Many foreign companies in China engage professional tax advisors for regular reviews of their operations. These recurring reviews, conducted monthly, quarterly, bi-annually, or annually, provide ongoing support for local accounting teams, address management’s questions, and clarify complex issues for headquarters, fostering transparency. This proactive approach ensures continuous compliance and clarity in local finances and taxation, going beyond the often-limited annual statutory audit conducted by local firms that may lack understanding of international reporting and compliance standards. The scope of these reviews is tailored to the specific industry, headquarters’ requirements, and can be collaboratively defined. Our review services cover a range of areas, including accounting, tax declarations and issues, payroll, import/export procedures, intercompany transactions, and bank transactions, ultimately aiming to strengthen compliance, increase transparency, and enhance efficiency.
Company Review Services
- Financial Reporting and Compliance: We provide comprehensive reviews of general ledger accounting, tax declarations, and local financial reports (ensuring adherence to applicable frameworks). This includes verifying the validity of fapiao (Chinese VAT invoices) and reviewing VAT, CIT, surtax, and other tax reports. We also offer support with group consolidation.
- Transaction and Process Verification: We examine routine sample transactions (revenue, costs, inventory, fixed assets, AR/AP) to check the booking process and identify any abnormal accounting practices. We also scrutinize special transactions (e.g., related party rebates, overseas payments).
- Payroll and Social Security Compliance: Our review encompasses salary calculations, individual income tax (IIT), and social security/housing fund calculations to ensure completeness and accuracy.
- Account Classification Accuracy: We review samples of account classifications to confirm accuracy and completeness.
Benefits of our Company Review Services
- Collaborative Partnership: Our Company Review service works closely with your local accounting team, providing support and enhancing their capabilities, not replacing them.
- ERP Proficiency: We are experienced with various ERP solutions, such as SAP, KingDee, Microsoft Business Central, and ProALPHA, and can adapt to your specific system for efficient collaboration.
- Global Perspective, Local Expertise: We ensure your China operations comply with both PRC regulations and international standards, leveraging our global experience.
- Efficient Bookkeeping Enhancement: Regular reviews provide an efficient and cost-effective method for improving your bookkeeping standards.
Tax Compliance Requirements for Chinese WFOEs
Wholly Foreign-Owned Enterprises (WFOEs) in China face a complex web of tax compliance requirements. They are subject to corporate income tax (CIT) on their profits, value-added tax (VAT) on most goods and services, and various other taxes depending on their specific business activities. WFOEs must maintain accurate accounting records, file tax returns regularly (monthly, quarterly, and annually), and remit taxes on time to avoid penalties. Understanding and complying with these regulations, which can vary by industry and location, is crucial.
Annual Compliance Requirements for Chinese WFOEs
WFOEs in China must fulfil several annual compliance requirements to maintain their legal standing and operational capacity. These include undergoing an annual audit by a qualified Chinese accounting firm, reconciling corporate income tax payments with tax authorities, and submitting an annual report to relevant government bureaus, often through the National Public Credit Information System. Additionally, WFOEs may face other compliance obligations depending on their industry and location, such as environmental regulations, industry-specific licenses, or foreign exchange reporting. Meeting these requirements is crucial for WFOEs to retain their business license, avoid penalties, and ensure smooth operations within the Chinese market.
