One of the ways of investing in China as a foreign businessman is by registering a foreign-invested commercial enterprise (FICE). It is possible to set up a foreign-invested commercial enterprise (FICE) in China if the businessman wants to invest in specific business activities (there are 4 main areas). Our consultants in setting up a company in China can provide information and assistance on the registration of this company type.
This type of company is a wholly owned foreign enterprise(WOFE) in China, that has been created for those engaging in distribution services in this country.
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Legislation on FICE in China
FICE became a company type available for foreign investors in China after the country’s accession to the World Trade Organization (WTO), a step which further opened the pathway to fewer restrictions on foreign investment projects carried out in this country. China became a WTO member state and the FICE was implemented in 2004. Some of the highlights are:
- the FICE Regulations were adopted in April 2004;
- the law entered into force on 1st of June 2004 and foreign investors were able to open a company in China starting with 11st of December 2004;
- FICE can be set up provided that investors carry out 4 main categories of activities (commission agency, retail, franchising and retail);
- the company type can be set up with 100% foreign ownership;
- the law stipulates that investors can set up a company in China as a FICE and engage in economic activities, but the operating period can’t be longer than 30 years.
Incorporation requirements
The process of company formation in China for this entity entails the standard requirements available for other company types that have foreign ownership. In this case, the company needs to obtain an approval from the Ministry of Commerce, which must provide an answer in a period of 3 months since the submission of the application.
In the case in which the institution provides an affirmative answer, the owners of the company have to address a local branch of this authority, operating in the region where the company has its tax residence, for the issuance of a business license. Some of the paperwork that must be presented during the process of company incorporation in China are:
- the application letter;
- the FICE’s incorporation documents;
- a feasibility report;
- the investors’ audited financial reports;
- the list of members who represent the board of directors;
- documentation attesting that the company has a registered address in China, etc.
The documentation and the approvals required when opening a company in China as a FICE may vary based on the operations the entity engages in. Our consultants, specialized in company formation in China, can provide further information on this topic.
Tax obligations
A FICE company is liable totaxation in China, given that it is set up for commercial purposes. In general, it is charged following the standard taxes available for other legal entities, but it may also benefit from various tax exemptions or deductions. Investors who will start a company in China as a FICE must know that they are liable to the payment of the corporate income tax and the value added tax.
In some cases, the FICE can benefit from VAT rebates – our accountants in China can present the rules applicable in this sense. They can also present and assist such companies in completing their accounting obligations – for instance, FICEs must have their annual statements audited on a yearly basis.
Pleasecontact us for more information on how to set up a foreign-invested commercial enterprise (FICE) in China. We can provide tailored assistance, in accordance with the business activity you want to start here. You can also rely on us on ongoing consultancy services.
