Tax Advisory and Compliance Services in China: The Gateway to Success for Your WFOE

To achieve total compliance, wholly foreign-owned enterprises (WFOE) are required to comply with specific audit and tax procedures outlined by the Chinese administration. We must indicate that the tax landscape in China is not static but is subjected to regular changes, and all companies in the country must comply. Again, it is important to appreciate that China uses the Chinese Accounting Standards (CAS), which follow different attributes from the common International Financial Reporting Standards (IFRS) that you might be used to. 

The entire process of accounting and filing tax returns is never easy, even for large companies. Instead of trying to handle the tax and accounting matters internally and raising the risk of getting it wrong, the best idea is to work with professionals. 

This post takes a closer look at the reporting process to demonstrate why using tax and compliance services in China is central to business success. 

A Brief Look at China’s Tax Reporting System

In China, taxation is foreseen by the State Taxation Administration that sets the rates for all companies. However, the task of tax collection and checking the filing of tax returns is done by local and regional tax bureaus

Most taxation schemes used in China are the same nationally, but there are instances where key differences are noted. For example, the tax obligation for a company located in a free trade zone (FTZ) is different from the standard rates. Here are other instances where variations might be noted: 

  • When tax breaks are applied to specific regions or industries as incentives. 
  • Policy changes on tax rates being tried in a specific area before enrollment in the entire country. 
  • Specific tax rates that apply to free trade zones or inland urban areas.

What Taxes Do WFOEs Pay in China? 

Taxes that are paid by WFOEs can be broken into two main groups: 

  • Income & Profit Distribution Related Taxes 
  1. Corporate income tax (CIT). 
  2. Withholding tax.
  • Sales & Turnover Related Taxes 
  1. Consumption tax.
  2. Value-added tax (VAT). 
  3. Stamp duty. 
  4. Real estate tax. 

The Main Stages in Filing Tax Returns for Your Company 

The process of accounting and tax compliance is complex because it touches on almost all operations of the company. This is why it is good to work with a professional firm, such as Fiducia, for tax advisory and compliance services in China. Check out the main steps involved: 

  1. Preparing your company’s annual financial report. 
  2. Preparing CIT reconciliation reports or yearly tax returns. 
  3. Yearly reporting to the State Administration of Industry and Commerce (SAIC).
  4. The annual combined reporting to the Ministry of Finance (MOF), National Bureau of Statistics (NBS), Ministry of Commerce (MOFCOM), and the State Administration of Foreign Exchange (SAFE). The deadline for the combined reporting is April 1st to June 30th.

Work with Fiducia Tax Advisory and Compliance Services in China

As you can see, the process of compliance with accounting and tax requirements in China is never easy. We must also indicate that you should not relax on compliance because the cost will be way higher than that for compliance. Your license might even get canceled or renewal declined for non-compliance. 

By working with Fiducia, the best firm for tax advisory and compliance services in China, you are sure of getting every step right. The experts have been in the accounting and tax compliance sector for years and have all the experience you need to get everything right. This is not all.

Experts from Fiducia will also come in handy to help you with other executive services, such as accounting, payroll services, and carrying out due diligence services. 

Visit Fiducia now to talk to an expert and get assistance in tax, accounting, payroll management, and other matters.