks When Registering Your Company in China <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Choose the optimal capital contribution method <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Compliance check for foreign investors <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Registration & SAFE assistance Free consultation 5 Key Questions and Answers for Foreign Investors on Rules for Contributing Registered Capital in China FAQ 1: What is the current deadline for paying up registered capital for a new company? According to the new revision of the PRC Company Law effective July 1, 2024, founders are obligated to fully pay up the declared registered capital within 5 years from the company’s state registration date. This rule is mandatory and aims to strengthen financial discipline. For companies registered before this date, a transition period until June 30, 2027 applies to bring their schedules into compliance with the new requirements. FAQ 2: Can capital be contributed in-kind, for example with patents or equipment, instead of cash? Yes, such an option (non-monetary contribution) is permitted but strictly regulated. You can contribute tangible assets (equipment, real estate), intellectual property (patents, software), land use rights, or equity in other companies. The key condition: the asset must have a documented market value and be legally transferable. This requires a report from an independent, licensed Chinese appraiser. Sweat equity, business goodwill, or licenses cannot be contributed. FAQ 3: What happens if a founder decides to ‘return’ the contributed capital, for example via an interest-free loan? Illegal withdrawal of contributed capital (disguised as a loan, sham transaction, or refund) is a severe violation. Creditors or regulators may initiate “piercing the corporate veil” proceedings. In this case, founders (shareholders), as well as directors and managers who approved the transaction, bear subsidiary (personal) liability for the company’s debts with all their personal assets. The company’s limited liability is ineffective in such a situation. FAQ 4: Where and when must any changes related to registered capital be reported? Answer: Information about any changes (to the capital amount, form of contribution, payment schedule) must be disclosed by the company in the National Enterprise Credit Information Publicity System (www.gsxt.gov.cn) within 20 working days of the change. This registry is public, and its data is checked by banks, partners, and regulators. Failure to disclose on time or providing false information leads to the company being added to an “abnormal operations” list, facing fines, and having many administrative procedures blocked. FAQ 5: Can a company be financed not only by registered capital but also by loans from a shareholder? Answer: Yes, a foreign shareholder can provide the company with shareholder loans. However, their amount is limited by thin capitalization rules. There are two main regimes: Classical: The debt-to-equity ratio should not exceed 2:1 (for most industries). Based on Net Assets (NAV): The loan limit is tied to the company’s net asset value. Important: Interest on loans exceeding the established limit is not recognized as an expense for corporate income tax purposes in China. Choosing the optimal regime requires mandatory consultation with a tax advisor. All such loans are also subject to mandatory registration with the foreign exchange authorities (SAFE). Ask a question Contribution of Registered Capital to Companies in China
Key Risks After Obtaining a Work Permit and Residence Permit in China
From Formal Status to Sustainable Residence Obtaining a work permit and a residence permit in China is a crucial milestone, marking your formal recognition as a foreign expert. However, this stage should be viewed not as a final goal, but as an entry point into the ecosystem of regulated long-term relations with the government bodies […]
From Formal Status to Sustainable Residence Obtaining a work permit and a residence permit in China is a crucial milestone, marking your formal recognition as a foreign expert. However, this stage should be viewed not as a final goal, but as an entry point into the ecosystem of regulated long-term relations with the government bodies of the People’s Republic of China. After receiving the documents, a period of active interaction with the system begins, within which your legality ceases to be a static fact and becomes a dynamic process requiring constant confirmation. The risks at this stage are predominantly administrative and predictable: they arise not from ignorance of the rules, but from a lack of understanding of the depth and interconnections of the requirements, as well as from the false assumption that the issued documents have a “permissive” rather than a “declaratory” nature in the long term. The key challenges are associated with the need to continuously demonstrate: The economic viability of your stay for the Chinese economy. Full tax and regulatory compliance, both for you personally and for the sponsoring company. Actual and continuous integration into the country’s legal framework, including adherence to immigration deadlines. In Zhejiang Province, as in other developed regions, these requirements are formalized in clear, but not always publicly advertised procedures. Consequently, the strategy for successful long-term residence lies in transitioning from a reactive response to authorities’ requests to the proactive formation of one’s administrative dossier, anticipating the logic of the inspecting bodies. Risk of Losing Residence Permit Due to Prolonged Absence from China Holders of a work-type residence permit must consider the most important immigration rule concerning the continuity of residence. According to clause XVI.3 of the typical guidelines of Zhejiang Province (as well as similar provisions in other regions), continuous stay outside of China for more than 183 days leads to the automatic cancellation of the residence permit by the registration system. <img loading="lazy" decoding="async" width="1190" height="1156" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-important-a-residence-permit-in-china-can-be-cancelled-automatically.webp" alt="" class="wp-image-28231" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-important-a-residence-permit-in-china-can-be-cancelled-automatically.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-important-a-residence-permit-in-china-can-be-cancelled-automatically-300x291.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-important-a-residence-permit-in-china-can-be-cancelled-automatically-1024x995.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-important-a-residence-permit-in-china-can-be-cancelled-automatically-768x746.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-important-a-residence-permit-in-china-can-be-cancelled-automatically-154x150.webp 154w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> After cancellation, it is impossible to restore the previous residence permit. The foreign specialist will need to go through the procedure of obtaining a visa (Z or R) abroad again, followed by applying for a new residence permit in China, which involves significant time and financial costs. <img loading="lazy" decoding="async" width="1190" height="978" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-what-happens-if-the-limit-is-exceeded_.webp" alt="" class="wp-image-28246" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-what-happens-if-the-limit-is-exceeded_.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-what-happens-if-the-limit-is-exceeded_-300x247.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-what-happens-if-the-limit-is-exceeded_-1024x842.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-what-happens-if-the-limit-is-exceeded_-768x631.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/2.-what-happens-if-the-limit-is-exceeded_-183x150.webp 183w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> To eliminate the risk of losing status due to a long business trip, work on a remote project, or personal circumstances, the following steps must be taken: 1. Strict Control of Absence Periods (Basic Measure) Set a reliable reminder in your calendar that triggers on the 175th day of continuous stay abroad. This creates the necessary buffer (about a week) for a trouble-free return to China before the critical limit expires. The count is based precisely on days of continuous absence. Short-term visits to China (even for 1-2 days) interrupt this counter, and the count starts anew from the date of the last departure. 2. Obtaining Official Permission for Temporary Exit (Guaranteed Measure) If the planned absence exceeds 183 days and is unavoidable (e.g., long-term overseas training, implementation of an international project), it is necessary to obtain a special document in advance from the Exit-Entry Administration of the Public Security Bureau (PSB). Name: “Certificate of Temporary Exit” or “Permission for Long-Term Absence” (Temporary Exit Record / Permit for Residence Permit Holders). Procedure for Obtaining: Submission of a personal application indicating valid reasons (medical treatment, study, performing company work tasks abroad). Provision of an official explanatory note from the employing company on a letterhead with a company seal, confirming the business necessity of the long business trip. Presentation of a valid residence permit, passport, and other documents as required by the inspector. Validity Period: The permit can be issued for a period of up to 1 year (the maximum term is determined at the discretion of the PSB body). The administrative fee is generally 200 yuan. With this permit, stamped in the passport or issued as a separate document, the period of continuous stay abroad is not counted for the purposes of canceling the main residence permit. <img loading="lazy" decoding="async" width="1190" height="1493" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-official-solution_-permission-for-long-term-more-than-183-days-exit-to-preserve-residence-permit-in-china-in-case-of-valid-reasons.webp" alt="" class="wp-image-28261" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-official-solution_-permission-for-long-term-more-than-183-days-exit-to-preserve-residence-permit-in-china-in-case-of-valid-reasons.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-official-solution_-permission-for-long-term-more-than-183-days-exit-to-preserve-residence-permit-in-china-in-case-of-valid-reasons-239x300.webp 239w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-official-solution_-permission-for-long-term-more-than-183-days-exit-to-preserve-residence-permit-in-china-in-case-of-valid-reasons-816x1024.webp 816w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-official-solution_-permission-for-long-term-more-than-183-days-exit-to-preserve-residence-permit-in-china-in-case-of-valid-reasons-768x964.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/3.-official-solution_-permission-for-long-term-more-than-183-days-exit-to-preserve-residence-permit-in-china-in-case-of-valid-reasons-120x150.webp 120w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Practical Example: A foreign General Director of a technology company in Ningbo must head a branch in Germany for a period of 10 months. Two weeks before departure, the company submits a package of documents to the PSB and obtains a “Certificate of Temporary Exit” for him valid for 10 months. Upon returning to China after this period, his residence permit remains fully valid, allowing him to avoid the complex restoration procedure. Conclusion: The rules of continuous residence are a strict and automatically applied condition. Compliance requires a high level of discipline from the foreign specialist in tracking days or timely application to the immigration authorities to obtain official deferral, which is the only legal way to preserve status during a prolonged absence. Risk of Tax Audit in Case of Formalized Employment Relationships Being Recognized Within the framework of tax supervision over the activities of companies with foreign participation, the tax authorities of the People’s Republic of China pay special attention to analyzing the compliance of the employment contract terms of key managers (in particular, founding general directors) with economic reality and market standards. A situation where the official salary of a company’s sole executive body is, for example, 10,000 yuan per month, while the legal entity’s net annual profit reaches 10 million yuan, will most likely be assessed as a scheme with signs of “sham employment”. <img loading="lazy" decoding="async" width="1190" height="1277" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-risk_-tax-audit-due-to-_formal_-directors-salary.webp" alt="" class="wp-image-28276" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-risk_-tax-audit-due-to-_formal_-directors-salary.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-risk_-tax-audit-due-to-_formal_-directors-salary-280x300.webp 280w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-risk_-tax-audit-due-to-_formal_-directors-salary-954x1024.webp 954w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-risk_-tax-audit-due-to-_formal_-directors-salary-768x824.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/4.-risk_-tax-audit-due-to-_formal_-directors-salary-140x150.webp 140w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> This practice can be classified by inspectors as “intentional understatement of the taxable base for personal income tax” in accordance with Article 63 of the Tax Administration Law of the People’s Republic of China. Consequences can include tax recalculations, significant fines (from 50% to 500% of the unpaid tax amount), and even administrative liability. A set of correct countermeasures to minimize risks: Establishing a Market-Based Level of Remuneration The salary level of a general director (a foreign highly qualified specialist) must be adequate to their function, experience, industry, and regional labor market. For example, for the high-tech sector in Hangzhou city, the market salary range for such a position may start from 35,000–50,000 yuan per month. Recommendation: Prepare an internal justification (market analysis, description of area of responsibility) confirming the established salary level. <img loading="lazy" decoding="async" width="1190" height="1301" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-klyuchevye-kontrmery-kak-izbezhat-riskov-neprodleniya-razresheniya-na-rabotu-v-kitae-1.webp" alt="" class="wp-image-28291" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-klyuchevye-kontrmery-kak-izbezhat-riskov-neprodleniya-razresheniya-na-rabotu-v-kitae-1.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-klyuchevye-kontrmery-kak-izbezhat-riskov-neprodleniya-razresheniya-na-rabotu-v-kitae-1-274x300.webp 274w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-klyuchevye-kontrmery-kak-izbezhat-riskov-neprodleniya-razresheniya-na-rabotu-v-kitae-1-937x1024.webp 937w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-klyuchevye-kontrmery-kak-izbezhat-riskov-neprodleniya-razresheniya-na-rabotu-v-kitae-1-768x840.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/5.-klyuchevye-kontrmery-kak-izbezhat-riskov-neprodleniya-razresheniya-na-rabotu-v-kitae-1-137x150.webp 137w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> 2. trict Adherence to the Procedure for Withholding and Remitting Taxes by the Withholding Agent. The employing company, acting as a tax withholding agent, is obliged monthly and in full to calculate, withhold from the salary, and remit to the budget the Personal Income Tax (PIT) at a progressive rate of up to 45%. Critically Important: Having documentary confirmation (tax payment orders) of regular PIT payment is for the inspection a primary proof of the reality of the employment relationship. <img loading="lazy" decoding="async" width="1190" height="1472" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-clearly-fulfill-the-role-of-a-tax-withholding-agent.-the-employer-is-obliged-to_.webp" alt="" class="wp-image-28306" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-clearly-fulfill-the-role-of-a-tax-withholding-agent.-the-employer-is-obliged-to_.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-clearly-fulfill-the-role-of-a-tax-withholding-agent.-the-employer-is-obliged-to_-243x300.webp 243w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-clearly-fulfill-the-role-of-a-tax-withholding-agent.-the-employer-is-obliged-to_-828x1024.webp 828w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-clearly-fulfill-the-role-of-a-tax-withholding-agent.-the-employer-is-obliged-to_-768x950.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/6.-clearly-fulfill-the-role-of-a-tax-withholding-agent.-the-employer-is-obliged-to_-121x150.webp 121w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Annual Tax Settlement (Annual Tax Settlement) At the end of the calendar year, the general director (like any tax resident receiving income from multiple sources or with an annual total income exceeding 120,000 yuan) must undergo the final tax settlement procedure (Annual Tax Settlement) through the “个人所得税” platform (Personal Income Tax App). As part of this procedure, all income received is declared, prepaid tax amounts are reconciled, and a final settlement with the budget is made. The fact of successfully completing this procedure serves as final proof of full tax discipline and income legitimacy. <img loading="lazy" decoding="async" width="1190" height="786" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-complete-the-annual-tax-settlement.webp" alt="" class="wp-image-28321" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-complete-the-annual-tax-settlement.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-complete-the-annual-tax-settlement-300x198.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-complete-the-annual-tax-settlement-1024x676.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-complete-the-annual-tax-settlement-768x507.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/7.-complete-the-annual-tax-settlement-227x150.webp 227w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> For a foreign investor-director, it is unacceptable to view their formal salary as a technical expense item. Its size must be economically justified, and all related tax obligations must be fulfilled systematically and transparently. This approach not only eliminates the risks of tax recalculations and fines but also forms an impeccable business reputation for the company in the eyes of the regulatory authorities of the People’s Republic of China. <img loading="lazy" decoding="async" width="1190" height="1827" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-3-key-principles-for-the-safe-salary-of-a-foreign-director-investor-in-china.webp" alt="" class="wp-image-28336" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-3-key-principles-for-the-safe-salary-of-a-foreign-director-investor-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-3-key-principles-for-the-safe-salary-of-a-foreign-director-investor-in-china-195x300.webp 195w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-3-key-principles-for-the-safe-salary-of-a-foreign-director-investor-in-china-667x1024.webp 667w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-3-key-principles-for-the-safe-salary-of-a-foreign-director-investor-in-china-768x1179.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-3-key-principles-for-the-safe-salary-of-a-foreign-director-investor-in-china-1000x1536.webp 1000w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/8.-3-key-principles-for-the-safe-salary-of-a-foreign-director-investor-in-china-98x150.webp 98w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Keep Your Work Permit & Residence Permit in China Risk-Free <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Status risk assessment <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Migration compliance monitoring <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Document renewal support Free consultation Risk of Limited Educational Opportunities for Children of Work Permit Holders Obtaining a work-type residence permit (Work-type Residence Permit) by a foreign specialist and registering similar permits for family members (Family Member Residence Permit) on its basis does not guarantee automatic access to the general state school education system of the People’s Republic of China for children. This type of residence permit is intended primarily for legalizing stay in connection with the work activity of the main applicant. The essence of the problem: A Work-type Residence Permit grants children the right to study primarily in private international or bilingual schools (such as Harrow, Wellington, Yew Chung, and similar), where instruction is conducted in English or other foreign languages according to foreign curricula. Enrollment in a state or municipal Chinese school generally requires the registration of a special “Residence Permit for Family Reunion” (Reunion-type Residence Permit). Its acquisition is often associated with stricter conditions, such as confirmation of long-term (e.g., from 1 year) stable residency of one parent, ownership of one’s own housing, and other criteria that may be unattainable for newly arrived specialists. A comprehensive approach to ensuring children’s education Strategy of preliminary planning and coordination: Choosing a school at the preparation stage for relocation: Before moving to China, it is necessary to identify several potential educational institutions for the child and directly request official information from their administrations: Do they accept students based on the Work-type Residence Permit of the primary parent? Is it required for enrollment to provide a “Temporary Residence Permit for Accompanying Family Members,” which is processed at the Exit-Entry Administration (PSB) simultaneously with the main work residence permit. An official confirmation letter from the school should become part of the document package when applying for visas and residence permits. Utilizing special regional programs for children of highly qualified specialists: In a number of developed megacities and provinces of China, targeted pilot programs operate, aimed at attracting global talents by providing their children with access to elite educational resources. Examples: In Shanghai and Hangzhou, the “Global Talent Children Education Pilot” initiative is implemented. Within the framework of this program, children of foreign specialists classified as Category A have priority rights for enrollment in leading state schools with in-depth study of foreign languages or special international departments within them (for example, Shanghai Foreign Language School, Hangzhou Foreign Languages School). For this, the employer or an authorized government agency (for example, the Foreign Experts Bureau) must issue a special recommendation letter or certificate confirming the parent’s status. This document is submitted along with the application to the school and to the education authorities. Alternative path: long-term planning through changing the type of residence permit. After the foreign specialist has worked in China for the required period (often 1-2 years), paid taxes, and obtained a renewed residence permit, the family gains grounds to transition from a work-type to a family reunion-type residence permit. This status finally removes restrictions and opens full access to the local education system, including state schools and universities on a general basis. Conclusion: The issue of children’s education should not be secondary. Its solution requires no less careful planning than the registration of one’s own work documents. Active use of special programs for Category A and prior coordination of conditions with educational institutions allows for completely mitigating this risk and ensuring children’s quality education in China. <img loading="lazy" decoding="async" width="1190" height="1385" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-the-family-obtains-a-residence-permit-in-china-but-the-child-cannot-study.webp" alt="" class="wp-image-28351" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-the-family-obtains-a-residence-permit-in-china-but-the-child-cannot-study.