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Shanghai Company Formation (WOFE)

Updated:2018-3-28 17:22:02    Source:www.tannet-group.comViews:1954

Shanghai company formation (WOFE) is a business entity formed in China entirely with foreign capital. WFOE refers to wholly owned foreign enterprise. It is totally under foreign control and does not have any formal Chinese ownership participation. For a foreign company to be able to issue receipts and export goods from China, it must be able to legally registered as a local company or a WOFE. A WOFE is set up as limited liability entity and represents separate legal persons and is taxed according to local legislation.

Advantages of WFOE in Shanghai
1. Independence and freedom to implement the worldwide strategies of its parent company without having to consider the involvement of the Chinese partner;
2. Ability to formally carry on business rather than just a representative office function;
3. Issue invoices to their customers in RMB and receive RMB revenues. Convert RMB profits to US dollars for remittance to their parent company outside.
4. Cheap labor, which can lower your cost;
5. Not required to share profits with Chinese counterpart;
6. Greater efficiency in its operations, management and future development.

Application Documents for WFOE in Shanghai
1. A project proposal and feasibility study report (in print and under the company seal);
2. Original copies of the application paper and the resolution by the Chairman of the Board of the foreign investor (in printed form signed by members of the Board and with company chop);
3. Copies of the business licenses of certificates of incorporation of the foreign investor (usually with the permission chop from the government department.);
4. An original copy of leasing agreement with chop of the Housing Department.
5. Directors name list of board or management.;
6. An original copy of the corporate ratification paper (2 copies in duplicate).;
7. Two original bank credibility letters for the foreign investors, stating 7-digits bank balances, issued within 6 months in both English and Chinese language.;
8. A copy of the approval paper for corporate formation and other papers for company alterations (the original are required for check-up);
9. Notice of enterprise’s name confirmation appraised by the Industry & Commerce Administrative Bureau.
10. 2 photos of the legal person of WFOE.
11.A copy of the stub of corporate certificate of approval.

General Procedures and Estimated Time Frame
1. WFOE company name reservation-1 work day;
2. Certificate of Approval Application-7 work days;
3. Business License Registration-5-7 work days;
4. Application and engraving of Company stamps-1work day;
5. Organization Code License Application-1 work day;
6. State Tax Registration-1 work day;
7. Local Tax Registration-1 work day;
8. Foreign Exchange Registration-1 work day;
9. Bank account opening-10 work days;
10. Financial Registration for WFOE-3 work days;
11. Registration with local Customs-3 work days;
12. Registration with China E-Port-3 work days;
Total Time required-7~8 weeks.

Taxation of WFOE in Shanghai
Tax rates can vary somewhat depending on the location of the WFOE, but generally, WFOEs selling into Shanghai will be subject to business tax of about 5% on all revenues in Shanghai; profits tax of 15-33% depending on location and in come instances withholding tax and VAT may be applicable.

Contact Us
For further queries, please do not hesitate to contact Tannet at anytime by calling Shanghai Hotline: 021-68877368,  18101640557
Address: Block F, 15th Floor, World Plaza, No.855 South Pudong Road, Pudong New Area, Shanghai

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