1. OVERVIEW ABOUT SHANGHAI
Shanghai is the industrial, commercial and financial centre of China, an outward-looking city famous for its fashion as well as for its finance. Located in Yangtze River Delta, shanghai also has the largest port in mainland China. Shanghai has an area of 6,340 square kms and a population of more than 20 million. Its highly developed finance, trade, travel, real estate catch up with the world standard day by day. The complete legal system and the international standard market rule build a nice investment environment for Shanghai. As the famous journal Economists stated, Shanghai is an ideal city to live in and work in for foreign investors.

2. CONCEPT OF RO
A Chinese representative office (RO) is an office of the foreign enterprise established in China for liaison with Chinese businesses and customers on behalf of its parent company.

A RO is not considered to be a separate legal entity. It can not directly engage in operational activities. However, its parent company can enter into contracts with its supplier/customers in China in its own name, but not in the name of its RO. Therefore, before a foreign investor establishes its presence in China using wholly foreign owned enterprise, equity joint venture and cooperative joint venture, it could first set up a representative office to test the market.

3. NAME OF REPRESENTATIVE OFFICE
The format of the RO Name is: country (area) + parent company name + Shanghai Representative Office.

4. FUNCTIONS OF RO
RO enjoys a great popularity in Chinese market since its simple procedure, short time consuming and comparatively loose requirements for formation.

The simplicity and short time required for establishing a RO is the main reason for its popularity in China market. Unlike foreign investment enterprises ("FIEs"), representative offices are not required to meet stringent requirements for items such as capital contribution.

The functions of a RO are as follows:
1. Can handle market research, sourcing, project investigation for parent company, who in turn to execute trading function.
2. It cannot enter into purchase/sales contracts and receive payment for services, issue invoices.
3. A RO can open bank accounts and employ staff to maintain liaison with customers and suppliers.
4. Apply for work permit and residence permit more easily.
5. RO is not considered to be a separate legal entity, so it only works as liaison purpose.
6. Limitation in activity. No trading or invoicing is allowed.
7. Local staff should be hired via government admitted agents.
8. Although not profits, cost expenses still attract tax liability.

5. PROCEDURE

Fill the application form —》sign the agreement—》 Pay the advance payment—》hand in the materials—》  sign the documents—》transact the Registration certificate —》Go to the public security bureau to carve the common seal in appointed institution—》Organization's code card—》Open the basic account—》transact the National tax card, the local tax card —》pay the rest fee

6. DOCUMENTS REQUIRED

1. Parent company's original copy of business licenses, certificate of Incorporation & stamp;
2. Two original copies of bank reference letters for the parent company from the financial institution with which the parent company has business contact.

3. Lawyer’s legalization or notarization; the whole set of company documents (including business licenses, certificate of Incorporation, documents showing information of shareholders and directors; M&A; annual return report) should be notarized by the organization which is recognized by the P.R.C. Ministry of Justice: If the parent company is abroad, the above mentioned documents should be notarized from local notarization institution and be testified by the local Chinese Embassy or Consulate).
4. The authorized letter for the Chief Representative signed by the board chairman or general manager, and the resumes, photocopies of the passports of representatives and 5 passport-size photos of every representative. If a Chinese citizen occupies the chief representative or representative, it should refer foreign company’s dispatch letter.

5. Three original copies of contract of rent or purchase of the office location, 3 copies of house property certification which are signed by the lesser, backup contract of rent or purchases of the office location, certification of residence for office location (stamped), two approval letters of location issued by FETC (stamped).

(Note: The registration address of RO should be in office building for aliens.)

7. OUR SERVICE

1. Both original and duplicate copy of business license;
2. Registration license of National &Local Administration of Taxation;
3. Seal carving registration card;
4. Organization Code License & card (IC card);
5. Three seals. (Common seal, financial chop, Chief Representative Seal)

6. Chief Representative Certificate

ATA can provide a series of follow up services to customers, such as bank account opening, book-keeping and auditing, annual return service, company alteration, financial planning and so on.

Around 35 working days.

10. TAXATION

In General a RO is subject to foreign enterprise’s income tax (FEIT) and Business tax (BT) under the PRC FEIT Law and the PRC Provisional Regulations of BT. There are different ways in which a representative office may be taxed but the most common basis is the cost-plus-basis.

Although a RO is not to conduct business, it attracts tax as stated below:

Income=expenses/（1-10%-5%）

Operating tax=income×5%

Profit tax=income×10%

Profit tax of the foreign enterprise=income×10%×33%

NOTE:
1. Hand over of materials such as for non- Chinese document, need to translate into Chinese, and hand over together.
2. Carry out time to hand over a well-found day by consigning down payment and data since start computing.

Contact Us

For further queries, you are welcome to visit ATA website www.3737580.net or email to atahkhk@21cn.com / ata-cfmp@hotmail.com or contact any of the following branches, thank you.
HONGKONG TEL:852-27837818     SHENZHEN TEL:86-755-82143272
SHANGHAI TEL:86-21-58763186

ATA——Global Corporate Solution Provider, Value Investment & Strategic Development