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-the-family-obtains-a-residence-permit-in-china-but-the-child-cannot-study-258x300.webp 258w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-the-family-obtains-a-residence-permit-in-china-but-the-child-cannot-study-880x1024.webp 880w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-the-family-obtains-a-residence-permit-in-china-but-the-child-cannot-study-768x894.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/9.-the-family-obtains-a-residence-permit-in-china-but-the-child-cannot-study-129x150.webp 129w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Risk of Being Asked to Confirm Economic Contribution When Renewing a Work Permit One to two years after the initial registration, during the process of renewing the “Work Permit for Foreigners,” the authorized bureau for foreign expert affairs (FEB/SAFEA) may initiate an in-depth inspection of the actual economic activity of the employer-company and the expediency of the foreign manager’s further stay. The purpose of the inspection is to confirm that the engagement of foreign personnel brings tangible benefit to the local economy. As part of such an inspection, the authorities may request the following evidence: Confirmation of the legal entity’s tax payments for the reporting period. Data on the creation of jobs for local specialists (the number of hired Chinese employees, registered in accordance with the Labor Law of the People’s Republic of China). Documents on the payment of contributions to mandatory social insurance funds for the foreign and Chinese employees. <img loading="lazy" decoding="async" width="1190" height="887" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-risk-during-work-permit-renewal-in-china-after-1-2-years.webp" alt="" class="wp-image-28366" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-risk-during-work-permit-renewal-in-china-after-1-2-years.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-risk-during-work-permit-renewal-in-china-after-1-2-years-300x224.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-risk-during-work-permit-renewal-in-china-after-1-2-years-1024x763.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-risk-during-work-permit-renewal-in-china-after-1-2-years-768x572.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/10.-risk-during-work-permit-renewal-in-china-after-1-2-years-201x150.webp 201w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Strategic countermeasure: Obtaining an official “Contribution Certificate” To simplify the renewal procedure and form an impeccable dossier, it is recommended to obtain in advance one or several official documents confirming your company’s contribution to the region’s economy. Such certificates serve as substantial objective evidence, minimizing the inspector’s subjective assessment. Key authorities for obtaining supporting documents: Chamber of Commerce and Industry or Foreign Trade Association. What it confirms: The real volume of export-import operations, the company’s entry into international markets. Document format: Official statement or certificate, certified by the Chamber’s seal. Local Statistics Bureau (National Bureau of Statistics, NBS Branch). What it confirms: Stable revenue growth, added value, and other positive macroeconomic indicators of the company. Document format: A statistical statement of the established form based on the financial reports you provided. Administration of a technology park or development zone. What it confirms: Innovative activity, including the filing and registration of patents, software development, obtaining the status of a “High-Tech Enterprise.” Document format: A recommendation letter or certificate confirming the company’s participation in the region’s innovation ecosystem. <img loading="lazy" decoding="async" width="1190" height="1271" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-what-can-be-requested-during-work-permit-renewal-in-china_.webp" alt="" class="wp-image-28381" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-what-can-be-requested-during-work-permit-renewal-in-china_.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-what-can-be-requested-during-work-permit-renewal-in-china_-281x300.webp 281w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-what-can-be-requested-during-work-permit-renewal-in-china_-959x1024.webp 959w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-what-can-be-requested-during-work-permit-renewal-in-china_-768x820.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/11.-what-can-be-requested-during-work-permit-renewal-in-china_-140x150.webp 140w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Example of a Successful Practice Consider an information technology company registered in Hangzhou. Over two years of operation, it has: Created 3 jobs for Chinese IT specialists with a full social benefits package. Paid total taxes (VAT, corporate income tax) amounting to 180,000 yuan. Registered 1 national invention or software product patent. By providing the Foreign Expert Bureau with a “Contribution Certificate” from the technology park administration and a tax certificate, the company receives a positive assessment. In a number of regions, such a company may qualify for participation in “green channel” programs (informally referred to as a “Green Certificate”), which allows for the renewal of the work permit for the key foreign specialist through a simplified procedure, often without additional inspections and within compressed timeframes. Conclusion: Systematic work on documenting the company’s economic and social contribution not only protects against renewal risks but also builds a positive business reputation, opening access to privileged modes of interaction with government bodies. <img loading="lazy" decoding="async" width="1190" height="1337" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-strategic-solution_-obtain-a-_contribution-certificate_-in-advance.webp" alt="" class="wp-image-28396" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-strategic-solution_-obtain-a-_contribution-certificate_-in-advance.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-strategic-solution_-obtain-a-_contribution-certificate_-in-advance-267x300.webp 267w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-strategic-solution_-obtain-a-_contribution-certificate_-in-advance-911x1024.webp 911w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-strategic-solution_-obtain-a-_contribution-certificate_-in-advance-768x863.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/12.-strategic-solution_-obtain-a-_contribution-certificate_-in-advance-134x150.webp 134w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Obtaining a work permit and a residence permit in China signifies not the end of the journey, but the beginning of a new stage – the stage of confirming one’s value and legitimacy. The key risks arising after the successful registration of the documents clearly indicate the philosophy of Chinese immigration and tax policy: the status of a resident is not an unconditional privilege, but a mutual obligation requiring constant compliance with established economic, tax, and social criteria. The main conclusions drawn from the risk analysis boil down to several systemic principles: Legality is active, not passive. It must be constantly confirmed through real economic activity, full tax transparency, and adherence to immigration rules. The automatic cancellation of a residence permit after an absence of over 183 days is the most vivid example that status can be lost automatically, without warning, if the resident fails to meet the basic condition of actual presence. All elements of the system are interconnected. A low official salary of a director calls into question not only their tax discipline but also their real qualifications as a Category A specialist, which can lead to problems both with the tax inspection (STA) and with the foreign expert bureau (FEB) during renewal. Similarly, the successful renewal of a work permit directly depends on the documented contribution of the company to the local economy. There are proactive strategies for each risk. The system is not closed – it offers legal mechanisms for preserving status: The 183-day rule: It can be complied with by not exceeding the limit, or by obtaining an official temporary exit permit from the PSB. Tax inspections: The risk is mitigated by establishing a market salary, flawless fulfillment of tax withholding agent duties, and completing the annual tax settlement. Children’s education: Access to the best educational resources is ensured through advance planning and utilizing special regional programs for Category A. Permit renewal: The process is simplified thanks to the preliminary collection of a portfolio of documents confirming the contribution (tax certificates, certificates from the CCI, technology parks, etc.). Thus, the long-term and successful stay of a foreign specialist, especially one acting in the dual role of investor and manager, depends on a strategic approach to administering their status. What is required is not merely a reaction to authorities’ requests, but the proactive formation of an evidentiary base that, at every stage—from the annual tax declaration to the renewal of the residence permit—demonstrates your value, lawfulness, and integration into the socio-economic fabric of China. This constitutes the transition from possessing formal documents to achieving sustainable and secure legality. Avoid Problems After Getting Your China Residence Permit <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Tax & HR risk review <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Status renewal preparation <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Foreign director support Free consultation 5 Key Questions and Answers About Key Risks After Obtaining a Work Permit and Residence Permit in China FAQ 1: What will happen to my residence permit if I spend more than six months abroad? Answer: If you stay outside of China continuously for more than 183 days, your Residence Permit will be automatically canceled by the registration system of the immigration service (PSB), even if the card’s validity period has not yet expired. To restore your status, you will have to go through the entire process of applying for a work visa and residence permit again. Solution: Either strictly monitor your period of absence and return before the 183-day limit, or obtain a “Certificate of Temporary Exit” (Temporary Exit Permit) from the PSB in advance, which “freezes” this counter for a period of up to 1 year. FAQ 2: Can a low “formal” salary for a director-investor cause problems? Answer: Yes, this is one of the main risks. If the official salary of a key foreign manager (for example, 10,000 yuan) is disproportionate to the company’s profit (for example, millions), the tax authorities (STA) may consider this as sham employment for the purpose of evading PIT (Personal Income Tax). Consequences include tax recalculations, substantial fines, and problems with renewing the Work Permit. Solution: Set a market salary appropriate for the position, industry, and region (for example, starting from 35,000 yuan/month in IT in Hangzhou). The employer must reliably pay PIT, and the director must annually complete the Annual Tax Settlement in the “个人所得税” (Personal Income Tax) app. FAQ 3: My child received a residence permit as a family member. Can they attend a regular Chinese school? Answer: No, a work-type Residence Permit does not automatically grant the right to study in state schools. It primarily allows for study in private international schools. Solution: 1) Negotiate in advance with the chosen school and obtain a Temporary Residence Permit for Accompanying Family Members. 2) Inquire about regional programs for highly qualified specialists (Category A), for example, the Global Talent Children Education Pilot in Shanghai/Hangzhou. 3) In the future, transition to a family reunion-type Residence Permit (Reunion-type), which grants full access. FAQ 4: What can be requested during the work permit renewal process, and how can this process be simplified? Answer: After 1-2 years, the authorities (FEB/SAFEA) may inspect your company’s economic contribution: taxes paid, jobs created for Chinese citizens, social insurance contributions. Solution: To simplify the renewal, proactively compile a portfolio of documents in advance: certificates from the tax office (STA), employment data, as well as “Contribution Certificates” from the Chamber of Commerce and Industry, the Statistics Bureau, or a technology park administration. This creates an impeccable dossier and may grant access to the “green channel.” FAQ 5: What is the main principle of legal long-term residence in China after obtaining the documents? Legality is an active and continuous process, not a one-time acquisition of documents. Your status requires constant confirmation through real economic activity, full tax transparency, and adherence to immigration rules. Proactivity is the key to success: do not wait for requests from the authorities, but proactively build an evidence base of your value and lawfulness at every stage. Ask a question Key Risks After Obtaining a Work Permit and Residence Permit in China
Company Registration Procedure for Foreign-Invested Enterprises in China
Just ten years ago, the procedure for establishing a foreign-invested company in China resembled navigating a labyrinth with many closed doors. The foreign investor was forced first to find the “right key” – a special permit – and only then received the right for their company to exist in the form of a business license. […]
Just ten years ago, the procedure for establishing a foreign-invested company in China resembled navigating a labyrinth with many closed doors. The foreign investor was forced first to find the “right key” – a special permit – and only then received the right for their company to exist in the form of a business license. This approach, burdened by barriers inherited from the era of “opening up,” created a field of uncertainty and significant time costs at the start. The situation has undergone a radical transformation. Today, China offers foreign capital not a labyrinth but a clear and largely standardized registration roadmap, fundamentally changing the regulatory philosophy. The introduction in 2020 of the Foreign Investment Law (FIL) became not merely a legal reform but a symbolic “reboot” of the system, replacing three different sets of rules for various types of enterprises with one common standard. The modern process can be characterized by three key principles: Universality: Regardless of whether the company is a joint venture or wholly foreign-owned, the basic registration process follows unified rules. “License First”: The company is legally born at the moment the business license is issued, allowing for quick market entry, while necessary industry-specific permits are obtained in parallel or afterwards. Transparent Boundaries: The main reference point for an investor is the “Negative List” – an exhaustive and publicly available list of industries with restrictions. If the business sector is not included in it, the path to registration is maximally straightforward and comparable to the procedure for a Chinese investor. This article serves as a detailed navigator through this updated system. We will break down the standard registration procedure step by step, explain the logic behind the “Negative List,” and highlight special scenarios for large-scale projects requiring capital construction. Understanding this structure is the first and decisive step toward the successful and predictable legalization of your business in China. <img loading="lazy" decoding="async" width="1190" height="1144" src="https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-three-principles-of-modern-company-registration-in-china.webp" alt="" class="wp-image-24479" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-three-principles-of-modern-company-registration-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-three-principles-of-modern-company-registration-in-china-300x288.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-three-principles-of-modern-company-registration-in-china-1024x984.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-three-principles-of-modern-company-registration-in-china-768x738.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/04/1.-three-principles-of-modern-company-registration-in-china-156x150.webp 156w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Legal Basis for Foreign-Invested Enterprises in China Since January 1, 2020, the regulation of foreign investment in China has entered a new era thanks to the entry into force of the Foreign Investment Law of the People’s Republic of China (FIL). This foundational document replaced the outdated tripartite system, unified the legal landscape, and significantly strengthened the protection of foreign investors’ rights. Key Change: Unification of Legislation The new law completely repealed the three previous specialized laws that regulated different forms of foreign presence: Law on Sino-foreign Equity Joint Ventures; Law on Sino-foreign Cooperative Joint Ventures; Law on Wholly Foreign-Owned Enterprises. <img loading="lazy" decoding="async" width="1190" height="1489" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-unification-of-the-legal-landscape-regulating-the-establishment-and-operation-of-legal-entities-with-foreign-capital-in-china.webp" alt="" class="wp-image-24496" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-unification-of-the-legal-landscape-regulating-the-establishment-and-operation-of-legal-entities-with-foreign-capital-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-unification-of-the-legal-landscape-regulating-the-establishment-and-operation-of-legal-entities-with-foreign-capital-in-china-240x300.webp 240w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-unification-of-the-legal-landscape-regulating-the-establishment-and-operation-of-legal-entities-with-foreign-capital-in-china-818x1024.webp 818w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-unification-of-the-legal-landscape-regulating-the-establishment-and-operation-of-legal-entities-with-foreign-capital-in-china-768x961.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-unification-of-the-legal-landscape-regulating-the-establishment-and-operation-of-legal-entities-with-foreign-capital-in-china-120x150.webp 120w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Thus, all foreign-invested enterprises (FIEs) – whether joint ventures or companies with 100% foreign capital – now adhere to the same basic corporate laws of the PRC, similar to local companies: For legal entities: The Company Law of the PRC (on limited liability companies or joint-stock companies) applies. For non-corporate forms (e.g., partnerships): The Partnership Law of the PRC applies. Within the scope of this review, the focus is on the most common form – companies established in accordance with the Company Law. <img loading="lazy" decoding="async" width="1190" height="1438" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-fie-any-commercial-organization-in-china-whose-registered-capital-involves-a-foreign-investor.webp" alt="" class="wp-image-24511" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-fie-any-commercial-organization-in-china-whose-registered-capital-involves-a-foreign-investor.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-fie-any-commercial-organization-in-china-whose-registered-capital-involves-a-foreign-investor-248x300.webp 248w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-fie-any-commercial-organization-in-china-whose-registered-capital-involves-a-foreign-investor-847x1024.webp 847w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-fie-any-commercial-organization-in-china-whose-registered-capital-involves-a-foreign-investor-768x928.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-fie-any-commercial-organization-in-china-whose-registered-capital-involves-a-foreign-investor-124x150.webp 124w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> National Treatment and the “Negative List”: The Dual Foundation of China’s Economic Openness China’s legal framework for investment proclaims the principle of national treatment as fundamental. This guarantees foreign investors and companies equal business conditions with domestic players, the application of identical standards, and legal protection in the vast majority of industries. Exceptions to this general rule are systematized and transparent thanks to the “Negative List for Market Access of Foreign Investment” mechanism. This list, subject to regular review and consistent reduction, serves as a clear regulator. It structures industries into two categories of restrictions: Prohibited for foreign capital. This includes strategic and sensitive sectors where foreign investment is completely excluded (for example, defense industry, certain media services). Restricted for foreign capital. In these sectors, investment is permissible but subject to specific conditions, such as an established limit on the share of foreign participation in the registered capital (for example, 50% or 51%) or a requirement to appoint a Chinese resident to certain management positions (as in the financial sector or telecommunications). <img loading="lazy" decoding="async" width="1190" height="2073" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-_national-treatment-and-the-negative-list_-the-dual-foundation-of-chinas-economic-openness__.webp" alt="" class="wp-image-24526" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-_national-treatment-and-the-negative-list_-the-dual-foundation-of-chinas-economic-openness__.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-_national-treatment-and-the-negative-list_-the-dual-foundation-of-chinas-economic-openness__-172x300.webp 172w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-_national-treatment-and-the-negative-list_-the-dual-foundation-of-chinas-economic-openness__-588x1024.webp 588w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-_national-treatment-and-the-negative-list_-the-dual-foundation-of-chinas-economic-openness__-768x1338.