If you want to invest in Shenzhen China, you don’t just turn to the relevant government departments for so many certificates and formalities, but turn to ATOZ. At ATOZ we don't just give you tailor-made service for your need, but for your satisfaction. ATOZ—serve the world of business, professionally and worldwide.
OVERVIEW OF WFOE IN SHENZHEN
The Wholly Foreign Owned Enterprise (WFOE) is a Limited liability company wholly owned by the foreign investor(s).
In Shenzhen China, WFOE were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology. However, with China's entry into the WTO, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well.
1 THE CONCEPT OF WFFE
Wholly foreign founded enterprise means the foreign investors(including Hong Kong, Macau, Taiwan) established the enterprise within Chinese territory, in accordance with 《PRC Wholly Foreign founded Enterprise Law》, with capital provided solely by the foreign investor. The foreign investors refer to the foreign enterprise, individual or partner. (Including Hong Kong, Macau, Taiwan)
2 REFERENTIAL POLICIES OF WFOE in SHENZHEN
1) The company will enjoy tax holidays for the first two years since the company makes profit and enjoy half tax for the following three years;
2) Shenzhen is implementing the lowest preferential profit tax around the whole country. The enterprise income tax of manufacturing foreign founded enterprises shall be levied at the rate of 15% .While the other area in china is usually 33%, in some coastal area the rate is 22%.
3) China’s tax law provides that a wholly foreign founded manufacturing enterprise is allowed two years exemption of corporate income tax starting from the year generating profits, and a half corporate income tax in the following six years. After the tax allowance policies expire, certified export enterprises whose export volume accounts for 70% or above of the current production are allowed a reduced rate of 10% of corporate income tax.
4) For some advanced –technology enterprises which engaged in the software development are allowed two years exemption of corporate income tax starting from the year generating profits, and a half corporate income tax in the following three years.
Certified advanced –technology enterprises are allowed two years exemption of corporate income tax starting from the year generating profits , and a half corporate income tax in the following eight years.
For the certified highly-supported advanced –technology enterprise are allowed five years exemption of corporate income tax starting from the year generating profits, and a half corporate income tax in the following five years.
5) There are some preferential policies when the wholly foreign owned enterprises buy the land which used for the workshop within Chinese territory.
3 COMPANY NAME
In Shenzhen China, only Chinese company names are officially used, while English company names are for reference only. NOT every name will be accepted by the Company Registry. And in China some sectors need special license, it is important for you to know the wording of a company name should be in conformity with the registered capital, such as with the words “international” or “investment” or “industrial” within a company name, the registered capital should more than RMB 10 millions, while “group’’ or “holding” more than RMB 30 millions.(The detailed information depends on the local stipulation) Your company name must be distinguished from the others registered name before.
4 BUSINESS SCOPE
One of the most important issues covered in the project documentation is the business scope of the WFOE. Business scope is narrowly defined for all businesses in Shenzhen China and the WFOE can only conduct business within its approved business scope, which ultimately appears on the business license. Amending the business scope requires further application and approval. General business scope usually includes, investment consulting, international economic consulting, trade information consulting, marketing and promotion consulting, corporate management
consulting, science and technology , manufacturing, etc. With China's entry into WTO, more and more business is open to WFOE. Especially, trade, commercial and wholesale businesses are gradually granted to WFOE to enter into the Chinese markets. ATA confirms every Chinese name with Registry Department before you make a final decision.