How to form a wholly foreign - owned enterprise in China

作者:Helena 發表日期:2017-08-10 14:46:02

This post focuses on the registered capital needed to form a China WFOE. This is the fifth post in our series on what it takes to form a WFOE in China. Part 1 set out the questions our China lawyers typically ask our clients for whom we are forming a China WFOE. Part 2 was on the issues our China lawyers confront in determining whether a China WFOE makes sense for our clients at all. Part 3 was on whether it makes sense to have a Hong Kong entity own your China WFOE (or China Joint Venture). Part 4 was on the steps required to form a China WFOE. Our next post will be on why it is so important you get the business scope right on your WFOE application bvi company setup.

How to form a China WFOE: The minimum capital requirements

How to form a China WFOE: The minimum capital requirements

China has liberalized its minimum capital requirements for a WFOE and the amounts required have been reduced in most Chinese cities/districts. But even if the Chinese government is going to let you deposit only very small amount of registered capital, you almost certainly will want to put in more work visa hong kong.

In determining how much you should contribute in registered capital for your China WFOE, you should start out by considering how much money you will need to sustain your China WFOE until it can generate enough China revenues to sustain itself. If you inject less than needed to sustain your WFOE until it generates enough in revenues to sustain itself, your WFOE will need a cash injection from somewhere else at some point. If you transfer money to your WFOE from overseas but you do not go through the correct process of re-registering your registered capital (which typically takes at least six weeks and involves having to secure government approval ) the funds that you (or anyone else) send to your WFOE will count as income to your WFOE and will be taxed accordingly by China’s tax authorities hong kong company formation.

Way back in 2007, we did a post entitled, China Company Formation Law Is Clear — WFOEs Are Easy, in which we discussed three companies my firm was in the midst of forming and noted how China’s minimum registered capital requirement was the biggest source of confusion for all three of these companies. All three companies contacted us after having become confused about registered capital after talking with various company formation consultants. We blamed the consultants for the confusion, insisting that the law itself is clear china company formation.