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-_national-treatment-and-the-negative-list_-the-dual-foundation-of-chinas-economic-openness__-882x1536.webp 882w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-_national-treatment-and-the-negative-list_-the-dual-foundation-of-chinas-economic-openness__-1176x2048.webp 1176w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-_national-treatment-and-the-negative-list_-the-dual-foundation-of-chinas-economic-openness__-86x150.webp 86w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> The Chinese model combines the principle of equality with strategic caution: national treatment ensures openness, while the ‘negative list’ provides control over sensitive sectors. This makes the investment environment in China both attractive and manageable. Free Trade Zones: Preferential Treatment and the “Shortened List” In addition to the national regulatory system, China employs a targeted tool for deepening openness – the special regime of Free Trade Zones (FTZs). Such zones, including leading financial and innovation hubs (Shanghai, Hangzhou, Guangdong, Tianjin, Hainan, etc.), function as experimental platforms for accelerated development. Their key feature is the application of a special, “shortened” Negative List, which contains significantly fewer restrictions for foreign capital compared to the nationwide list. This provides investors in FTZs with preferential access to sectors that remain restricted in other parts of the country (for example, telecommunications, education, healthcare). Thus, FTZs serve as “testing grounds”: new models of openness are trialed here and, after successful implementation, can be scaled up across the entire country. The 2020 reform, which enshrined the principle of national treatment in legislation, created a unified and transparent framework for foreign investment. In this system, FTZs act as locomotives of continuous liberalization. They not only attract high-tech projects through preferential conditions but also practically demonstrate the effectiveness of further reducing restrictions, thereby generating demand for updating the nationwide list. Foreign-Invested Company Registration in China <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> WFOE setup for foreign investors <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> SAMR documentation preparation <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> End-to-end support until business license issuance Free consultation Company Registration Procedure for Foreign-Invested Enterprises in China The procedure for registering a foreign-invested company in China continues to become more standardized and transparent. A key trend for 2026 is the shift in focus from formally completing the registration process to the strict compliance of a company’s actual activities with its statutory documents, licenses, and subsequent tax accounting. Authorities expect accuracy, transparency, and full alignment of declared objectives with real business activity. Despite global challenges, China remains attractive to investors, as evidenced by the registration of 53,782 new foreign-invested enterprises (FIE) in the first 10 months of 2025, a 14.7% increase compared to the previous year. Key Decisions at the Pre-registration Stage The success of the entire process is laid at the preparation stage, where two fundamental decisions must be made. Choice of Organizational-Legal Form: This determines taxation, HR policy, and market exit options. The main options are: Wholly Foreign-Owned Enterprise (WFOE): The most popular form, ensuring full control. Suitable for trade, services, manufacturing, and R&D. Joint Venture (Equity or Contractual): Used when the presence of a Chinese partner is a mandatory requirement (according to the “Negative List”) or strategically advantageous. Representative Office: Suitable only for research, marketing, and coordination activities. Cannot directly conduct commercial activities or generate revenue. Determination of Business Scope: This is a critically important step. Authorities require clear and specific wording that must fully correspond to actual operations. Too broad a description will raise questions, while too narrow a description will limit growth. The choice of scope also determines the need to obtain special permits (licenses). “Negative List” Context: Checking against the current “Negative List for Market Access of Foreign Investment” remains mandatory. New Opportunities: Concurrently, it is worth studying the “Catalogue of Encouraged Industries for Foreign Investment” (the latest version effective from February 1, 2026), which adds 205 new items, especially in advanced manufacturing and high technology. Furthermore, preferential conditions apply for the services sector in 20 pilot cities, for example, lifting restrictions on foreign capital share in internet services. <img loading="lazy" decoding="async" width="1609" height="1247" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-choice-of-organizational-legal-form-when-registering-a-company-in-china.webp" alt="" class="wp-image-24541" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-choice-of-organizational-legal-form-when-registering-a-company-in-china.webp 1609w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-choice-of-organizational-legal-form-when-registering-a-company-in-china-300x233.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-choice-of-organizational-legal-form-when-registering-a-company-in-china-1024x794.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-choice-of-organizational-legal-form-when-registering-a-company-in-china-768x595.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-choice-of-organizational-legal-form-when-registering-a-company-in-china-1536x1190.webp 1536w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-choice-of-organizational-legal-form-when-registering-a-company-in-china-194x150.webp 194w" sizes="auto, (max-width: 1609px) 100vw, 1609px" /> 2. Procedure for Establishing a Limited Liability Company (LLC) in China: A Step-by-Step Algorithm The registration of a legal entity in China is a strictly regulated administrative procedure, where each subsequent stage is initiated only after the result of the previous one is recorded in unified state registries. The modern regulatory paradigm is based on the principle of end-to-end digital integration between authorities (SAMR, State Taxation Administration, State Administration of Foreign Exchange, banking system), which eliminates the possibility of providing conflicting data at different stages of the process. Stage 1. Reservation of the Legal Entity’s Name Submitting an application to the local branch of the State Administration for Market Regulation (SAMR) for preliminary approval of a unique company name. The name is checked for compliance with the rules for composing company names, absence of duplicates, and similarity to the point of confusion with already registered companies and registered trademarks in the jurisdiction. It is recommended to submit 2 to 5 alternative options to minimize time costs in case of rejection. Stage 2. Legalization of the Registered Address and Registration of the Lease Agreement Formalization of a lease agreement for non-residential premises, which will serve as the company’s registered address, followed by its mandatory registration with the competent authorities. The leased premises must have the designated purpose “for commercial/office activities.” Using residential property for registering a legal entity is prohibited. A standard model lease agreement is subject to official registration at the Real Estate Management Center. An unregistered agreement has no legal force for company registration purposes. Owners of business centers often provide a package of documents from the owner (lease agreement) necessary for submission to SAMR. Verification of the address for compliance with the “actual location” is a common practice of regulatory authorities. Stage 3. Preparation, Notarization, and Submission of Incorporation Documents Forming a package of corporate documents and submitting it to SAMR to obtain approval for the company’s establishment. Key documents: Company Registration Application. Articles of Association. Resolution/Minutes of Incorporation. Identity documents of the founders and appointed directors (for foreign individuals – notarized and legalized copies of passports). Proof of legality of the registered address (registered lease agreement + documents from the owner). Declaration of the registered capital amount. Currently, for the vast majority of industries, there is no legally established minimum registered capital amount. The concept of “subscribed capital” provides flexibility to founders. Founders independently declare the total amount of registered capital in the Articles of Association. It is permissible to establish a schedule for its actual payment (Contribution Schedule) within a set period, which can be up to 5 years from the date of registration. This schedule can be fixed in the Articles of Association or determined by the owner at their discretion. The declared amount must be economically justified by the business plan. Stage 4. Obtaining the Business License (Legal Entity Registration Certificate) After document verification, SAMR issues a unified license document – the Company Business License. This document is unconditional proof of the creation of a legal entity, containing its unique registration number (Unified Social Credit Code). Without this license, any subsequent legally significant actions are impossible. Stage 5. Production and Registration of the Company’s Official Seals Based on the business license, the company’s physical seals are produced at an accredited public security bureau branch. The mandatory set of seals includes: Company Seal (公章), Financial Seal (财务章), Legal Representative’s Seal (法人章), Contract Seal (合同章). Each seal is registered with the police and has a unique number. The legal force of a document is determined by the presence of the “impression of the company seal” on it, not just a signature. Stage 6. Opening the Corporate Basic Capital Account The company applies to a chosen Chinese bank to open its first settlement account. The bank conducts the “Know Your Customer” (KYC) procedure in strict accordance with the data already entered into the SAMR system. Any discrepancy (for example, in the spelling of the director’s name, address) will lead to refusal. It is into this account that the first portion of the registered capital is deposited in accordance with the approved schedule. After confirming the payment, the bank issues a Capital Contribution Certificate (入资证明), which is critically important for the next stage. Stage 7. Registration with the State Taxation Administration Mandatory registration with the tax office at the place of registration within 30 days after obtaining the license. Data from SAMR is automatically transferred to the tax system. At this stage, the following occurs: Final data verification. Determination of the taxation system (general or simplified). Obtaining permission to use electronic invoices (Fapiao). Signing an agreement with the bank for automatic tax withholding (Tax Withholding Agreement). Stage 8. Registration with Social Security and Pension Funds Registration with local social security and housing provident fund management centers. Registration is a mandatory prerequisite for the legal employment of any employee, including the founder-general director. Non-compliance results in significant fines and operational blocking. After completing the eight stages, the company acquires full legal capacity. However, to begin operational activities, obtaining additional industry-specific permits may be required, the list of which is determined by the industry codes specified in the business license. <img loading="lazy" decoding="async" width="1190" height="2318" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-8-key-registration-stages.webp" alt="" class="wp-image-24556" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-8-key-registration-stages.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-8-key-registration-stages-154x300.webp 154w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-8-key-registration-stages-526x1024.webp 526w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-8-key-registration-stages-768x1496.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-8-key-registration-stages-789x1536.webp 789w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-8-key-registration-stages-1051x2048.webp 1051w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-8-key-registration-stages-77x150.webp 77w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> 3. Special Cases and Additional Procedures for Company Establishment in China Special Cases: “Greenfield” Projects and Capital Construction For investment projects involving the construction of new facilities from scratch (factories, logistics centers, technology parks), the company establishment procedure is an expanded and multi-stage process. In addition to the standard legal entity registration, the investor must undergo a complex set of preliminary approvals and obtain specialized permits before commencing construction work and commissioning the facility. Preliminary Approval and Strategic Review The initial phase involves interaction with authorities responsible for strategic planning and investment policy—the National Development and Reform Commission (NDRC) or its regional branches. The project undergoes an assessment for compliance with national and regional industrial priorities, with its scale, energy intensity, and overall strategic significance analyzed. For energy-intensive industries, a separate requirement is conducting an energy audit and providing a plan for improving energy efficiency. b. Construction, Environmental, and Expert Procedures Following strategic approval, the stage of detailed project coordination with specialized regulatory authorities begins. These processes can often be initiated or conducted in parallel. Urban Planning: Obtaining an approved land use plan and construction permit from local architecture and urban planning authorities. c. Environmental Impact Assessment (EIA): Conducting an environmental impact assessment, coordinated with the local environmental protection bureau. Mandatory for industrial, chemical, and other facilities with potential environmental risk. Occupational Health, Safety, and Environmental Protection (EHS): Developing and coordinating a package of documents on occupational risk assessment, fire safety, and sanitary and hygienic standards. The strictness of requirements varies by region: in megacities (Shanghai, Shenzhen), they are typically significantly higher than in less developed provinces. Although these procedures can be carried out in parallel, their successful completion is an unconditional prerequisite for the start of construction and the subsequent commissioning of the facility. d. Industry Licensing After Facility Creation After completing construction and registering the company, the investor proceeds to obtain special industry licenses, which grant the right to engage directly in business activities. For example: Food production requires a food business license. Pharmaceutical manufacturing is impossible without product registration and GMP certification. Activities in the education sector are subject to licensing by the applicant. Exception: Sectors with Preliminary Permitting Procedure For a number of strictly regulated sectors (finance, telecommunications, education with foreign participation, etc.), a reverse order of legalization applies. In these cases, the investor is first obligated to obtain preliminary approval from the industry regulator and only after that has the right to register the company with SAMR. Example: to establish a company in the securities market, preliminary approval from the China Securities Regulatory Commission (CSRC) is required. Only with this decision in hand can the founders submit documents to obtain a business license. <img loading="lazy" decoding="async" width="1190" height="1340" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-_reverse-order_-for-separately-licensed-types-of-activities-in-china.webp" alt="" class="wp-image-24571" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-_reverse-order_-for-separately-licensed-types-of-activities-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-_reverse-order_-for-separately-licensed-types-of-activities-in-china-266x300.webp 266w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-_reverse-order_-for-separately-licensed-types-of-activities-in-china-909x1024.webp 909w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-_reverse-order_-for-separately-licensed-types-of-activities-in-china-768x865.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-_reverse-order_-for-separately-licensed-types-of-activities-in-china-133x150.webp 133w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Thus, implementing a “greenfield” project requires not only significant capital investment but also a deep understanding of the multi-level system of administrative approvals, where the sequence of actions and interaction with specialized authorities are of critical importance for success. List of Required Documents for the Registration of a Foreign-Invested Company The formation of a foreign-invested enterprise in China is associated with strict compliance with a regulated documentation process. The list presented below reflects the exhaustive set of official papers required to initiate the registration procedure with the State Administration for Market Regulation (SAMR) and other authorized bodies. Each document must meet established formal criteria, and its content must comply with the norms of Chinese corporate law. Incorporation and Registration Forms (Establishment Registration Forms) Company Registration Application on the SAMR form – A unified form containing legally significant declarations: the company’s full name in Chinese, the declared amount of registered capital, its payment schedule, information about the founders, management structure, registered address, and types of economic activity (business scope). The applicant’s (future legal representative’s) signature is subject to verification. Constitutional Document Company Articles of Association – The internal set of rules regulating the company’s activities. The document must include provisions on the purpose of establishment, the amount and distribution of registered capital shares, the rights and obligations of investors, the competence and formation procedure of executive and supervisory bodies, the procedure for making key decisions, as well as conditions for liquidation. The Articles of Association are signed by all founders and serve as the basis for resolving corporate disputes. Documents on the Formation of Corporate Bodies (Corporate Governance Appointments) Shareholders’ Resolution/Minutes of the Incorporation Meeting – Records the collective decision of the founders to establish the company, approve its Articles of Association, and appoint key officers. Appointment Letters – Individual official documents confirming the authority of: Legal Representative – The person authorized to act on behalf of the company without a power of attorney. • Supervisor – A mandatory control body for a limited liability company, not part of the executive management. The appointment of a supervisory board member or a sole supervisor is an imperative legal requirement. • Financial Controller – The employee responsible for maintaining accounting records and interacting with tax authorities. Documents Certifying the Legal Capacity of Founders (Investor Identity and Capacity Proof). For foreign individuals: A copy of a valid passport, notarized in the country of citizenship and legalized via apostille or consular legalization in China. A notarized translation into Chinese is required. For foreign corporate founders: • Certificate of Incorporation or equivalent document confirming legal status. • A valid certificate of good standing or extract from the commercial register, certifying that the company is not in the process of liquidation or bankruptcy. • Articles of Association or similar constitutional document. • A document confirming authority, permitting this person to sign the incorporation documents of the Chinese company on behalf of the foreign investor. All listed documents are subject to notarization, legalization (apostille/consular legalization), and translation into Chinese. Documents Confirming the Legitimacy of Using the Registered Address Chinese legislation requires the provision of indisputable proof that the company has a real non-residential premises for conducting activities. The following documents are accepted: • Standard Lease Agreement, signed with the owner of commercial real estate and having undergone mandatory registration at the local Real Estate Management Center. The lease term, as a rule, must be at least one year. • Property Ownership Certificate (房产证): A copy provided by the landlord. • Address Filing Form (住所经营场所使用证明): A document in the prescribed form, issued by the property owner or the management company of the business center, confirming consent to use the address for registering a legal entity. The use of so-called “virtual offices” or P.O. boxes for the initial registration of an FIE is not legally permitted. SAMR reserves the right to conduct an on-site inspection of the specified address. This set is basic and mandatory for initiating the procedure. Depending on the specific administrative district, the specifics of business activities (e.g., those restricted for foreign investment), and the requirements of industry regulators, authorized bodies have the right to request additional permits or approvals. It is recommended to prepare the package with the assistance of a qualified local consultant or lawyer. <img loading="lazy" decoding="async" width="1190" height="1834" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documents-for-registering-a-foreign-invested-company-in-china.webp" alt="" class="wp-image-24586" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documents-for-registering-a-foreign-invested-company-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documents-for-registering-a-foreign-invested-company-in-china-195x300.webp 195w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documents-for-registering-a-foreign-invested-company-in-china-664x1024.webp 664w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documents-for-registering-a-foreign-invested-company-in-china-768x1184.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documents-for-registering-a-foreign-invested-company-in-china-997x1536.webp 997w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documents-for-registering-a-foreign-invested-company-in-china-97x150.webp 97w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> The procedure for registering a foreign-invested company in China is a clearly structured but multifaceted process, reflecting the balance between openness to international capital and the strategic regulation of the national economy. Successful navigation of this path requires from the investor not only meticulous document preparation but also a deep understanding of the logic of the Chinese legal field and administrative system. The key stages on this path remain: the strategic choice of the correct form of investment (WFOE, joint venture, representative office) aligned with long-term business goals; preliminary approval of a unique company name; obtaining all necessary approvals and licenses for regulated activities; and the correct preparation of statutory documents, primarily the Articles of Association, which must account for Chinese regulatory requirements. The final steps – obtaining the business license, registration with tax, customs, foreign exchange, and statistical authorities – legalize the activity but mark the beginning of the next critically important stage: operational compliance with continuously evolving legislation. In recent years, significant simplification and digitalization of many administrative procedures, lowering of barriers in a number of industries, and increased transparency have been observed. Nevertheless, complexities such as the correct classification of activities by GB/T codes (similar to OKVED), compliance with registered capital requirements, nuances of labor law, and cross-cultural communication barriers remain relevant. Therefore, an indispensable condition for minimizing risks and time costs is engaging qualified local specialists – lawyers, consultants, and accountants. Ultimately, company registration is not a bureaucratic finish line but a strategic starting point. A company that is registered competently and professionally, with a clear legal structure and an understanding of its obligations, lays a solid foundation for sustainable development, building trust with Chinese counterparties and authorities, and fully realizing the enormous potential of the Chinese market. Thus, the investment of time and resources at the establishment stage pays off with long-term stability and the ability to effectively focus on core business in China’s dynamic and competitive environment. Open a Company in China as a Foreign Investor <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Negative List eligibility check <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> FIE structure preparation <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Licensing and registration assistance Free consultation 5 Key Questions and Answers on the Legal Basis for Foreign-Invested Enterprises in China FAQ 1: How is the new system for regulating foreign investment after 2020 fundamentally different? On January 1, 2020, the new Foreign Investment Law of the People’s Republic of China (FIL) came into force, radically changing the legal landscape. It completely repealed the three old laws that regulated different forms of enterprises (equity joint ventures, cooperative joint ventures, and wholly foreign-owned enterprises). Now, unified rules apply to all companies with foreign participation—the general Company Law and the Partnership Law—that is, the same norms as for Chinese companies. This created a unified, transparent, and more protected environment for investors. FAQ 2: What is the “Negative List” and how does it work? The “Negative List for Market Access of Foreign Investment” is a transparent and regularly updated list of industries where exceptions to the general principle of national treatment (equal conditions with local companies) apply. The list is divided into two categories: prohibited (complete ban on foreign investment, e.g., in the defense industry) and restricted (investment is possible subject to conditions, e.g., a limit on the foreign capital share or a requirement for management). If your business sector is not on the list, the path to registration is maximally simplified. FAQ 3: Which organizational-legal form is the most popular and why? The most popular and flexible form is the Wholly Foreign-Owned Enterprise (WFOE). It provides the investor with full control over the business, offers better protection for intellectual property, and ensures full transparency of operations. A WFOE is suitable for most sectors: trade, services, manufacturing, R&D. Joint Ventures (JV) are typically created when it is explicitly required by the “Negative List” or is strategically necessary for accessing a local partner’s resources and market. FAQ 4: What are the key stages of registering a foreign-invested company? The standard process includes 8 sequential stages: Reserving a unique name with SAMR. Legalization of the registered address (execution and registration of a lease agreement for non-residential premises). Preparation and submission of the incorporation document package to SAMR. Obtaining the business license — the primary document confirming the creation of the legal entity. Production and registration of the company’s official seals. Opening a corporate bank account and depositing the first portion of the registered capital. Registration with the State Taxation Administration. Registration with social security and pension insurance funds. FAQ 5: Are there special procedures for large-scale projects, for example, building a factory? Yes, for “greenfield” projects (capital construction from scratch) the procedure is significantly more complex. In addition to standard company registration, it is necessary to undergo preliminary strategic approvals with the Development and Reform Commission (NDRC), as well as obtain a number of special permits before starting construction: urban planning approval, environmental impact assessment (EIA), and approval for occupational health, safety, and environmental protection (EHS). Only after this can a construction permit be obtained. For strictly regulated industries (finance, telecommunications), an “reverse order” often applies: first, approval from the industry regulator must be obtained, and only then can the company be registered with SAMR. Ask a question
