China Accounting Basic Concepts

Business China takes care of all your accounting obligations and provides quick access of experienced accountants to ensure that your WFOE is operating within Chinese rules. To achieve this, we have a secure network of online teams and local teams for the management of your entire accounting needs, and to ensure you remain compliant with China accounting laws and policies. Before we get down to China accounting total support services in detail, let’s go through some basic concepts that are related to accounting in China.

China Tax Registration Certificate

China Tax Registration Certificate is a legal document which is issued by the Chinese authorities. The certificate bears the China company’s legitimate name, company type, registered address, authorized representative’s name, registered capital, establishment date, the business term, business scope and China tax identification number.

China Tax Identification Number (TINs)

The China tax identification number is similar to an ID number of a citizen, it is unique and inalterable. China already combines business license with the tax registration certificate into one Business License, and has also introduced a unified social credit code to be consistent with the tax identification number.

China Company Taxpayers Registration

While the China tax registration certificate is combined with the business license, it does not indicate the company taxpayer registration. A business that has set up a WFOE in China is requested to apply for the company taxpayer registration, within 30 days from the issuance of the business license.

Documents Checklist:

Those foreign companies that are looking to set up a WFOE in China will need the following documentation.

• Taxpayer Registration Form
• Passport / ID of Legal Representative
• Other Required documents based on different office address;
• Company Business License
• Article of Association
• Approval Letter
• Approval Certificate

China Company Taxpayer Types

There are altogether only two types of company taxpayer, i.e., “Small-scale VAT Taxpayer” and “General VAT Taxpayer.” The typological criteria are the annual turnover, which varies according to industry classification. It is generally recommended to start with the small-scale VAT Taxpayer for the first year and could upgrade to General VAT Taxpayer if the business expands.

Electronic Tax System Agreement (ETS Agreement)

To promote paperless tax collection and facilitate tax payment of company taxpayer, State Administration of Taxation (SAT), the Chinese Ministry of Finance (MOF) bureau and national banks jointly launch the Electronic Tax System, abbreviated as” ETS.” When the company’s business license and account opening permit issued, the ETS agreement should be arranged and stamped.

Tax-Control Disk

The tax-control disk is hardware commonly used for the record and transmits tax data between the company and the tax bureau. A tax-control CD must install specific software before invoice issue.

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