China WFOE taxation requirements
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The rules to incorporate a China WOFE may by easy for investors to understand. But when it comes to taxation of a China WFOE, it becomes complicated. It is actually not that hard to uderstand and follow the rules. That's the reason why you need a professional accounting team of your China WFOE to follow China tax bureau regulation rules. A team can ensure no overdue of tax filing for your China WFOE since registration.
For a China WFOE there are usually two kinds of tax rates you need to know. The first one is company profit tax which follows the rate 25% no matter for which city your WFOE registered. But please be noted that if the annual profits less than 3 million RMB the profit tax rate should go with 5%. The other tax is VAT tax. The VAT tax various from 1% to 13% depends on the services or goods you are trading with.
Talking about the tax filing rules a little different from most regions a China WFOE needs to file its tax each month instead of each year. Since the company registered a tax filing need to be forwarded on tax bureau system even with no busienss at the very begining or the company may face the penaties of overdue and even become abnormal status which is quite complicated that will cost investors a lot of time not to mention money to get it back to normal status.
Some investor will also worry about if there will be minimum tax amount for a China WFOE before registration. There will be no such requirement for the so-called minimum tax amount. A China WFOE is allowed negtive profit status like companies in other regions.
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