How a Foreign Investor Can Obtain a Visa and Residence Permit in China as Founder and Director of Their Own Company
Step-by-Step Guide 2026: From Company Registration to an R Visa and Permanent Residence The Core Problem: “I established a WFOE in China. Now I want to come, become its General Director, manage the business, and live here with my family. But Ministry of Foreign Affairs staff say: you cannot work in your own firm—you are […]
Step-by-Step Guide 2026: From Company Registration to an R Visa and Permanent Residence The Core Problem: “I established a WFOE in China. Now I want to come, become its General Director, manage the business, and live here with my family. But Ministry of Foreign Affairs staff say: you cannot work in your own firm—you are the founder! Where is the logic in this?” Such inquiries are among the most frequent from foreign entrepreneurs. The answer: you can—but only on the condition of absolute legal clarity of the structure and adherence to 12 critical steps. Otherwise: permit denial, fines, deportation, entry ban. Introduction: A Unique Status – A Unique Procedure A foreign investor who is simultaneously the founder (shareholder) of a Chinese company and plans to hold a senior management position within it (e.g., General Director, Director, Board Member) faces a specific legal and administrative situation. Their status combines two key roles: business owner (investor/owner) and employee (hired worker). Chinese legislation clearly separates these concepts, and for lawful residence and work in China, it is necessary to meet the requirements for each of them. <img loading="lazy" decoding="async" width="1609" height="1533" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-_investor_-_worker_-in-the-eyes-of-chinese-authorities.webp" alt="" class="wp-image-23777" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-_investor_-_worker_-in-the-eyes-of-chinese-authorities.webp 1609w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-_investor_-_worker_-in-the-eyes-of-chinese-authorities-300x286.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-_investor_-_worker_-in-the-eyes-of-chinese-authorities-1024x976.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-_investor_-_worker_-in-the-eyes-of-chinese-authorities-768x732.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-_investor_-_worker_-in-the-eyes-of-chinese-authorities-1536x1463.webp 1536w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-_investor_-_worker_-in-the-eyes-of-chinese-authorities-157x150.webp 157w" sizes="auto, (max-width: 1609px) 100vw, 1609px" /> This article explains the complex process in detail: from company creation to obtaining a work visa and residence permit for a foreign investor/director. The focus is on Zhejiang Province, but the general principles apply throughout China, taking into account local specificities. <img loading="lazy" decoding="async" width="1190" height="796" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-the-essence.webp" alt="" class="wp-image-23792" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-the-essence.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-the-essence-300x201.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-the-essence-1024x685.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-the-essence-768x514.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-the-essence-224x150.webp 224w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Legal Framework The process is regulated by the following main regulatory acts: Law of the People’s Republic of China on Control of Entry and Exit of Foreigners: Article 41 establishes a mandatory rule: any foreigner working in China must obtain a work permit (工作许可) and a work-type residence permit (工作类居留证件). Work without these documents is illegal. Regulations on the Administration of Entry and Exit of Foreigners: Specify the procedures, particularly for Z (work) and R (for highly qualified specialists) visa categories. Regulations on the Employment of Foreigners in China: Detail requirements for employers and employees. Local Regulations: Such as the published Zhejiang Province Handbook, which specify local procedures within the framework of national legislation. Classification of Foreign Workers (A, B, C) in China The key factor determining the complexity and speed of the procedure is the classification of the foreigner into one of the following categories: “Top-tier, precise, cutting-edge, and scarce” talent. Foreign investors often fall into this category, especially with significant investment volumes, the introduction of advanced technologies, or management of companies in priority industries for China. Advantages: No restrictions on age, education, or experience. Simplified procedure (often entirely online), acceptance of commitment letters instead of certain individual documents (e.g., criminal record check), the permit is issued for up to 5 years. For an investor-director, classification as Category A is the best-case scenario. Category B (Professionals) Qualified specialists with a higher education degree and at least 2 years of work experience, meeting labor market needs. Age limit – usually up to 60 years. This is the most common category for hired directors and managers. The procedure is standard, requiring the submission of a full set of documents. Category C (Others) Unskilled or seasonal labor, strictly regulated by quotas. Not applicable to an investor-director. An investor-director, especially with a significant share in the registered capital or investments in the high-tech sector, has every chance of qualifying as Category A. The decision is made by the Bureau of Foreign Experts Affairs (formerly the State Administration of Foreign Experts Affairs) based on the submitted evidence (business plan, investment amount, patents, etc.). <img loading="lazy" decoding="async" width="1190" height="1928" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.the-only-correct-path-for-a-foreign-founder-planning-to-live-and-manage-in-china_.webp" alt="" class="wp-image-23807" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.the-only-correct-path-for-a-foreign-founder-planning-to-live-and-manage-in-china_.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.the-only-correct-path-for-a-foreign-founder-planning-to-live-and-manage-in-china_-185x300.webp 185w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.the-only-correct-path-for-a-foreign-founder-planning-to-live-and-manage-in-china_-632x1024.webp 632w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.the-only-correct-path-for-a-foreign-founder-planning-to-live-and-manage-in-china_-768x1244.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.the-only-correct-path-for-a-foreign-founder-planning-to-live-and-manage-in-china_-948x1536.webp 948w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.the-only-correct-path-for-a-foreign-founder-planning-to-live-and-manage-in-china_-93x150.webp 93w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Work Permit vs. Visa vs. Residence Permit in China The First Document: The Work Permit Notification — a document issued by the Chinese authorities (the Bureau of Foreign Experts Affairs). Based on it, a foreigner obtains a visa at a Chinese consulate abroad. This is not the permit, not a visa, and not even the card. It is an official document issued by the Bureau of Foreign Experts Affairs that confirms: “Yes, we have approved you as a worker, and your future employer (even if that is yourself) is permitted to hire you.” Without this notification — no visas. At all. Key Features: Generated electronically immediately after application approval, but the original paper copy, sent by mail, is required for the consulate. Valid for exactly 3 months from the date of issue — no more, no less. For Category A (highly qualified specialists), it is issued within 5 working days; for B and C — 10–15 days. Important: The notification text clearly states: “This notification is not a visa and cannot be used in place of a visa.” This is not a bureaucratic formality — it is a direct instruction that at this stage you do not yet have the right to enter. The Second Stage: Z or R Visa — The Border Pass. Issued by a Chinese consulate abroad. Allows entry into China for the purpose of work. Only after receiving the notification can you go to the consular section of a Chinese Embassy and apply for a work visa. Here, there are two options: Z Visa — the standard work visa. Suitable for B and C categories. It specifies an entry date and validity period (usually 30 or 90 days). But the most important thing is: when crossing the border, immigration officers stamp your passport with the entry date, and it is from this moment that the 30-day countdown begins, within which you must apply for the residence permit. R Visa — a visa for highly qualified specialists of Category A. This is not just a privilege but an acceleration tool: processing time is 2–4 days, the visa can be issued for 12–24 months, and, crucially, it grants the right to multiple entries at this stage — meaning you can enter, start the formalities, leave to handle other matters, and return without a new visa. Common mistake: Attempting to enter on an M visa (business) and “get sorted out inside.” This is directly prohibited by Article 41 of the “Law on Control of Entry and Exit”: “Foreigners in China must obtain a work permit and a work-type residence permit. Hiring individuals without these documents is prohibited.” Violation: deportation, fines up to ¥20,000, and inclusion on a “blacklist.” The Third Stage: The Work Permit (Card) — Your Professional Status After entry, you have 15 days to submit documents to obtain the physical Work Permit Card — yellow, with a chip and QR code. It is this card that confirms your belonging to Category A, B, or C, specifies the employer, and the validity period. This document is the foundation for everything else: Without it, a bank will refuse to open an account (even if you are the director and founder); Without it, you cannot sign a long-term lease agreement; Without it, a school will not admit your child to an international class. And yes — this card does not grant the right of residence. It is merely proof that you have the right to work. You can only reside after the next step. The Fourth and Main Stage: The Work-Type Residence Permit — Your Legal Place in China Only after receiving the Work Permit Card do you apply to the Public Security Bureau (PSB, 派出所) for the work-type residence permit. This is not a separate document, but a passport insert, resembling a visa, but with two critical differences: It is valid for up to 5 years (for Category A — contract-dependent, up to 5 years); It grants the right to multiple entry and exit without obtaining new visas. It is this document that makes you a resident, not a temporary guest. With it, you can: Purchase real estate (in some cities without the 5-year waiting period); Obtain a Chinese driver’s license; Participate in state digital systems (Health Code, Alipay Health, electronic museum tickets, etc.). Table: Work Permit vs. Visa vs. Residence Permit in China Document Issued By Where Valid Purpose Validity Period Key Features 1. Work Permit Notification Bureau of Foreign Experts Affairs (SAFEA/Provincial Bureau) Outside China (at the consulate) Confirms you are approved as a worker in China. Without it — no visa. 3 months from issue date Issued online as PDF + original by mail. For Category A — 5 work days, for B/C — 10–15. Does not grant entry or work rights! 2. Work Visa: Z-Visa or R-Visa (for talents) Consular Department of Chinese Embassy/Consulate-General For entry into China Grants the right to cross the border for employment upon invitation. Specified in visa (usually 30–90 days for single entry) Z-Visa: Standard for B and C categories. R-Visa: Only for Category A. Longer validity, priority processing. Upon entry, border control stamps the date starting the 30-day countdown to apply for the Residence Permit. 3. Work Permit (Card) Same Experts Bureau (SAFEA) Within China (after entry) The primary document confirming your status as a foreign worker for tax authorities, banks, and employer. Up to 5 years (5 years max only for Category A with salary ≥ ¥500k/year) Physical yellow card with a chip. Is not a Residence Permit! Without it — rejection of Residence Permit application. Specifies category (A/B/C), employer, validity. 4. Work-Type Residence Permit Public Security Bureau (PSB) In China (place of residence/registration) Grants the right to legally reside and enter/exit multiple times without a new visa. Up to 5 years (matches the Work Permit validity) Format: passport insert with a chip. Enables: opening a bank account, renting property, obtaining a driver’s license, enrolling a child in an international school. Invalidated if absent from China for >180 consecutive days. Step-by-Step Action Plan for the Investor-Director Step 0: Company Preparation and Registration – Creating the Legal Basis for Status A At this stage, it’s important not just to register a company, but to create a structure that automatically meets the criteria for an “investor-entrepreneur” in Category A. Key Actions: Choice of Structure WFOE (Wholly Foreign-Owned Enterprise) – the optimal option for a foreign founder planning to become the General Director. Joint Venture is not recommended: The division of authority makes it difficult to prove the founder’s “key role” and increases the risk of rejection for Class A. Registered Capital: Not a Minimum, but a Strategy Chinese law indeed does not set a minimum amount and allows capital to be contributed over 5 years. However, to qualify for Class A under the “investor-entrepreneur” criterion, demonstration of reasonable investments is required, showing intent and covering initial startup costs. Even if you contribute only a part initially, but specify a justified target capital in the articles of association and confirm the intention with a bank statement for the corporate account opening — this is sufficient to apply for Class A. Registration with SAMR (State Administration for Market Regulation) In the Articles of Association, it is mandatory to state: “The founder [Full Name] is appointed as the General Director of the company for an indefinite term.” The Business License must indicate industry codes corresponding to the “Province’s Priority Industries Catalogue” — this critically influences automatic qualification as A. Opening a Corporate Bank Account Do this within 30 days of registration – otherwise SAMR may initiate an inspection. The bank will request the business license, company seal, and the director’s passport – ensure you are already registered as the General Director. Tax and (if necessary) Customs Registration Mandatory: Registration with the tax authorities (within 30 days). Customs registration (inclusion in the Customs Registration List) – only if you plan foreign trade activities. For Class A, it is not mandatory but desirable – confirms the “significance of operations.” Important Clarification: Successful company registration is not the end, but the beginning of the process of confirming investor status. Already at this stage, start collecting evidence for the Category A dossier: Screenshots from the National Enterprise Credit Information System with your name as director, Office lease agreement (SAMR requirement — a real address), First bank transactions (to confirm “activity”). Only this way do you lay the foundation for a quick transition to Step 1 – applying for the Category A work permit. <img loading="lazy" decoding="async" width="1190" height="1071" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-you-are-the-sole-founder-simultaneously-the-general-director-in-the-registration-documents.webp" alt="" class="wp-image-23822" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-you-are-the-sole-founder-simultaneously-the-general-director-in-the-registration-documents.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-you-are-the-sole-founder-simultaneously-the-general-director-in-the-registration-documents-300x270.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-you-are-the-sole-founder-simultaneously-the-general-director-in-the-registration-documents-1024x922.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-you-are-the-sole-founder-simultaneously-the-general-director-in-the-registration-documents-768x691.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-you-are-the-sole-founder-simultaneously-the-general-director-in-the-registration-documents-167x150.webp 167w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Step 1: Employer Registration in the System – Creating Your Company’s “Digital Passport” for Hiring Foreigners Before applying for a work permit for yourself, you must register not yourself, but your company as an employer in the system. This is akin to “accreditation” – the state first checks the organization and only then allows it to hire foreigners. How to do this in practice: Go to the “Management and Service System for Foreigners Working in China” platform (外国人来华工作管理服务系统) → select “Legal Entity” (法人登录). Note: A personal account (e.g., for your own visa application) is created later – at this stage you are acting on behalf of the company. Upload 6 mandatory documents: Employer Registration Form – filled out online, printed, stamped with the company seal, and signed (by the head). Business License – in PDF format, with the Unified Social Credit Code (USCC) clearly visible. Passport of the Company Head – if you are the founder and General Director, this is your passport (page with photo and data). Passport of the Authorized Representative – can be the same person (you), but it’s a formally separate role. Seal Power of Attorney (if you are using not the main company seal, but, for example, an HR seal). Commitment Letter for Work Permit Application (外国人来华工作许可申请承诺书) – with your signature as head and the company seal. The key difficulty for a foreign founder: There is no field in the system for “I am hiring myself.” But you are not violating the law – and here is how to correctly formalize it: In the “Responsible Person” field, enter yourself (name, passport, contacts). In the “Contact Person for Hiring Matters” field, also enter yourself – this is technically acceptable. In the “Planned Hiring” section, when filling it out, specify: “Position: General Director. Category: A. Basis: Section 5 of the Classification – ‘Investor and Key Manager.'” Timeline and Result: After uploading the documents, the system conducts an automatic check of the USCC and a verification against the SAMR registry. If there are no errors – approval within 1–3 working days. You receive the status “Employer Confirmed” and access to the function “Apply for Work Permit.” Important: What NOT to do Do NOT register the company through a third party (e.g., a Chinese nominee) if you plan to become the director. The system will link the company’s USCC to your passport – and in case of a mismatch, will request explanations. Do NOT use low-resolution scans: the seal (must be fully legible) and the USCC number are especially critical. Do NOT skip the hiring commitment letter – without it, the system blocks the transition to the next step. After completing this stage, your company becomes a “trusted employer” in the eyes of SAFEA. Step 2: Determining the Worker Category (A) and Preparing the Dossier Even before applying, it is necessary to prepare evidence for classification as Category A. The guide indicates that Category A includes, among others, “international entrepreneurs” and individuals meeting the criteria of the points system for high-level talents. Evidence of Investment: Show the seriousness of your intentions and financial solvency. For example, a shareholder’s bank statement: This is a basic but essential document. Audit Report (if available): If the company has been operating for some time, an independent auditor’s report confirming financial health and implementation of the investment plan is an indisputable argument in your favor. It shows that you have not simply “registered and forgotten,” but are conducting transparent and responsible activities. Combine these documents into a narrative: “We registered the company with registered capital X, confirmed by statement Y. These funds are allocated for equipment purchase and personnel hiring, as described in our business plan. Our first audit report (if available) demonstrates stable development.” Goal: To transform numbers into proof of reliability and long-term plans. Business Plan: Your main “marketing” document for the authorities. The business plan should be written not only for investors but specifically for the officials of the Bureau of Foreign Experts Affairs (SAFEA). Emphasize alignment with national and local priorities (“Made in China 2025”, development of the digital economy, “green” technologies actively promoted in Zhejiang). Do not simply list that you use SaaS. Describe how your technology (e.g., a proprietary AI-based platform, a unique production process) fills a gap in the local market or surpasses existing solutions. Reference Chinese or international standards. Job Creation: Indicate not only the number of planned positions (manager, developer) but also their quality. Emphasize that you will hire and train local Chinese specialists, transferring knowledge and expertise to them. This is extremely important for the authorities. Export Potential: Show how your company in Zhejiang will contribute to the export of Chinese goods/services or, conversely, attract advanced foreign practices. An export plan is a powerful argument for gaining support. Structure the business plan with clearly highlighted sections that directly address the criteria of “high-end, precise, and advanced.” The goal is to present your company not as just another foreign firm, but as a strategic partner in the development of the region. Resume (CV): Confirm your leadership capital and expertise. The resume should reflect not just a chronology of employment, but a history of success and leadership. Emphasis on: • Management experience (number of subordinates, size of managed budget). • Experience in launching projects “from scratch” or expanding a business into new markets (direct analogy with your current task in China). • Industry expertise aligned with the direction of your Chinese company. Diplomas and Certificates: Diplomas and professional certificates must be legalized (apostille or consular legalization) and accompanied by a notarized translation into Chinese. Your resume and diplomas should paint a portrait of an international entrepreneur and expert whose knowledge is critically necessary for the success of this enterprise in China. Goal: Prove that your personal qualification, and not just your capital, is the key asset of the company. Patents, Certificates: Evidence of innovation as a competitive advantage. This is one of the strongest arguments for Category A. Patents: Provide copies of international or national patents where you are listed as the inventor or rights holder. Support them with a description of how this intellectual property will be used or adapted in the Chinese project. Software certificates, technical attestations, awards: Any documents confirming the uniqueness of your product or international recognition of your professional merits (industry awards, grants). Link your innovations to the points in the business plan. Show the chain: “I have a patent for technology X. We will implement it at our factory in Zhejiang. This will give us a market advantage and allow us to create high-tech jobs.” Goal: To move innovations from the realm of abstraction into a concrete plan for economic impact. Company Ownership Documents: Legitimization of the dual status. • Shareholder Register Extract: This document, obtained from the Chinese Market Regulation Administration (SAMR), legally proves your ownership right. It removes any question of why the company is hiring you—because you are its owner and key strategic decision-maker. • Company Charter: It will also list the composition of the founders and the size of shares. Submit these documents together with the employment contract. This creates a complete and transparent picture: “I, as the owner (Document A), hire myself for the position of General Director (Document B) to implement our investment plan (Document C).” Goal: To eliminate any potential suspicion of sham employment and show the complete alignment of your legal status with business logic. Final Tactic for Step 2: • Not disjointed, but systematic: Don’t just send a folder of documents. Create a cover letter or a brief explanatory note (in Chinese), where you connect all elements of the dossier into a single convincing narrative through key points: “Based on proven investments, innovation potential, and personal experience, I, as the owner and key manager of [Company Name], plan to implement a project that will contribute to the development of [e.g., the digital economy sector] in Zhejiang, creating jobs and transferring technology. This meets the criteria for a foreign high-level talent (Category A).” • Translation quality: All documents must be translated into Chinese by a qualified translator, and key points (resume, business plan) should be edited by a native speaker for flawless understanding. Category A is a status that must be earned in the eyes of the official through documents. Your dossier is your weapon in this fight for privileged status. The more convincing, complete, and strategically precise it is, the higher the chances of success and obtaining all the advantages associated with Category A. However, an important note: it must be a true story, not a fairy tale! <img loading="lazy" decoding="async" width="1190" height="2281" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-a-foreign-category-a-entrepreneur_.webp" alt="" class="wp-image-23837" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-a-foreign-category-a-entrepreneur_.