Tax, Accounting and Audit

Due to our expertise in the area of China taxation we are able to offer comprehensive taxation advice for all types of foreign invested enterprises (FIEs), domestic companies, representative offices and individuals. We have extensive experience in advising our clients on the development of:

China Taxation optimization strategies

Transfer pricing strategies

Profit repatriation strategies, and others.

Due to our local expertise we are also able to liaise with the tax authorities in charge in order to solve "past irregularities".
China Advisory has assisted a significant number of expatriates in China to structure their remuneration package in a tax-efficient way and in compliance with the law as to avoid potential conflicts with the local tax authority.

In the following we provide you with some basic issues regarding China Taxation:

China Tax Returns and Due Dates
Enterprise Income Tax
Foreign Invested Enterprises shall file their accounting statements and provisional income tax returns within 15 days from the end of each quarter with the local tax authorities in charge. The annual income tax return together with financial statements and an audit report issued by a licensed CPA firm shall be filed within the first 4 months of a calendar year for the previous year. The final tax settlement shall be made within the first 5 months of a calendar year. The fiscal year in China is the calendar year, i.e. from January 1 to December 31. If a foreign enterprise experiences difficulties in computing its taxable income on the calendar-year basis, it may apply to the tax authorities to adopt its own fiscal year as the tax year. An enterprise that commences business within a calendar year or has operated for less than 12 months in a calendar year treats the actual operating period as the tax year.

Individual Income Tax
Individual Income Tax shall be paid to the State Treasury within the first 7 days of a month for the previous month. The income earner of wages and salaries shall be the taxpayer and the paying unit or the individual shall be the withholding agent. In some cases (e.g. public holidays), local tax bureaus may have different tax filing and payment dates.

Value Added Tax
The assessable period for Value Added Tax is determined by the local tax authorities based on the amount of Tax of a taxpayer in China. The length of the assessable period can vary between 1 day and 1 month while the assessable period for taxpayers with a large amount would normally be shorter than those of taxpayers whose tax volume is comparatively small.

Categorization of Taxation
Foreign Invested Enterprises (FIEs) should complete tax registration, file tax returns, maintain accounting records and correctly use invoices in accordance with related policies. The major China tax categories can be divided into 3 groups:

Shared Taxes
The collected tax revenue of the following tax categories are shared by the Central and local governments on different sharing ratios:

• Enterprise Income Tax (domestic and foreign related)
• Value Added Tax
• Business Tax
• Individual Income Tax
• Resource Tax
• Urban maintenance and construction Tax
• Stamp Tax

State Taxes
The following taxes are exclusive revenue sources of the Central government:

• Excise Tax
• Vehicle purchase Tax
• Customs duty
• Tonnage duty

Local Taxes
These China tax categories are exclusive revenue sources of local governments:

• Land use Tax
• Land Value Added Tax
• Building property Tax
• Vehicle and Vessel usage Tax
• Deed Tax
• Urban Real Estate Tax

We can help companies with:

• Tax consultations and compliance assistance
• Implementation of accounting systems
• Bookkeeping & Payroll
• Tax Filings & Monthly Compliance
• Expatriate individual income taxes
• Tax Plan & Tax Healthy Check
• Representation and negotiation with tax authorities
• Financial Software Implementation
• Financial planning for senior executives
• Profits Repatriation Strategies
• Preparation and filing of annual returns
• Liquidations & Terminations

Outsourcing services

• Dispatch professional staff to work at client’s place as full time staff.
• Build up an accounting system and standard accounting procedures for clients, also providing advice and training.
• Services for consultation and supervision of accounting works.