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Are you working in China legally ?
How to work in China legally as a foreigner?
A: What permits do foreigners need to apply for if they want to work in China legally?
B: They should apply for work permit and work residence permit (work visa) in China.
A: How to get them?
B: There are two kinds of situations below:
If foreigners are not in China, the processes as below:
1. The China company / employer will apply for Employment License for foreign employees;
2. Then foreign employees need go to China embassy stationed at his country to apply for Z VISA;
3. After foreign employees arrived in China, the employer could help apply for work permit ;
4. Finally the residence permit will be applied at the Exit and Entry Administration department.
If foreigners are already in China, the processes will be faster as below:
1. The China Company /employer will apply for work permit directly in China
2. After that to apply for residence permit at the Exit and Entry Administration Bureau.
KIND SHARING
Based on latest news，
If foreigners holding work permit as shareholder, visa authorities may ask for below supporting docs for visa renewal next time.
1. Physical office；
2. Sales revenue with VAT Fapiao per quarter；
3. Chinese staff with social security report;
4. Others depends on facts.
Visa rules are always changeable , please do keep in touch with your visa agency for new visa ruls in time .
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Profit Tax Rate Down to 2.5% !
In order to further support the development of small and micro enterprises and individually-owned business, China Ministry of Finance and China Tax Bureau released new preferential policies to lower the enterprise income tax (profit tax) :
1. For small and micro enterprises whose annual profit do not exceed RMB 1,000,000 / year, The enterprises could enjoy further 50% discount of profit tax o the basis of current preferential policy_ Notice of the Ministry of Finance and Tax Bureau on the implementation of preferential tax relief policies for small and micro enterprises.
The actual tax rate is only 2.5% now.
2. For the individually-owned business, if the annual taxable income do not exceed RMB 1,000,000 per year, they could enjoy further 50% discount of payable personal income tax on the basis of the existing preferential policies.
3. The term of this announcement is effective from January 1st, 2021 to December 31st, 2022.
This announcement released by China Ministry of Finance and China Tax Bureau on Apr 2, 2021.
If your annual profit less than RMB1,000,000, you just need to pay 2.5% profit tax.
It's the super great support from China government from Jan 1.2021 to Dec 31,2022!
Legal support:
http://www.chinatax.gov.cn/chinatax/n362/c5163253/content.html
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What tax types a WFOE need to pay?
1) VAT= Value-Added Tax
For smaller tax payer, the VAT=( revenue/(1+3%)×3% ;
For general tax payer, the VAT=( revenue/(1+3%)×6%/ 13%- input VAT
VAT 6% is for service and VAT 13% is for trading.
But the VAT tax rate is different for different company types , the main tax rate is 3%，6%，9%，13%. The current preferential tax policy for smaller tax payer is, you can enjoy VAT tax exemption if monthly revenue less than RMB 100,000 and less than RMB 300,000/quarter.
2) Company surtaxes
The surtaxes mainly includes urban construction tax, national education tax, and local education tax.
3) Enterprise Income Tax =Profit tax
The payable Enterprise Income Tax =annual profit X 25%
China government released preferential tax policy from Y2019 till Y2021, we summarized as below:
a) If Annual profit less than RMB 1 million, the enterprise just pay 5% profit tax according to current preferential policy;
b) If Annual profit more than RMB 1 million and less than RMB 3 million, the enterprise profit tax is 10%;
c) If Annual profit more than RMB 3 million, the enterprise profit tax is normal 25% of your total profit, cannot enjoy above preferential tax policy.
4) Stamp Duty
The payable stamp duty = revenue x0.03%
Stamp duty is a very important regulatory tax. The tax rate of stamp duty follows the principle of light tax burden and joint burden. So the tax rate is lower to 0.03%.
For example:
The stamp duty for business license is only RMB 5
The stamp duty for house lease contract is only 0.1% of total contract value;
Business contracts including Purchase and sales contracts, technology contracts just need to pay 0.03%. Even though, China government always release short-term relief policies to further reduce the burden on enterprises.
5) Exporting Tax Refund
If you do exporting business from China to outside of China, then basically you can enjoy tax refund after exported. The tax refund rates are from 0% to 13% specified based on HS Code of your products. The exporting tax refund will not be returned automatically but need to be applied by exporter through fixed procedures.
Below key information is very important:
A. Exporter must have Exporting Tax Refund Certificate;
B. All exported goods must have input VAT fapiao/ invoice from suppliers, and all the basic information must be matched.
C. All the products were exported through China customs legally with all necessary documents.
D. Other requirements from tax bureau.
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When should a new WFOE declare tax after established?
The newly established company shall start accounting and tax works within 15 days after business license released. If the company do not declare taxes to the tax authority over 3 months, then tax authority has right to cancel your tax certificate according to the tax management rules.
Even you don’t have business at first few months and just declare taxes as ZERO, but you must do it in time, that’s the rules.
Legal Support from State Taxation Administration:
http://www.chinatax.gov.cn/n810341/n810755/c3357578/content.html
Article 22: Taxpayers engaged in production or business operation shall, within 15 days from the date of receipt of the business license or occurrence of tax obligation, set up accounting books in accordance with the relevant provisions of the State. The accounting books mentioned in the preceding paragraph refer to general ledger, subsidiary ledger, journal and other auxiliary account books. General ledger, journal shall adopt the form of this.