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-a-foreign-category-a-entrepreneur_-157x300.webp 157w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-a-foreign-category-a-entrepreneur_-534x1024.webp 534w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-a-foreign-category-a-entrepreneur_-768x1472.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-a-foreign-category-a-entrepreneur_-801x1536.webp 801w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-a-foreign-category-a-entrepreneur_-1068x2048.webp 1068w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-a-foreign-category-a-entrepreneur_-78x150.webp 78w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Get a China Investor Visa Without Rejections <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Eligibility assessment for residence permit <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Complete documentation preparation <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> End-to-end support until permit issuance Free consultation Step 3: Applying for the “Work Permit Notification” This stage represents the formal online initiation of the process to legalize your status. The correctly chosen route and an impeccably prepared digital document package determine not only the timeline but the overall success of the endeavor. The procedure is legally divided into two fundamentally different paths, the choice between which depends on the current geographical location and visa status of the foreign citizen. Strategic Choice of Procedure: Two Branches of Development Standard (Consular) Route: The traditional path, involving visa issuance outside China. Requires exiting the country and is mandatory for individuals located abroad or not meeting the criteria for domestic processing. Simplified (Domestic) Route: A special procedure for individuals already legally in China on other types of visas. It is an exclusive privilege that avoids the need for consular visa issuance and should be used at the first opportunity. <img loading="lazy" decoding="async" width="1190" height="1565" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-two-paths-to-obtain-the-_work-permit-notification_-in-china.webp" alt="" class="wp-image-23852" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-two-paths-to-obtain-the-_work-permit-notification_-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-two-paths-to-obtain-the-_work-permit-notification_-in-china-228x300.webp 228w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-two-paths-to-obtain-the-_work-permit-notification_-in-china-779x1024.webp 779w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-two-paths-to-obtain-the-_work-permit-notification_-in-china-768x1010.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-two-paths-to-obtain-the-_work-permit-notification_-in-china-1168x1536.webp 1168w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-two-paths-to-obtain-the-_work-permit-notification_-in-china-114x150.webp 114w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Option I: Standard (Consular) Application Route for Individuals Outside China This process is relevant if the foreign investor-director is outside China. Phase 1: Formation and Submission of the Digital Dossier via the Integrated System The employer (your Chinese company) logs into the “System for the Management of Foreigners’ Work” and initiates a new application. Each attached document must be scanned in high resolution and correctly renamed. Key components of the dossier requiring special attention from the investor: Online Application Form: Generated by the system after filling out web forms. Key Point: The form is printed, personally signed by the foreign applicant, then scanned together with the official company seal of the employer. This symbolizes bilateral consent. Proof of Professional Experience: For Category A applicants falling under the criteria of “leading scientists” or “leaders in the scientific and technical field,” this point is handled through a written commitment mechanism. However, for an investor-manager, even using this benefit, it is strategically correct to attach a structured resume (CV) with referee contacts. For Category B, legalized certificates from previous employers are required. Higher Education Document: For Category A applicants, the commitment system also applies. Nevertheless, providing a notarized and apostilled copy of the diploma with a professional Chinese translation strengthens the applicant’s position and eliminates the need to provide the document later. Certificate of No Criminal Record: One of the most complex documents. Must be issued by competent authorities of the country of citizenship or permanent residency (residence >1 year) and legalized by a Chinese consulate or apostilled. For Category A, at the notification request stage, submission of a commitment is permissible, which is a fundamental simplification. For Categories B and C, the original with legalization is mandatory. Employment Contract or Appointment Document: The central document for the investor-director, requiring meticulous precision. Since the contracting parties are the legal entity (company) and the natural person (its own director-founder), the text must flawlessly reflect this duality. Mandatory sections: Clearly formulated job functions, corresponding to the claimed management level. Place of work (full company registration address). Salary (base salary) in RMB/CNY, matching or exceeding the regional average level (data from the local statistics bureau). This item cannot be contractually reduced. Precise contract duration. Complete details of both parties, the foreigner’s handwritten signature, and the impression of the Chinese company’s seal. A detailed job description is attached to the contract. Valid Passport: Scan of the biographical data page. Validity must exceed 6 months from the application date. Digital Photograph: Strict requirements: light background, size 40-120 KB, dimensions from 354×472 to 420×560 pixels. Health Examination: Can be postponed and presented at the stage of obtaining the plastic permit card inside China. Submission of a temporary commitment is allowed. Documentation for Accompanying Dependents: If necessary, include spouse and minor children in the application immediately by preparing copies of their passports, (legalized) marriage/birth certificates, and photographs. <img loading="lazy" decoding="async" width="1190" height="1883" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-key-documents-for-obtaining-the-work-permit-notification-in-china.webp" alt="" class="wp-image-23867" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-key-documents-for-obtaining-the-work-permit-notification-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-key-documents-for-obtaining-the-work-permit-notification-in-china-190x300.webp 190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-key-documents-for-obtaining-the-work-permit-notification-in-china-647x1024.webp 647w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-key-documents-for-obtaining-the-work-permit-notification-in-china-768x1215.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-key-documents-for-obtaining-the-work-permit-notification-in-china-971x1536.webp 971w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-key-documents-for-obtaining-the-work-permit-notification-in-china-95x150.webp 95w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Phase 2: Interdepartmental Verification and Approval After online submission of the document package, the responsible territorial authority (e.g., the Bureau of Foreign Experts Affairs of Zhejiang Province) conducts a preliminary audit within 5 working days. In case of incompleteness or non-compliance, the applicant receives a reasoned list of comments for correction. If formal criteria are met, the application is assigned the status “accepted for review.” Phase 3: Decision Making and Notification Generation At the substantive review stage, lasting up to 10 working days, specialists analyze the essence of the provided data. If positive, the official form “Notification of Work Permit for Foreigner in the PRC (Work Period Over 90 Days)” becomes available for download and printing in the employer’s personal account. This document has a limited validity period (usually 3 months) and serves solely as the basis for applying for a work visa. Option II: Simplified (Domestic) Application Route for Individuals Already in China This procedure is optimal for an investor if they have already entered China on another permitted basis (e.g., business visa M, tourist visa L). It allows bypassing the stage of obtaining the notification and visa abroad, by directly applying for the plastic permit card. Critical Conditions for Qualification: Status as a foreign highly qualified specialist (Category A) with a valid visa of any type except a work visa. Eligibility for the preferential policies of innovation pilot zones or free trade zones where the enterprise is registered. The fact of an intra-corporate transfer within an international group of companies. Other special circumstances deemed relevant by the regulatory authority. Practical Implementation: The document set is identical to the standard one, with a few tactical exceptions: Instead of a criminal record certificate from abroad, a similar certificate obtained within China (if the foreigner has lived in the country for over a year) can be submitted, or the right to a commitment (for Category A) can be used. The package must include scan copies of passport pages with the valid visa and the last entry stamp, as well as documentary justification for the right to apply domestically (e.g., an extract confirming the company’s registration in a free trade zone). Processing timelines are similar, but the result of a successful review is a direct transition to the production of the plastic “Work Permit” card, bypassing the “Notification” stage. For an investor-director whose business often requires constant presence in the initial phase, the simplified route is a priority. Even at the planning stage of the first entry into China for company registration, it is worth choosing a visa category (M, F) that will later allow using the domestic procedure, saving at least 1-2 months and avoiding a mandatory exit. <img loading="lazy" decoding="async" width="1190" height="1479" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-simplified-route-for-obtaining-the-work-permit-notification-in-china.webp" alt="" class="wp-image-23882" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-simplified-route-for-obtaining-the-work-permit-notification-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-simplified-route-for-obtaining-the-work-permit-notification-in-china-241x300.webp 241w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-simplified-route-for-obtaining-the-work-permit-notification-in-china-824x1024.webp 824w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-simplified-route-for-obtaining-the-work-permit-notification-in-china-768x955.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-simplified-route-for-obtaining-the-work-permit-notification-in-china-121x150.webp 121w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Step 4: Obtaining a Work Visa (Category Z or R) Outside China This stage is the final one in the preliminary procedure for legalizing the work activity of a foreign specialist in China. It is carried out exclusively abroad, in the territory of the applicant’s country of citizenship or country of permanent legal residence. Standard Document Submission Procedure: Choosing the Submission Institution: The applicant must apply in person to a diplomatic mission of China (Consular Section of an Embassy or Consulate-General) or an accredited Chinese visa center in the relevant country. Preparing the Document Package: The basic package includes: A passport, valid for at least 6 months at the time of application and with blank pages. Original and copy of the “Notification Letter of Work Permit for Foreigners”, issued by the authorized Chinese bureau for foreign specialists affairs. This is the key document confirming preliminary work approval. A completed and signed visa application form V.2013 (application for a Chinese visa), usually with an attached color photograph meeting the required specifications (light background, size 48mm x 33mm). Proof of legal stay in the country of application (if applying outside the country of citizenship). This can be a residence permit, long-term visa, or similar document. Additional documents as required by the specific consular institution (e.g., proof of previous work experience, copies of diplomas). Important: Requirements may vary slightly between consulates, so it is necessary to check the current list on their official websites in advance. Strategic Visa Category Choice: Z or R Work Visa Category Z (Z Visa) – This is the basic and most common visa, intended for the majority of foreign workers invited for employment in China. It is issued based on the Notification and serves solely for the initial entry into China for the purpose of subsequently obtaining a residence permit (Residence Permit). Work Visa Category R (R Visa) – A visa for highly qualified foreign talents belonging to Category A according to the national classification. Its application is recommended and prioritized for such specialists. <img loading="lazy" decoding="async" width="1190" height="1977" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-visa-choice_-z-vs-r-a-strategic-decision.webp" alt="" class="wp-image-23897" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-visa-choice_-z-vs-r-a-strategic-decision.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-visa-choice_-z-vs-r-a-strategic-decision-181x300.webp 181w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-visa-choice_-z-vs-r-a-strategic-decision-616x1024.webp 616w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-visa-choice_-z-vs-r-a-strategic-decision-768x1276.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-visa-choice_-z-vs-r-a-strategic-decision-925x1536.webp 925w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-visa-choice_-z-vs-r-a-strategic-decision-90x150.webp 90w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Key Advantages of the R Visa for Further Processing: Extended Initial Stay Period: The R visa is often issued for up to 180 days with the right of single, double, or multiple entry. This is significantly longer than the standard Z visa period (usually 30 days) and provides a comfortable time buffer for all administrative procedures upon arrival. Priority and Expedited Service: Holders of R visas and their family members (applying for S1/S2 visas) often receive priority when submitting documents and having applications processed, both at consulates and at Public Security Bureau organs in China. Simplified Transition to Long-Term Residency: The status confirmed by the R visa is the basis for obtaining a Residence Permit for up to 5 years (the maximum possible), which minimizes the need for annual document renewals. Positive Signal for Future Interactions: Possession of an R visa confirms the officially recognized high status of the specialist, which can simplify further visa procedures, interactions with banks, government, and other institutions. After receiving the Work Permit Notification, it is strongly recommended for a Category A foreign specialist to initiate the application specifically for the Category R work visa at the Chinese consular institution, providing all necessary documents. This is a strategically correct step that provides significant procedural advantages at the next stage – obtaining the residence permit in China after entering the country. <img loading="lazy" decoding="async" width="1190" height="2236" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-work-visa-application-only-outside-china.webp" alt="" class="wp-image-23912" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-work-visa-application-only-outside-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-work-visa-application-only-outside-china-160x300.webp 160w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-work-visa-application-only-outside-china-545x1024.webp 545w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-work-visa-application-only-outside-china-768x1443.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-work-visa-application-only-outside-china-817x1536.webp 817w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-work-visa-application-only-outside-china-1090x2048.webp 1090w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-work-visa-application-only-outside-china-80x150.webp 80w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Step 5: Entry into China and Receiving the Plastic “Foreigner’s Work Permit” Card This stage is the final one and is implemented exclusively within China. Upon arrival with a valid visa (Z or R), the foreign specialist and their employer must, within strictly established deadlines, complete the procedure for legalizing work activity by obtaining the personal plastic “Foreigner’s Work Permit Card”. This document is the primary proof of the right to work and legal stay related to employment. Step-by-step procedure after entry into China: 1. Undergoing a Medical Examination (Top Priority) Within the shortest possible time after arrival, the foreigner must undergo a full medical examination at a medical institution accredited by Chinese health authorities for visa and permit purposes (usually specialized departments in large international hospitals or clinics). The result is the official “Foreigner Physical Examination Report”, typically valid for 6 months. Without this document, applying for the card is impossible. 2. Submission of the Card Application by the Employer (Within the Legally Established Deadline) Within 15 calendar days from the foreigner’s entry date indicated in the border crossing stamp, the employer is obligated to submit a complete set of documents to the National Service System for Foreign Experts (Foreign Expert Service System or another approved platform). The responsibility for submission lies entirely with the employer. The purpose of the submission is to obtain a decision on issuing the physical card based on the already approved Notification and the newly provided originals. <img loading="lazy" decoding="async" width="1190" height="1930" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/11.-entry-and-receipt-of-the-work-permit-card.webp" alt="" class="wp-image-23927" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/11.-entry-and-receipt-of-the-work-permit-card.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/11.-entry-and-receipt-of-the-work-permit-card-185x300.webp 185w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/11.-entry-and-receipt-of-the-work-permit-card-631x1024.webp 631w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/11.-entry-and-receipt-of-the-work-permit-card-768x1246.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/11.-entry-and-receipt-of-the-work-permit-card-947x1536.webp 947w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/11.-entry-and-receipt-of-the-work-permit-card-92x150.webp 92w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> 3. Preparation and Submission of the Final Document Package For submission to the authorized local bureau for foreign experts affairs (often at a local branch of the Ministry of Science and Technology or the Ministry of Human Resources and Social Security), a package is prepared, including: Original and copy of the passport with the valid visa (Z/R) and the stamp of the last entry into China. Original and copy of the medical examination report obtained from an accredited Chinese hospital. Original and copy of the employment contract signed by both parties (if not provided at the Notification stage). The originals of all documents for which legalized or apostilled certified translations were used during the initial application (e.g., criminal record certificate with notarized Chinese translation, education certificates, work experience certificates). Presenting the originals is mandatory for the final verification. A photograph meeting the required specifications (usually white background). The completed official application form. <img loading="lazy" decoding="async" width="1190" height="1273" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/12.-dokumenty-neobhodimye-dlya-polucheniya-karty-razresheniya-na-rabotu-v-kitae-2.webp" alt="" class="wp-image-23942" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/12.-dokumenty-neobhodimye-dlya-polucheniya-karty-razresheniya-na-rabotu-v-kitae-2.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/12.-dokumenty-neobhodimye-dlya-polucheniya-karty-razresheniya-na-rabotu-v-kitae-2-280x300.webp 280w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/12.-dokumenty-neobhodimye-dlya-polucheniya-karty-razresheniya-na-rabotu-v-kitae-2-957x1024.webp 957w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/12.