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This whole discussion will be about Annual Audit & Compliance requirements pertaining to the Foreign-invested enterprise, including wholly-owned foreign enterprise, joint ventures, commercial enterprise, branch office & representative office.
All foreign-invested Enterprise in China is required to carry out annual compliance procedures. China is very much vigilant & stern when it comes to legal, paralegal & regulatory regimes of compliance. Non-Compliance may lead to revocation of license as well. Such regulatory measures help in fraud prevention. Especially tax compliance is important as an FIE can only repatriate its profits to foreign investors after Chinese tax bureaus are satisfied that all the relevant taxes have been paid.
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These Audit reports must be signed by China certified CPA’s; the main objective is to ensure compliance of Annual Accounting regulations along with Chinese GAAP.
Audit Procedure takes about 2 months & must be completed before April so as in order to meet the reconciliation deadline of 31st May.
Companies are however required to file CIT returns within 15 days from the end of month or quarter. SAT requires the company to submit an annual CIT reconciliation within 5 months from the previous year’s end.
Annual CIT reconciliation report must include adjustment sheets to bridge in the discrepancies between.
FIE’s who all conduct frequent transactions or are regular in their dealings should prepare an Annual Affiliated Transaction Report on Transfer Pricing issues as a supplementary document.
Also, Read: Procedure of Foreign Company Registration in India.
* The deadline for submitting the required report is June 30.
If it fails to get it conducted by the time, its license of foreign Company Registration will not be valid & it won’t be able to receive or disburse cash. SAFE usually provides guidelines on the same.
*After receiving Bank’s approval the money can be converted into foreign currency Account Outside at a daily conversion rate against the RMB issued by People’s Bank of China & remitted directly to the foreign country.
Such compliance at the internal & external level is a good tool to identify potential business risks. Failure to comply with Chinese Laws & Regulations would result in penalties along with the company being Black Listed which could affect the future business & operations of the whole group. The organization complying with the relevant norms will definitely have good standing & creditworthiness.
Our Recommended Post: Foreign Company Registration in India.
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