Holding companies in China have a straight purpose and that is to handle the operations and the management of other enterprises established in this country. Because holding companies in China come with several benefits, there are numerous foreign investors who decide for such type of business. Setting up a holding company in China is subject to varied requirements, and to ease the registration process, it is best to speak to our team of company formation agents in China.
Table of Contents
Why should I open a holding company in China?
A holding company in China is created in a special way, meaning that foreigners can buy assets like mutual funds, real estate, investments, or business licenses for which there is no corporate tax. Such an advantage makes entrepreneurs think of setting up a holding company in China. Here is an infographic that explains the ways in which a holding company can be registered in China:
What are the benefits of a holding company in China?
Among the advantages of a holding company in China, the following are important:
- foreigners can enlarge their portfolio and profits with a holding company in China;
- a holding company is a legal entity which has an easy incorporation procedure;
- the foreigner’s assets are completely protected through such business form;
- the double taxation treaties signed by China are also available for such type of company.
Knowing the business field and the advantages in certain sectors and climates can help the foreign entrepreneur decide for the proper business structure which in many cases can be the holding company which needs approval from the State Administration for Industry and Commerce, also known as SAIC. If you want to start a company in China and express the interest in holding companies, our Chinese team of specialists in company incorporation can offer in-depth information in this matter.
Choosing the city for setting up a holding company in China
It is good to know that holding companies are subject to different benefits, depending on the chosen city for such entity. A foreign entrepreneur should know complete details about the financial system, the economic stability, whether the risks are high or low and if the city offers complete supportive administration for holding companies in China. One should also observe the taxation of holding companies in China. If you need support for VAT registration in China, feel free to talk to our specialists.
The purpose of holding companies in China
The single purpose of a holding company in China refers to the management and control of the shareholdings in other companies with activities in China. Among the general rules of holding companies in China, we remind the obligation of having at least 10% company share in order to have and control a holding company and also to obtain the voting rights. The formalities for opening a holding company in China are not that complex, however, the support and guidance of an experienced team of company formation agents in China will prove extremely helpful. Also, if you would like to establish a subsidiary or a branch in China, do not hesitate to solicit our complete support.
Who can open holding companies in China?
Any kind of entrepreneur can easily open a holding company in China, as long as he/she respects the applicable laws and avoid any state-owned enterprise. Even local investors can think of another business type in China like the holding company and observe the advantages that come with such structure. International investors can open holding companies in any Chinese city, among which we mention Shanghai, Shenzhen, Beijing, Hangzhou, Tianjin, Chongqing, Huanggang or Qingdao. We have a team of experienced agents in company formation in China, so please feel free to address your inquiries to us if you are interested in opening a holding company.
Taxation of holding companies in China
It is good to know that there is no income tax imposed for holding companies in China. In the case of non-resident foreign holding companies, the dividends paid by parent companies in China are subject to the withholding tax. We also remind that China signed a number of double taxation agreements through which the company profits are protected from double taxation and fiscal evasion. The provisions of the double taxation treaties signed by China are also applicable to holding companies. Even tax minimization methods can be successfully applied to holding companies in China, in order to legally reduce the amount of taxes. For a better understanding of the tax structure in China, you can talk to our specialists. Also, if you are looking for accounting services for your firm, feel free to get in touch with us.
Other important advantages of holding companies in China
Besides the above-mentioned benefits of holding companies, investors should also pay attention to the protection against financial and operational risks. In terms of investments, holding companies in China are the right tools for entrepreneurs looking to expand the business direction and portfolio because they can implicate in large and consistent projects that can involve domestic or foreign investments. Among the protected assets of a holding company in China, we remind that the intellectual property and the company equipment are on the list. The control and management in a holding company in China can be appealing to foreign entrepreneurs interested in a new business direction in this country.
Making investments in China
China is one of the most important business markets in the world and a top destination for a large number of investments of any kind. Big companies from all over the world have branches and subsidiaries in China and benefit from a stable business environment and a series of tax advantages and encouragements. The available free trade zones of China come with a series of tax exemptions and the possibility of developing all sorts of businesses in a protected and respected environment. The Wholly Foreign-Owned Enterprise or WFOE in China is the proper structure for the business that can be adopted by foreign investors in China, allowing them complete control in the firm. The proficient and respected workforce in China represents a solid business advantage for foreigners in China, no matter if they start a company from scratch or relocate their operations in this country. Manufacturing, tourism, engineering, research and development, real estate, logistics, and transportation are among the prolific sectors preferred by foreign investors in China. Here are some interesting facts and statistics about China:
- In terms of total FDI stock, China registered around USD 1,627,719 million in 2018.
- The recent Doing Business report for 2020 ranks China 31st out of 190 worldwide economies.
- In 2018, there were more than 60,000 foreign companies registered in China.
- Japan, South Korea, the US, Singapore, Germany, and the Netherlands are among the big investors in China.
If you consider that a holding company suits your business needs in China, you can contact our company formation agents in China for comprehensive information and support in this matter.