-dokumenty-neobhodimye-dlya-polucheniya-karty-razresheniya-na-rabotu-v-kitae-2-768x822.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/12.-dokumenty-neobhodimye-dlya-polucheniya-karty-razresheniya-na-rabotu-v-kitae-2-140x150.webp 140w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> 4. Review of the Application and Receipt of the Card After successful submission of the documents, the authorized body conducts the final verification. The review and decision-making period is usually up to 10 working days from receipt of the complete package. If positive, the personal plastic “Foreigner’s Work Permit Card” is produced. It contains photo, personal data, employer data, category (A, B, C), and validity period. The card is issued in person to the foreign specialist or their authorized representative (with a notarized power of attorney) at the service window of the authorized body (for specific addresses and working hours, refer to Appendix 15 of the Guide or the official websites of local authorities). Crucial Significance: From the moment of receiving this card, the foreigner’s status is fully legalized. The card is the primary document confirming the right to work and simultaneously serves as the basis for the next mandatory step – applying for the “Residence Permit” at the Exit-Entry Administration of the local Public Security Bureau (PSB), which secures the right to multiple entry-exit and long-term residence. <img loading="lazy" decoding="async" width="1190" height="1595" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/13.-the-plastic-_work-permit_-card-in-china.webp" alt="" class="wp-image-23957" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/13.-the-plastic-_work-permit_-card-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/13.-the-plastic-_work-permit_-card-in-china-224x300.webp 224w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/13.-the-plastic-_work-permit_-card-in-china-764x1024.webp 764w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/13.-the-plastic-_work-permit_-card-in-china-768x1029.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/13.-the-plastic-_work-permit_-card-in-china-1146x1536.webp 1146w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/13.-the-plastic-_work-permit_-card-in-china-112x150.webp 112w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Step 6: Applying for a Residence Permit in China for Foreign Workers This stage is the concluding administrative procedure that legalizes the long-term stay of a foreign specialist in China based on work activity. After receiving the plastic “Work Permit” card, it is necessary to apply for a Residence Permit within the legally established timeframe. The Residence Permit replaces the initial visa (Z/R) and serves as the primary document for residence and multiple border crossings. Key Requirement and Deadlines The application for a Residence Permit must be made within 30 days of the entry date into China indicated in the passport stamp. It is important to note that the basis for the application is the already obtained “Work Permit” (plastic card). Therefore, Steps 5 and 6 must be completed sequentially and promptly after arrival. <img loading="lazy" decoding="async" width="1190" height="2039" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/14.-residence-permit-in-china-the-final-leg-of-legalization.webp" alt="" class="wp-image-23972" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/14.-residence-permit-in-china-the-final-leg-of-legalization.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/14.-residence-permit-in-china-the-final-leg-of-legalization-175x300.webp 175w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/14.-residence-permit-in-china-the-final-leg-of-legalization-598x1024.webp 598w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/14.-residence-permit-in-china-the-final-leg-of-legalization-768x1316.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/14.-residence-permit-in-china-the-final-leg-of-legalization-896x1536.webp 896w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/14.-residence-permit-in-china-the-final-leg-of-legalization-88x150.webp 88w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Document Submission Procedure The applicant is obliged to appear in person at the Exit-Entry Administration of the local Public Security Bureau (PSB) serving the area of their actual residence. Mandatory Document Package Original and copy of the passport, as well as the pages with the valid visa (Z/R) and the stamp of the last entry. Original and copy of the plastic “Foreigner’s Work Permit Card”. Completed and signed Residence Permit application form (provided on-site or can be downloaded in advance from the authority’s official website). Document confirming temporary residence registration (Temporary Residence Registration Form). This document (obtained at the local police station or through the landlord) is mandatory and must be obtained within 24 hours of moving in. Without it, submitting the application is impossible. One color photograph meeting the required specifications (size and background to be confirmed at the specific office). Additional documents upon the inspector’s request (e.g., the original employment contract or medical examination report may be requested). <img loading="lazy" decoding="async" width="1190" height="2061" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/15.-mandatory-document-package.webp" alt="" class="wp-image-23987" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/15.-mandatory-document-package.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/15.-mandatory-document-package-173x300.webp 173w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/15.-mandatory-document-package-591x1024.webp 591w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/15.-mandatory-document-package-768x1330.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/15.-mandatory-document-package-887x1536.webp 887w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/15.-mandatory-document-package-1182x2048.webp 1182w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/15.-mandatory-document-package-87x150.webp 87w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Result and Benefits After processing the application (timelines vary, typically 7 to 15 working days), a residence permit sticker page is affixed to the applicant’s passport. This document provides the following key advantages: The right to multiple entry and exit from China without the need to apply for a new visa each time. The right to continuous residence within China for its entire validity period. The validity period of the Residence Permit is directly tied to the validity of the “Work Permit”. For most categories, it is issued for 1 year with annual renewal. For highly qualified specialists of Category A, the maximum validity can be up to 5 years, which significantly reduces the administrative burden. Important Note: The Residence Permit is the final link in the legalization chain. Its possession definitively confirms that the foreign worker’s status complies with all requirements of Chinese legislation. Subsequently, it is only necessary to timely renew both documents – the “Work Permit” and the Residence Permit – until the end of the employment contract. <img loading="lazy" decoding="async" width="1190" height="1542" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/16.-residence-permit-in-china-key-points-to-remember.webp" alt="" class="wp-image-24002" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/16.-residence-permit-in-china-key-points-to-remember.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/16.-residence-permit-in-china-key-points-to-remember-232x300.webp 232w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/16.-residence-permit-in-china-key-points-to-remember-790x1024.webp 790w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/16.-residence-permit-in-china-key-points-to-remember-768x995.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/16.-residence-permit-in-china-key-points-to-remember-1185x1536.webp 1185w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/16.-residence-permit-in-china-key-points-to-remember-116x150.webp 116w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Step 7: Subsequent Legal and Administrative Obligations After Receiving the Residence Permit and Work Permit After the successful completion of the main legalization stages and obtaining the plastic “Work Permit” card and “Residence Permit” in the passport, a number of permanent obligations are imposed on the foreign specialist and their employer. Compliance with these is critically important for maintaining legal status and unimpeded activity in China. 1. Tax Registration and Residency Status Within 30 days of receiving the Residence Permit, the foreign worker is obligated to register as a taxpayer with the State Taxation Administration (STA) at their place of residence. The specialist is assigned a Taxpayer Identification Number (TIN) for non-residents, which is used for income declaration and tax payment. Important to note: According to the Tax Code of China, a foreigner acquires tax resident status if they spend 183 or more days on Chinese territory within one calendar year. In this case, they have an obligation to declare and pay taxes on all their worldwide income. Tax non-residents are only subject to taxation on income received from Chinese sources. 2. Mandatory Social Insurance The employer is legally obligated to register the foreign employee in the national social insurance system (pension, medical, unemployment, work injury, maternity) and pay the established contributions monthly (a portion of which is also withheld from the employee’s salary). Special feature for Category A: For highly qualified foreign specialists classified as Category A, based on mutual intergovernmental agreements or internal regulations, participation in the state pension and medical programs may be replaced by having comprehensive commercial medical and pension insurance of international standard. This replacement is carried out strictly based on a prior Letter of Commitment, submitted by the employer during the “Work Permit” application stage, and must be confirmed by the corresponding insurance policies. 3. Document Renewal The renewal procedure must be initiated by the employer no later than 30 calendar days before the expiration of the current “Work Permit.” Simplified procedure: Unlike the initial application, the renewal process for specialists of Categories A and B is typically significantly simpler. It is often conducted entirely online via the service platform and does not require re-submission of the full set of documents (e.g., legalized diplomas or certificates). Updated information regarding the employment contract and data on tax and contribution payments are required. Within 30 days of obtaining the new “Work Permit,” the Residence Permit must also be renewed at the PSB office by presenting the updated card. 4. Obligation to Notify of Changes The foreign specialist and employer are obligated to immediately notify the relevant authorities (foreign experts bureau and PSB) of the following changes: Change of workplace or employer (requires complete re-application of all documents). Change of position or workplace within the same company. Change of residential address (with subsequent re-registration at the police). Loss or theft of passport, residence permit, or work permit. To ensure full compliance with the rapidly changing Chinese legislation in the fields of migration, labor, and tax law, it is strongly recommended for both the employer and the foreign employee to maintain regular contact with specialized lawyers or consultants. <img loading="lazy" decoding="async" width="897" height="2560" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/17.-obligations-after-receiving-the-work-permit-and-residence-permit-in-china-scaled.webp" alt="" class="wp-image-24017" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/17.-obligations-after-receiving-the-work-permit-and-residence-permit-in-china-scaled.webp 897w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/17.-obligations-after-receiving-the-work-permit-and-residence-permit-in-china-105x300.webp 105w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/17.-obligations-after-receiving-the-work-permit-and-residence-permit-in-china-359x1024.webp 359w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/17.-obligations-after-receiving-the-work-permit-and-residence-permit-in-china-768x2192.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/17.-obligations-after-receiving-the-work-permit-and-residence-permit-in-china-538x1536.webp 538w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/17.-obligations-after-receiving-the-work-permit-and-residence-permit-in-china-718x2048.webp 718w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/17.-obligations-after-receiving-the-work-permit-and-residence-permit-in-china-53x150.webp 53w" sizes="auto, (max-width: 897px) 100vw, 897px" /> Conclusion The process of obtaining permits for a foreign investor who combines the functions of founder (shareholder) and sole executive body (e.g., General Director) in China is a complex but fully achievable administrative procedure. Its success is based on three key principles: Correct Determination of Legal Status. It is critically important to legally distinguish and documentarily confirm the two statuses of the individual: as a foreign investor (in relation to the company) and as a hired manager (in relation to the work position). This separation is the foundation for all subsequent actions. Impeccable Documentation. Special attention must be paid to preparing a well-reasoned justification for classification into the highest qualification category A, as well as drafting an employment contract that fully reflects management functions and complies with the requirements of both Chinese labor and investment legislation. Strict Adherence to Regulations. Each stage of the procedure – from company licensing to obtaining a residence permit – has legally established deadlines. Violating them can lead to rejections, fines, and complications for further stay. Chinese regions, including Zhejiang Province, demonstrate an interest in attracting responsible foreign investors and competent managers. This policy finds practical expression in the existence of detailed public guidelines and special simplified administrative procedures available to highly qualified specialists and entrepreneurs of Category A. Thus, the consistent and professional use of legally provided mechanisms allows the foreign investor-manager not only to successfully launch and develop a business in China but also to legalize their stay and work activity in the most effective and long-term manner. China Residence Permit Through Business Setup <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Company registration tailored for visa eligibility <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Full compliance with immigration regulations <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Ongoing support for status renewal Free consultation 5 Key Questions and Answers About Obtaining a Visa and Residence Permit for Foreign Investors in China FAQ 1: Why, as the founder of my own company in China, can’t I just come and work in it? Chinese legislation clearly separates the roles of owner (investor) and employee (hired worker). As an investor, you have the right to own shares and receive dividends, but you do not have the right to engage in work activity (operational management, signing contracts, receiving a salary) without the corresponding permit documents. To work in your own company, you are obliged to register yourself as an employee – obtain a work permit (Work Permit) and a work-type residence permit (Work-type Residence Permit). Working without these documents is illegal and leads to fines, deportation, and being placed on a “blacklist.” FAQ 2: What worker category (A, B, C) do I need to obtain and how do I qualify for it? For a founder-director, Category A (highly qualified specialist/talent) is optimal and desirable. It provides key advantages: no strict age or education restrictions, accelerated and simplified application processing, permit validity up to 5 years, and the possibility of obtaining a long-term residence permit and benefits for the family. To qualify as Category A, you need to provide evidence that you are not just an investor but a strategic manager or bearer of unique technologies. This is confirmed by a set of documents: a business plan emphasizing benefits for the local economy, evidence of investment, proof of management experience, patents or unique certificates. FAQ 3: What is the step-by-step process for legalizing work and residence? The process consists of sequential steps that cannot be bypassed or rearranged: Company registration with your appointment as director in the articles of association. Registration of the company as an employer in the system for managing foreign labor. Application and receipt of the “Work Permit Notification” (Work Permit Notice) through the local Bureau of Foreign Experts Affairs. Application for a work visa (Z or preferably R) at a Chinese consulate abroad based on the obtained Notification. Entry into China, medical examination, and receipt of the plastic “Work Permit Card”. Application for a residence permit (Residence Permit) at the local public security bureau (PSB) within 30 days of entry. Only after completing all 6 steps is your status fully legal. FAQ 4: What is the difference between an R visa, a work permit, and a residence permit? These are three different but interconnected documents: Visa (R or Z): This is the entry pass. Issued by a consulate abroad. The R visa is for highly qualified specialists (Category A) – it offers a longer validity and priority processing. Work Permit (Work Permit Card): This is the right to engage in work activity. Issued in China after entry. A physical plastic card confirming your worker status. Residence Permit (Residence Permit): This is the right to reside and enter/exit multiple times. Affixed in the passport in China. This document is what makes you a resident. Important: Without a work permit, you will not be given a residence permit, and without an R/Z visa, you cannot enter the country to apply for them. FAQ 5: What main mistakes must be avoided in this process? It is critically important to avoid the following mistakes: Attempting to work on a business (M) or tourist (L) visa. This is illegal. The purpose of the visa must strictly correspond to the activity. Incorrect drafting of an employment contract with oneself. The contract between you (the company) and you (the employee) must be legally flawless, with clear duties and a salary not lower than the regional norm. Missing deadlines. Missing deadlines (e.g., 30 days to apply for a residence permit after entry) leads to fines and complications. Insufficient justification for Category A. A formal application without a convincing document package (business plan, investment evidence, experience) can lead to rejection or assignment to the less privileged Category B. Ignoring subsequent obligations: After receiving the documents, you must register with the tax authorities, apply for renewals before expiration, and timely report changes (address, position) to the authorities. Ask a question How a Foreign Investor Can Obtain a Visa and Residence Permit in China as Founder and Director of Their Own Company
Launching a Business in China: Where to Start to Avoid Risks
The idea of opening a company in China is inspiring: new niches are formed here annually—from digital services and biotechnologies to the export of premium goods and green-tech solutions. The market actively supports innovation, and the growth of domestic demand makes the PRC attractive not only for industrial investments but also for agile projects. However, […]
The idea of opening a company in China is inspiring: new niches are formed here annually—from digital services and biotechnologies to the export of premium goods and green-tech solutions. The market actively supports innovation, and the growth of domestic demand makes the PRC attractive not only for industrial investments but also for agile projects. However, it is important to remember: without the correct registration of a legal entity, any commercial activity by a foreigner is considered illegal. Even preparation for market entry requires compliance with the established procedure—starting from choosing the legal form and ending with tax registration. What You Need to Know Before Registering a Company in China Since 2020, the procedure has become simpler thanks to the Foreign Investment Law and the digitalization of public services: for example, registration through the One-Stop Service allows submitting documents to the SAMR, tax authorities, and bank within a single process. But simplification does not cancel responsibility. Mistakes at the stage of choosing the structure (for example, an attempt to conduct direct sales through a representative office) can lead to the suspension of activities and fines. Business Structure Options for Foreigners As of 2026, the legislation of the PRC allows the following forms of presence: Representative Office – suitable only for marketing, research, and logistical coordination. Direct commercial activity is prohibited (clause 5 of the Regulations on Representative Offices of Foreign Enterprises, SAMR, 2023). Wholly Foreign-Owned Enterprise (WFOE) – fully foreign-owned capital, the ability to conduct business, hire staff, and receive profits. The most popular form for long-term presence. Legal entity with a Chinese partner (Joint Venture) – today it is used rarely and only for operational reasons (for example, access to licensed spheres: telecom, education). The form 中外合资企业 as mandatory has been abolished. The choice depends on the goal: entering the Chinese market with on-site sales almost always requires a WFOE, while market reconnaissance and B2B support can be handled with a representative office. <img loading="lazy" decoding="async" width="1400" height="2129" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-how-to-open-a-business-in-china_-3-legal-paths-for-foreigners.webp" alt="How to Open a Business in China_ 3 Legal Paths for Foreigners" class="wp-image-21009" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-how-to-open-a-business-in-china_-3-legal-paths-for-foreigners.webp 1400w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-how-to-open-a-business-in-china_-3-legal-paths-for-foreigners-197x300.webp 197w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-how-to-open-a-business-in-china_-3-legal-paths-for-foreigners-673x1024.webp 673w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-how-to-open-a-business-in-china_-3-legal-paths-for-foreigners-768x1168.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-how-to-open-a-business-in-china_-3-legal-paths-for-foreigners-1010x1536.webp 1010w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-how-to-open-a-business-in-china_-3-legal-paths-for-foreigners-1347x2048.webp 1347w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/1.-how-to-open-a-business-in-china_-3-legal-paths-for-foreigners-99x150.webp 99w" sizes="auto, (max-width: 1400px) 100vw, 1400px" /> WFOE: An Independent Legal Entity for Foreign Business in China A Wholly Foreign-Owned Enterprise (WFOE) is an ordinary limited liability company registered in the PRC, where 100% of the capital is owned by a foreign investor – an individual or legal entity. No Chinese co-founders, neither in capital nor in management, are required – this is directly confirmed by Article 4 of the Foreign Investment Law (2024). This form is in demand when opening a business in China, where control, transparency, and long-term stability are important. What does a WFOE actually allow? Full control: appointment of the general director, team selection, approval of financial policy – everything is decided by the foreign owner. Broad scope of activity: manufacturing, services, B2B/B2C trade, export-import operations – as long as the activities do not fall under the prohibitions of the Negative List. Rights like any Chinese legal entity: opening accounts in RMB and USD, registering office or warehouse for lease/ownership, participation in tenders, payment of dividends abroad. Standard tax scheme: corporate tax – 25% (reduced to 15% in preferential zones, for example, Hainan or Pudong), reporting according to CAS standards, submission of forms through the STA electronic cabinet. <img loading="lazy" decoding="async" width="1190" height="1123" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-wfoe-a-standard-llc-in-china-with-foreign-capital.webp" alt="WFOE = A Standard LLC in China with Foreign Capital" class="wp-image-21024" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-wfoe-a-standard-llc-in-china-with-foreign-capital.