What is the China WFOE tax liability?
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For a China WFOE what the foreign investors care about the most when they decide to start their business in China? That should be the tax liability for the China WFOE. How to caculate the minimum tax liability for a China WFOE even when it's inactive? Here is the fact the there will be no such minimum tax liability for a China WFOE no matter there are business trading or not.
For a China WFOE there are two main taxes which are company profit tax and VAT tax. The company tax based on company profits like most of the counties outside China. For an inactive WFOE there is no profit and there will be no tax in this case. That will be acceptable for tax office and no tax will be charged for your WFOE. When company start running busienss and gain profits there will be taxes base on company profits of tax rate 25%.
Also investors are confused about the company social insurance contributions and wonder how much social insurance shoudl they pay for the company. The fact is that only when there are Chinese employees in your WFOE, you need to buy social insurance for them based on their salaries. It is not mandatory for buy social insurrance for foreigners. Which means if there will be no Chinese employees, you don't have to buy social insurance under the name of your company. By the way, it is not required to hire Chinese employees for your WFOE. The company can be held and running by foreigners completely.
For the China WFOE there is no requirements for the physical office address when register the company. The China WFOE can be registered with a virtual office. But in some cases like applying work visa, it would be better to have a physical office address. The officers may come to spot check the physical office address when applying working visa. Will the officer check the tax liability of the WFOE when applying work visa? Yes they will ask for tax filing record for last year but no such requirement of paying taxes.
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