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-wfoe-a-standard-llc-in-china-with-foreign-capital-300x283.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-wfoe-a-standard-llc-in-china-with-foreign-capital-1024x966.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-wfoe-a-standard-llc-in-china-with-foreign-capital-768x725.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/2.-wfoe-a-standard-llc-in-china-with-foreign-capital-159x150.webp 159w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> How does the company registration in China in the WFOE format proceed? Document submission – through the One-Stop Service at SAMR: charter, resolution on establishment, confirmation of source of funds, data of beneficial owners. All materials – in Chinese; for individuals – passport with apostille and notarized translation. Timeline – from 7 to 12 working days in 2026, if no additional licenses are needed (for example, for medical products or online trade). Important: since 2020, the Approval Certificate has been abolished – instead, an entry in the National Enterprise Public Information System (www.gsxt.gov.cn) is sufficient. A WFOE is not a “special regime,” but a standard LLC with foreign capital. This model is the best choice for those planning entry into the Chinese market as a strategic direction: without management compromises, with the ability to develop a brand, scale logistics, and build a local team – from a startup office in Suzhou to an industrial cluster in Guangdong. <img loading="lazy" decoding="async" width="1190" height="1578" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-how-company-registration-in-china-wfoe-proceeds.webp" alt="How Company Registration in China (WFOE) Proceeds" class="wp-image-21039" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-how-company-registration-in-china-wfoe-proceeds.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-how-company-registration-in-china-wfoe-proceeds-226x300.webp 226w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-how-company-registration-in-china-wfoe-proceeds-772x1024.webp 772w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-how-company-registration-in-china-wfoe-proceeds-768x1018.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-how-company-registration-in-china-wfoe-proceeds-1158x1536.webp 1158w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/3.-how-company-registration-in-china-wfoe-proceeds-113x150.webp 113w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Joint Venture in China: When Partnership with a Local Company is a Strategic Advantage A Joint Venture (JV) is a legal entity established in the territory of the PRC with the participation of both a foreign and a Chinese investor. This form is in demand when entry into the Chinese market is associated with restrictions on foreign capital share or requires deep localization – for example, in the fields of telecommunications, automotive industry, or higher education. Although the mandatory establishment of JVs in most industries was abolished with the adoption of the Foreign Investment Law (2020), it remains a key tool in segments included in the Special Administrative Measures (Negative List), approved by MOFCOM and NDRC (ed. 2025). Two Operational JV Models In modern practice, two formats are used, enshrined in Chapter IV of the Company Law: Equity Joint Venture (EJV) – a classic structure where the share of participation directly determines the right to profit and a vote on the board of directors. Accounting is conducted according to unified CAS rules, and the enterprise is liable for its obligations with its own assets. Cooperative Joint Venture (CJV) – a flexible form allowing asymmetry: for example, the Chinese side contributes land or a license, the foreign side contributes technology and capital, and profits are distributed 60/40. The terms are detailed in the Contract of Cooperation, which takes precedence over the charter (clause 22 of the SAMR Guidelines on CJV, 2024). What is important when establishing a JV? The founding agreement (and charter) is registered with SAMR as the basis for creating a legal entity in the PRC. All parties bear joint and several liability for the accuracy of contributions (monetary, property, intangible assets) – verification is conducted within the framework of preliminary due diligence (Deloitte China, 2025). Management is built on the principle of consent: key decisions (budget, dividends, change of director) require a quorum on the board, the size of which is determined by the agreement. Disputes between partners are most often regulated through CIETAC (China International Economic and Trade Arbitration Commission) – an arbitration clause is mandatory when signing. Example: in the automotive industry (outside preferential zones, for example, Jinan New District), until 2025, there was a 50% limit on the foreign share in a JV with internal combustion engine production. Starting from 2026, the restriction has been lifted for electric vehicles — but JV remains effective for access to the dealer network and public procurement. When is a JV a reasonable choice? When access to licenses is needed that cannot be obtained directly by a foreigner; When localizing production within the framework of state programs (for example, “Made in China 2025”); To reduce risks in regions with high regulatory uncertainty – a local partner takes on coordination with authorities. This approach allows foreign investors not only to comply with requirements but also to integrate into the ecosystem – relying on proven connections and an understanding of the local business context. <img loading="lazy" decoding="async" width="1190" height="1128" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-joint-venture-jv-in-china.webp" alt="" class="wp-image-21054" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-joint-venture-jv-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-joint-venture-jv-in-china-300x284.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-joint-venture-jv-in-china-1024x971.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-joint-venture-jv-in-china-768x728.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/4.-joint-venture-jv-in-china-158x150.webp 158w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Representative Office in China: An Official “Bridge,” But Not a Business Unit A Representative Office (RO) is not a legal entity, but a territorial subdivision of a foreign company, officially accredited in the PRC for non-commercial activities. It acts on behalf of the head office and does not have independent legal personality. This form is in demand at the stage of entering the Chinese market, when it is necessary to study demand, establish contacts, and form a strategy – without obligations for taxes, registered capital, or complex establishment. What an RO can and cannot do? Permitted: • Conducting market research and competitor analysis; • Organizing meetings, presentations, exhibition participation; • Coordinating logistics, supporting clients, communicating with suppliers; • Hiring personnel through authorized HR agencies. Prohibited: • Entering into transactions, issuing invoices, receiving revenue in China; • Owning commercial real estate, warehouse stocks, or equipment; • Opening an RMB account – only a special account of the Non-Trade Foreign Exchange Account (NTEA) type to cover current expenses. <img loading="lazy" decoding="async" width="1190" height="1398" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-representative-office-ro-in-china-an-official-_bridge_-but-not-a-business.webp" alt="" class="wp-image-21069" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-representative-office-ro-in-china-an-official-_bridge_-but-not-a-business.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-representative-office-ro-in-china-an-official-_bridge_-but-not-a-business-255x300.webp 255w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-representative-office-ro-in-china-an-official-_bridge_-but-not-a-business-872x1024.webp 872w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-representative-office-ro-in-china-an-official-_bridge_-but-not-a-business-768x902.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/5.-representative-office-ro-in-china-an-official-_bridge_-but-not-a-business-128x150.webp 128w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Unlike a WFOE, a Representative Office (RO) is not registered as an independent legal entity in the PRC. Instead, it undergoes an official accreditation procedure with the State Administration for Market Regulation (SAMR). Key differences and procedure: Not a legal entity, but a subdivision: An RO is a legal but dependent office of the parent foreign company. It is liable for the obligations of the parent firm. Accreditation timeline: The approval process and issuance of the representative office registration certificate typically take from 20 to 45 working days from the moment of submitting the complete document package. In fact, registering a representative office takes longer than registering a WFOE. Document package: The main set includes: a completed application on the prescribed form, legalized constituent documents of the parent company, a resolution to establish the representative office, as well as an official explanatory letter outlining the planned activities of the representative office in the territory of the PRC. All responsibility – financial and regulatory – lies with the foreign parent company. Violation of restrictions (for example, an attempt to conclude a contract on behalf of the RO) leads to the annulment of accreditation and a fine of up to 100,000 CNY. Therefore, an RO is not a company registration in China, but a temporary preparatory tool for it. It is ideal for those just beginning to open a business in China and wanting to avoid the risks of premature commercial activity. <img loading="lazy" decoding="async" width="1190" height="1026" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-when-to-choose-an-ro_.webp" alt="" class="wp-image-21084" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-when-to-choose-an-ro_.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-when-to-choose-an-ro_-300x259.webp 300w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-when-to-choose-an-ro_-1024x883.webp 1024w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-when-to-choose-an-ro_-768x662.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/6.-when-to-choose-an-ro_-174x150.webp 174w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Open a Company in China Without Mistakes or Delays <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Business structure tailored to your goals <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Complete documentation package <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> End-to-end support until license issuance Free consultation How to Prepare for Company Registration in China – and Where to Open a Business in 2026 Before submitting the package to SAMR, it is crucial to conduct preliminary verification – otherwise, even a perfectly registered legal entity may fail the verification stage at the stage of obtaining licenses. For example, selling dietary supplements without CFDA Registration or launching a platform without an ICP/EDI License entails domain blocking and a fine of up to CNY 100,000 (STA, Regulation No. 7, 2025). Mandatory steps before submission: Clarify if your activity is included in the Negative List for Foreign Investment (MOFCOM & NDRC, 2025); Determine if special permits are needed: Medical Device Registration (Class II/III), Network Security Review (for applications with access to personal data), Cross-Border Data Transfer Assessment; Check if mandatory certification is required: CCC (electronics, automotive), GB standards (drinking water, cosmetics), China Green Product; Assess if a “catchment warehouse” model (bonded warehouse) is possible or if localization is needed – this affects the choice of form: registering a WFOE. Geography as a Strategic Asset: Choosing a Location for Entering the Chinese Market Determining the region for registration is not merely a technical step, but a fundamental strategic decision. It should only be undertaken after developing the business model, analyzing the regulatory field, and choosing the organizational form (WFOE, FICE, or representative office). It is the location that will become the key factor determining your operational efficiency, financial model, and growth potential. The correct choice affects not only the tax rate but also: Launch speed: from 3 working days to 3-4 weeks in less prepared provinces. Access to resources: the partner ecosystem, talent pool, and integration into logistics chains. Regulatory climate: the level of administrative pressure and frequency of inspections, especially in sensitive industries (fintech, healthcare, data processing). Below is an overview of key jurisdictions relevant for long-term planning in 2026. Shanghai: A Platform for Global Premium Business For whom: Fintech, luxury segment, B2B consulting, high-margin logistics, and global supply chain management. Context: The Yangshan Port complex is a world leader in cargo turnover; the city is home to over 700 regional headquarters from the Fortune Global 500 list. Challenge: Maximum competition for talent, high wages, and high cost of Class A rental space. Strategic value: It has no equal for building long-term prestige and deep integration into international business networks. Hangzhou: An Ecosystem for Digital Leaders and Global Wholesale Trade For whom: Digital companies: SaaS, AI, cross-border e-commerce platforms, big data services. Wholesalers and distributors: Companies engaged in B2B sales of small-wholesale goods (from consumer electronics to textiles and souvenirs) to global markets. Context and ecosystem: Hangzhou is not just a city, but the core of the digital economy that gave rise to Alibaba, Ant Group, NetEase, DeepSeek. A complete infrastructure for digital business has been created here: from MVP testing in Qiantang Valley to scaling through the APIs of platforms like Tmall Global and Cainiao Logistics. Key strategic advantage: proximity to the city of Yiwu – the “wholesale capital of the world” and Shanghai – a global financial center. Yiwu is a global small-wholesale hub, where tens of thousands of factories and suppliers are concentrated, offering incredible product variety based on the principle of “small order, big variety”. Registering a company in Hangzhou provides a legal and operational status in a developed metropolis with simultaneous direct access to the commodity flows of Yiwu, located just ~150 km away (about 1 hour by high-speed train) and Shanghai. The ideal “office in Hangzhou, warehouse/logistics in Yiwu” model: You locate your headquarters, sales department, and digital team in the modern ecosystem of Hangzhou, while conducting procurement, order assembly, and export logistics through the capacities of Yiwu, including its famous market and super-modern airport (Yiwu Airport), specializing in cargo air transportation. Advantages for business: For digital projects: Record registration speed (3–5 working days), preferential tax rates (from 10%), access to venture capital and technical talent. For wholesale trade: A combination of Hangzhou’s digital tools (Alibaba.com, international online payments) and Yiwu’s physical product base. This allows for creating hybrid business models, such as launching dropshipping platforms or managing supply chains for Amazon/Shopify with minimal costs. Strategic value: Hangzhou (in conjunction with Yiwu) offers a unique symbiosis of digital infrastructure and a physical product base. This is the ideal jurisdiction for companies that want to not just sell goods from China, but build technologically advanced, scalable business models in the fields of e-commerce and global distribution, having both code and product at hand. This is a choice for speed, innovation, and an unprecedented connection to the supply chain. Guangzhou: The Hub of Physical Export For whom: Manufacturers and wholesale exporters focused on ASEAN, Middle Eastern, and African markets. Context: Host of the Canton Fair – the world’s largest import-export fair, creating a unique concentration of verified suppliers and buyers. Advantage: Direct access to the Nansha port infrastructure and a culture of B2B cooperation developed over decades. Strategic value: Reducing transactional costs and time-to-market for physical goods globally. Shenzhen (Nanshan): The Factory of Industry 4.0 For whom: High-tech manufacturing with a focus on robotics, precision components, medical equipment, and smart automation. Context: The flagship “smart manufacturing” cluster within the Greater Bay Area project, with direct logistics corridors. Support: Direct subsidies for modern equipment (up to ¥3 million), tax holidays, and minimal distance to the port. Strategic value: Operational advantage for export-oriented high-tech factories with an automation rate of 70% or higher. Beijing: The Center of Strategic Innovation For whom: R&D centers, startups in deep tech, biotech, quantum computing, and “smart cities.” Context: Concentration of scientific elite (92 state laboratories, 36 top universities) and regulatory bodies. Important: Manufacturing with any significant emissions is practically impossible to approve — priority is given to “clean” technologies. Strategic value: Direct access to state grants, strategic partnerships, and the “brains” of the nation. Chongqing: The Gateway to the Eurasian Continent For whom: Logistics operators, projects in automotive and green energy, targeting the domestic market of Western China and Eurasia. Context: The largest river port in the PRC and a key node of the “New Silk Road” land routes. Advantage: Significantly lower land and labor costs (35-50% lower than on the coast) + direct railway links to Europe. Strategic value: The optimal point for cheap placement of production facilities with subsequent shipment of products to the EU by land. Tianjin: The Industrial Hub of Northern China For whom: Enterprises in the chemical, petrochemical industry, and automotive component manufacturers. Context: The country’s second-largest port by cargo turnover, integrated into the Bohai Bay cluster with BMW, Toyota, Volkswagen plants. Advantage: Expedited registration procedure in the Binhai Zone (5-7 days) and specialized incentives for advanced manufacturing. Strategic value: Logistical advantage for working with markets in Northeast Asia, Mongolia, and Eastern Siberia. Suzhou: Shanghai’s High-Precision Manufacturing Twin For whom: Manufacturers of electronics, semiconductors, medical equipment, and pharmaceuticals. Context: Located 25 minutes by high-speed train from Shanghai, this cluster produces critical components for world technology giants. Advantage: Rental rates and operational costs are 30-40% lower than Shanghai’s, with full access to its infrastructure and talent. Strategic value: The ideal balance between proximity to the financial-logistical center and cost of ownership for high-end manufacturing. Chengdu: The Technological Capital of the West For whom: Software development centers, projects in the aerospace industry, biotech, and GovTech. Context: China’s fourth most significant technology hub with the Tianfu Park (1000+ foreign IT companies) and R&D centers of Intel, Siemens. Advantage: A deep talent pool cultivated by leading universities and developed air connectivity (100+ international flights). Strategic value: Control over the growing western market of China with a significantly lower cost of talent than in Beijing or Shanghai. <img loading="lazy" decoding="async" width="1190" height="2067" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-choosing-a-city-in-china-for-company-registration.webp" alt="" class="wp-image-21099" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-choosing-a-city-in-china-for-company-registration.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-choosing-a-city-in-china-for-company-registration-173x300.webp 173w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-choosing-a-city-in-china-for-company-registration-590x1024.webp 590w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-choosing-a-city-in-china-for-company-registration-768x1334.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-choosing-a-city-in-china-for-company-registration-884x1536.webp 884w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-choosing-a-city-in-china-for-company-registration-1179x2048.webp 1179w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/7.-choosing-a-city-in-china-for-company-registration-86x150.webp 86w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Preparing a Company Name: What to Consider Before starting the company registration process in China, it is necessary to approve its future name. This is a mandatory procedure upon which the success of all subsequent legal work depends. The main rule: the name must be completely unique nationwide. This applies to both the Chinese version and the English translation. The verification is conducted by the local market regulation authority (SAMR branch). Specialists compare the proposed options with the national registry, assess them for similarity to already existing ones, and check compliance with the corporate law norms of the PRC. Strict requirements are imposed on the name: It is prohibited to use words that may mislead government authorities or the public. It is not allowed to include indications of the type of activity if the company does not plan to engage in it or does not have the necessary licenses. The name must not contain terms contrary to public interests or the cultural traditions of China. If the verification reveals a match or non-compliance, you will have to choose a new option and submit it for re-examination. The procedure is repeated until a positive decision is obtained. Upon approval, you will receive an official certificate, which will be necessary for the next stages: submitting documents for the creation of a legal entity in the PRC, opening a bank account, and obtaining all subsequent permits. Documentation Package for Opening a Business in China Successfully navigating the formalities requires careful preparation of the documentation package. We recommend gathering it in advance. Founders’ documents. For individuals – notarized copies of foreign passports. If the founder is a foreign company, a full set of its legalized constituent documents will be required. Company Articles of Association. This document must clearly define the management structure, types of economic activities, profit distribution procedures, and other key provisions. It will become the foundation for your enterprise’s operations. Proof of legal address. For registering a WFOE, a lease agreement for a real office space is generally required. Using a virtual address is often impossible, as the registering authority has the right to conduct an on-site inspection of the specified location. Confirmation of registered capital. Although for most industries there is no mandatory minimum amount set, the presence of capital must be confirmed. At the registration stage, a bank statement is usually sufficient; later, the funds must be deposited into the opened corporate account. Legalized translations. All documents issued outside the PRC must be translated into Chinese by a professional translator, and their copies must be notarized. Additional documents (if necessary). For sectors with special regulation (e.g., finance, education, healthcare), industry-specific licenses must be obtained in advance. A business plan or recommendation letters may also be required upon request. A correctly prepared documentation package submitted through the “One-Stop Service” system significantly speeds up entry into the Chinese market and reduces the risk of receiving official rejections. <img loading="lazy" decoding="async" width="1190" height="1280" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documentation-package-for-opening-a-business-in-china-wfoe.webp" alt="" class="wp-image-21114" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documentation-package-for-opening-a-business-in-china-wfoe.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documentation-package-for-opening-a-business-in-china-wfoe-279x300.webp 279w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documentation-package-for-opening-a-business-in-china-wfoe-952x1024.webp 952w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documentation-package-for-opening-a-business-in-china-wfoe-768x826.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/8.-documentation-package-for-opening-a-business-in-china-wfoe-139x150.webp 139w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Stages and Procedure for Registering a Legal Entity in the People’s Republic of China The process begins with the preparation of documents. Each document must strictly comply with Chinese norms, including a certified translation into the state language. Inaccuracies at this step will lead to delays later. Submission of Documents to the Authorized Body The prepared package is submitted to the territorial market regulation authority (SAMR). Employees conduct a detailed verification: All data is cross-checked with national registries. Particular attention is paid to the uniqueness of the name and the correctness of the legal address. Even a minor error can be grounds for returning documents for revision. Verification Procedure The check includes formal analysis and, in some cases, actual actions. For enterprises with foreign investment, such as a WFOE, an on-site inspection of the declared office premises is possible. For joint ventures (Joint Venture), inspectors carefully study the contract between participants and the distribution of powers. Obtaining the Registration Certificate (Business License) After successfully passing all checks, the registering authority – the State Administration for Market Regulation (SAMR) – enters the company into the Unified State Register and issues the Enterprise Registration Certificate (Business License, 营业执照). This document serves as legal confirmation of the company’s creation and its primary identification for conducting business activities. Under the standard procedure through the “One-Stop Service” system, the issuance of the certificate typically takes from 7 to 15 working days from the moment of submitting a complete and correct documentation package. For types of activities requiring additional approvals (e.g., in healthcare, finance, or education), the overall company registration timeline in China increases. Delays are related to the need to obtain separate industry-specific licenses after the SAMR registry entry stage. In special economic zones or for projects in priority industries, an accelerated registration procedure may apply, reducing the timeframe to 3-5 working days. This regulated process allows the investor to accurately plan the schedule for entering the Chinese market and minimize administrative risks. Understanding this sequence helps in properly planning the opening of a business in China and minimizing the risks of delays. Subsequent Steps After Initial Registration Obtaining the license is only the first stage. For the company to operate legally, a series of mandatory procedures must be completed. Tax Registration The company is obliged to obtain a Taxpayer Identification Number (TIN). At this stage, the applicable tax regime (e.g., VAT, corporate income tax) corresponding to the types of activities is determined. Opening a Bank Account A bank will open a corporate account only upon presentation of the business license. The procedure includes verification of the documentation package and beneficial owners and usually takes about one week. Registration with Social Insurance Funds Hiring employees obligates the company to register with social and pension insurance funds and make contributions for each worker. Obtaining Special Permits Engaging in foreign trade activities requires a separate permit. Operating in regulated sectors (finance, education, medicine) is possible only after obtaining the relevant specialized licenses from the respective ministries. <img loading="lazy" decoding="async" width="1190" height="2180" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-7-stages-of-registering-a-wfoe-company-in-china.webp" alt="" class="wp-image-21129" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-7-stages-of-registering-a-wfoe-company-in-china.webp 1190w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-7-stages-of-registering-a-wfoe-company-in-china-164x300.webp 164w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-7-stages-of-registering-a-wfoe-company-in-china-559x1024.webp 559w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-7-stages-of-registering-a-wfoe-company-in-china-768x1407.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-7-stages-of-registering-a-wfoe-company-in-china-838x1536.webp 838w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-7-stages-of-registering-a-wfoe-company-in-china-1118x2048.webp 1118w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/9.-7-stages-of-registering-a-wfoe-company-in-china-82x150.webp 82w" sizes="auto, (max-width: 1190px) 100vw, 1190px" /> Regular Company Obligations After Completing Registration in the People’s Republic of China After a legal entity is officially established, its management must ensure continuous compliance with a series of administrative and fiscal norms. These obligations are permanent and require a systematic approach. 1. Financial Accounting, Audit, and Tax Reporting Bookkeeping must strictly comply with the Chinese Accounting Standards (CAS). All accounting registers and reports are prepared in the Chinese language. Key requirements: Mandatory annual audit: For companies with 100% foreign participation (WFOE), conducting an independent financial audit at the end of the year is a legislative requirement. The audit report is submitted to the tax authorities. Regular submission of declarations Consequences of violations: Delayed submission of reports or tax payments leads to penalty charges, substantial fines, and in serious cases – to the blocking of bank accounts and restriction of activities. 2. Personnel Records and Compliance with Labor Norms Legal registration of employees is the foundation of stable operations. Each employee must have an official labor contract, drawn up in accordance with the Labor Code of the PRC. Mandatory procedures include: Registration and monthly contributions to social, medical, pension insurance funds, as well as the unemployment fund. Timely renewal or processing of new work visas and residence permits (Z, R category visas) for foreign employees. Compliance with occupational health and safety regulations, which are regularly inspected by relevant authorities. 3. Maintaining Legal Status and Renewing Permits Legal address and the right to operate must remain up-to-date. This block includes: Renewal of office lease agreement: A valid lease agreement for physical premises is a mandatory condition for maintaining the company’s legal address. Its expiration without timely renewal leads to the risk of being listed in the “dishonest companies” register. Renewal of industry-specific licenses: Permits for certain types of activities (e.g., import-export, ICP license for IT) have a limited validity period and require timely renewal. Annual company inspection (Annual Inspection): Submission of basic company data to the SAMR authorities to confirm the continuity of operations. Systematic management of these processes, often involving a local accountant and lawyer, is the key to the long-term and uninterrupted operation of the enterprise in the Chinese market. <img loading="lazy" decoding="async" width="1400" height="1451" src="https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-3-key-blocks.webp" alt="" class="wp-image-21144" srcset="https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-3-key-blocks.webp 1400w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-3-key-blocks-289x300.webp 289w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-3-key-blocks-988x1024.webp 988w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-3-key-blocks-768x796.webp 768w, https://www.vitaliberta.hk/wp-content/uploads/2026/03/10.-3-key-blocks-145x150.webp 145w" sizes="auto, (max-width: 1400px) 100vw, 1400px" /> Turnkey Business Registration in China <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> WFOE, JV & Representative Office setup <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> License eligibility & compliance verification <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Ongoing accounting support Free consultation 5 FAQs on Launching a Business in China FAQ 1: What is the best business form in China for a foreigner who wants to conduct full-scale commercial activity? For long-term and independent business operations with the right to sell, hire employees, and receive profits, the optimal choice is a WFOE (Wholly Foreign-Owned Enterprise). This is a full-fledged Chinese legal entity with 100% foreign capital, which gives full control over the business. A Representative Office (RO) does not allow commercial activity, and a Joint Venture (JV) is primarily used today for access to regulated industries (e.g., telecommunications or education). FAQ 2: How does registering a WFOE differ from opening a Representative Office (RO)? These are fundamentally different forms of presence: WFOE is a legal entity in the PRC. It can sign contracts, issue invoices, receive revenue, own property, and hire employees directly. The registration process takes 7-15 days. Representative Office (RO) is not a legal entity, but merely an accredited subdivision of a foreign company. It cannot conduct commercial activity (sell, receive profit) and is intended only for marketing, research, and client support. The accreditation process takes 20-45 days. An RO is a tool for market “reconnaissance,” not for conducting business. FAQ 3: Which city in China is best to choose for company registration? Answer: The choice depends on the business model and industry: Shanghai: For fintech, premium brands, B2B consulting, and managing global supply chains. Hangzhou: Ideal for digital projects (SaaS, AI, e-commerce) and wholesale trade thanks to the Alibaba ecosystem and proximity to the “wholesale capital of the world,” Yiwu. Shenzhen (Nanshan): For high-tech manufacturing and Industry 4.0. Guangzhou: For traditional export and access to ASEAN and Middle Eastern markets. Beijing: For R&D centers, deep tech, and biotech startups. FAQ 4: What are the key steps and timelines for registering a WFOE? Key stages through the “One-Stop Service” system: Preparation of documents: Articles of Association, founders’ documents with legalization and translation, proof of legal address (real office). Submission and verification to SAMR: approval of a unique company name and verification of documents. Obtaining the Business License: Issued within 7-15 working days after successful verification. Subsequent steps: tax registration, opening a corporate bank account (~1 more week), registration with social insurance funds. FAQ 5: What mandatory requirements must be fulfilled after company registration? After launch, the company must comply with constant administrative norms: Finance and taxes: Maintaining bookkeeping according to Chinese standards (CAS), submitting regular tax reports, and a mandatory annual audit for WFOEs. Personnel: Registering employees according to the Labor Code of the PRC, making monthly contributions to social and pension insurance funds, legally processing visas for foreign employees. Legal status: Maintaining an up-to-date legal address (timely renewal of office lease), renewing industry-specific licenses, and undergoing the annual inspection (Annual Inspection) with the SAMR authorities. Ask a question Launching a Business in China: Where to Start to Avoid Risks
Hong Kong Allocates $200 Million to Boost SME Competitiveness
The Government of the Hong Kong Special Administrative Region has announced a comprehensive support package aimed at enhancing the resilience and competitiveness of local small and medium-sized enterprises (SMEs), with total targeted funding amounting to USD 200 million. Key Support Areas Under this initiative, the subsidy cap for the BUD Fund (Special Fund on Branding, […]
The Government of the Hong Kong Special Administrative Region has announced a comprehensive support package aimed at enhancing the resilience and competitiveness of local small and medium-sized enterprises (SMEs), with total targeted funding amounting to USD 200 million. Key Support Areas Under this initiative, the subsidy cap for the BUD Fund (Special Fund on Branding, Upgrading and Domestic Sales) will be raised to USD 150,000 per application, encouraging companies to invest in brand development, digital transformation, and expansion into new sales markets. Special emphasis is placed on technological modernization: enterprises adopting artificial intelligence-based solutions will receive priority, tailored assistance from regulators. Insurance Protection and Guarantee Mechanisms To mitigate export risks, the Hong Kong Export Credit Insurance Corporation (HKECIC) will launch a pilot insurance program this year covering transactions with counterparties in high-risk jurisdictions — exclusively for SMEs. Concurrently, the SME Financing Guarantee Scheme is being expanded: Application deadline for the 80% Guarantee Product extended to 31 March 2028; Main scheme open for applications until mid-November 2026; Total credit guarantee capacity increased by USD 20 billion, providing additional liquidity access for thousands of businesses. Support for the Food Sector The Centre for Food Safety has waived certification fees for food products for a two-year period to reduce operational costs for manufacturers and distributors. By mid-2026, a new unified brand for local agricultural and fisheries products will be introduced, backed by an integrated quality control system featuring independent testing, certification, and end-to-end supply chain traceability.
China vs. Hong Kong: Where to Start a Business to Avoid Drowning in Rules and Still Make Money
Starting a business in mainland China and in Hong Kong are not the same thing at all. Mainland China offers direct access to the market, factories, logistics, and domestic demand. Hong Kong often functions as a convenient international platform: a company for contracts, payments, holding, and trade with the world — including China — without […]
Starting a business in mainland China and in Hong Kong are not the same thing at all. Mainland China offers direct access to the market, factories, logistics, and domestic demand. Hong Kong often functions as a convenient international platform: a company for contracts, payments, holding, and trade with the world — including China — without constantly battling currency restrictions and local bureaucracy. China and Hong Kong: Business Specifics <img loading="lazy" decoding="async" width="1024" height="992" src="https://www.vitaliberta.hk/wp-content/uploads/2025/12/1.-entrepreneurs-enter-china-for-very-practical-reasons_-1024x992.png" alt="" class="wp-image-16622" srcset="https://www.vitaliberta.hk/wp-content/uploads/2025/12/1.-entrepreneurs-enter-china-for-very-practical-reasons_-1024x992.png 1024w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/1.-entrepreneurs-enter-china-for-very-practical-reasons_-300x291.png 300w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/1.-entrepreneurs-enter-china-for-very-practical-reasons_-768x744.png 768w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/1.-entrepreneurs-enter-china-for-very-practical-reasons_-155x150.png 155w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/1.-entrepreneurs-enter-china-for-very-practical-reasons_.png 1429w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /> Hong Kong, meanwhile, is formally part of China but has a separate legal and tax system and its own financial infrastructure. This explains the popularity of the model: “we work with China, but keep the company in Hong Kong.” Legally, it’s easier to conclude international contracts, receive payment in foreign currency, and build a holding structure. It’s important to understand: Hong Kong does not replace mainland operations if you genuinely need a physical presence “on the ground” (office, staff, sales within the PRC, manufacturing). But it often addresses tasks where a mainland company becomes too burdensome. Formats of Presence in Mainland China: What Foreigners Choose You can choose from two main options. WFOE — A Wholly Foreign-Owned Enterprise A WFOE (Wholly Foreign-Owned Enterprise) is a company with 100% foreign capital for operating in mainland China. You can independently conduct sales, sign contracts, hire people, rent an office, and handle import/export (with the necessary license). Pros: Full control without a Chinese partner, and all processes can be tailored to your needs. Cons: Lengthy timelines and extensive documentation, a real office is required, strict currency rules, and reporting. Joint Venture (JV) with a Chinese Partner A JV is chosen when access to the market, channels, licenses, or resources is difficult without a Chinese partner. They become your “entry door.” Cons: Control must be shared, conflicts can arise in practice, and exiting the project and dividing assets is usually complicated. Representative Office A Representative Office is a format for presence in China but without full-fledged commercial activity. Suitable for marketing, negotiations, supplier control, and preparing to launch a WFOE/JV. Earning revenue directly through a Representative Office is not allowed or is very limited. Mainland China: Regulatory Landscape You Need to Be Prepared For In short: China loves order, paperwork, and verifiable logic for every transaction. In practice, this looks like: Registration timelines often take from one week to one and a half months (depends on the city, industry, document readiness, office lease, and licenses). A real office is often mandatory; a “virtual address” won’t suffice. Foreign exchange transactions require evidential support: contracts, invoices, acceptance certificates, payment logic. Transfers and conversions can’t be done simply because “it’s more convenient.” The registered capital threshold is abolished and is determined by the necessary level of investment in the company until operational income covers the costs. The tax burden is usually heavier in structure — corporate income tax, VAT, plus regular reporting. Register a Company in China and Operate Directly <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Direct contracts with suppliers, no agents <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Full control of import, export, and logistics <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Legal online and offline sales in China Free consultation Hong Kong as an Alternative: Why It’s Chosen as an International Base Hong Kong is often chosen not for the love of geography, but for speed and clear rules. <img loading="lazy" decoding="async" width="876" height="1024" src="https://www.vitaliberta.hk/wp-content/uploads/2025/12/2.-typical-advantages-of-hong-kong_-876x1024.png" alt="" class="wp-image-16623" srcset="https://www.vitaliberta.hk/wp-content/uploads/2025/12/2.-typical-advantages-of-hong-kong_-876x1024.png 876w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/2.-typical-advantages-of-hong-kong_-257x300.png 257w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/2.-typical-advantages-of-hong-kong_-768x898.png 768w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/2.-typical-advantages-of-hong-kong_-1314x1536.png 1314w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/2.-typical-advantages-of-hong-kong_-128x150.png 128w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/2.-typical-advantages-of-hong-kong_.png 1429w" sizes="auto, (max-width: 876px) 100vw, 876px" /> Hong Kong has a different tax logic. The territorial principle applies, so profits deemed sourced outside Hong Kong are not subject to local tax with correct justification and accounting. Profits sourced in Hong Kong are taxed at 8.25% on the first HKD 2 million and 16.5% on the excess. In mainland China, the standard corporate income tax rate is 25%. Comparison of China and Hong Kong <img loading="lazy" decoding="async" width="1531" height="2560" src="https://www.vitaliberta.hk/wp-content/uploads/2025/12/3.-china-vs.-hong-kong-a-visual-comparison-scaled.png" alt="" class="wp-image-16624" srcset="https://www.vitaliberta.hk/wp-content/uploads/2025/12/3.-china-vs.-hong-kong-a-visual-comparison-scaled.png 1531w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/3.-china-vs.-hong-kong-a-visual-comparison-179x300.png 179w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/3.-china-vs.-hong-kong-a-visual-comparison-612x1024.png 612w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/3.-china-vs.-hong-kong-a-visual-comparison-768x1284.png 768w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/3.-china-vs.-hong-kong-a-visual-comparison-918x1536.png 918w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/3.-china-vs.-hong-kong-a-visual-comparison-1225x2048.png 1225w, https://www.vitaliberta.hk/wp-content/uploads/2025/12/3.-china-vs.-hong-kong-a-visual-comparison-90x150.png 90w" sizes="auto, (max-width: 1531px) 100vw, 1531px" /> When to Open a Company Specifically in Mainland China You are almost certainly “ready” for the PRC if you have: Manufacturing/assembly in China. Need employees, quality control, warehouse, local contracts, sometimes licenses. Offline retail or active sales in the domestic market. Especially if working with Chinese platforms, distributors, chains. Government procurement, state projects, work with large PRC corporations. They often want to see a counterparty within the country. Intensive B2B/B2C work inside China. Where money, logistics, and service essentially reside within the PRC. Procurement of goods from PRC enterprises/companies without an export license. Besides the idea, the entrepreneur will need patience with timelines and inspections, willingness to maintain a real office, and a fully set-up Chinese accounting and tax framework from the start, not on a “we’ll figure it out later” principle. When It’s More Logical to Start with Hong Kong Hong Kong often wins if: International trade with Chinese factories. You buy in the PRC — sell to other countries, and your sales office is not in China. Export/import and payments in different currencies. Need a convenient “contract center” that doesn’t break down with every transfer. IT services, consulting, services. Team is distributed across different countries, and there is no physical presence in the PRC. You are still testing the market. Don’t want to immediately invest in a lengthy WFOE registration, office, and local reporting. At the start, a practical model is: open a Hong Kong company as a center for contracts and payments, and work in China through contractors — for manufacturing, logistics, quality inspections, and fulfillment. It’s better to launch a WFOE later, when clear volumes appear and the necessity of your own legal entity in the PRC becomes obvious. Use China for Business Growth and Global Expansion <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Export VAT refund of up to 13% <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Corporate bank account in China and other currencies <path d="M15 10L11 14L9 12M12 21C7.02944 21 3 16.9706 3 12C3 7.02944 7.02944 3 12 3C16.9706 3 21 7.02944 21 12C21 16.9706 16.9706 21 12 21Z" stroke="#CEE7FF" stroke-width="2" stroke-linecap="round" stroke-linejoin="round"/> Office, warehouse, or manufacturing in China Free consultation Conclusion Mainland China and Hong Kong solve different problems, so the choice shouldn’t be “where is it easier,” but “where is the result needed.” China is direct access to the domestic market, manufacturing, personnel, and contracts within the PRC, but you pay for it with time, office, paperwork, and strict rules on currency and reporting. Hong Kong is a convenient international platform for contracts, payments, holding, and trade with China without excessive bureaucracy, but it won’t replace a real presence if you operate inside China. The most practical path for many is to start with Hong Kong for international operations and connect a Chinese WFOE when stable volume appears and the need to “set down roots” in the PRC arises.