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Wofe procedure

  • Advantage and function
  • Documents Required
  • Setup requirements
  • Setup procedure and cost

 

Advantage and function

When first established, the WGQ was positioned as a special zone for investors to carry out international trade and entrepot trade. Therefore, the majority of companies in WGQ nowadays are trading companies.

 

A free trade zone in China is often referred to as an area which is within the Chinese territory but outside the Chinese customs' because goods flowing between a free trade zone and overseas countries are 'bonded', i.e. free from customs duties. That is why

free trade zones in China are also known as 'bonded zones'.

 

Companies in WGQ are able to import goods from overseas to Chinese domestic market and export goods from Chinese domestic market to foreign countries through a import and export company (also known as 'state trading company') or a general bonded commodity exchange market (E/M) in WGQ.

 

WGQ companies can also engage in domestic trade; i.e. buying goods of PRC origin and selling them back to the PRC domestic market. No import and export company is required and no customs procedures are involved for this type of trade. However, VAT invoices should be issued through an E/M. According to the WGQ customs, the sale of goods to a WGQ company for ultimate sales to other PRC buyers will not be deemed export and the PRC company will not be entitled to export tax refund. It implies that foreign investment enterprises cannot treat the sale of goods to WGQ as a means of fulfilling their export commitment if such goods will eventually be sold within China.

 

Functions include:

 

1. Import goods from overseas to China and export goods from China to overseas through a import and export company or a general bonded commodity exchange market in FTZ. 

 

2. Engage in domestic trade directly, though it is not advocated for WOFE with nature of trading to engage entirely in domestic trade since it can be deemed as a clear departure from the government policies.

 

 

  It is not advisable for a WGQ company to engage entirely in domestic trade since it could be viewed as a clear and complete departure from the central government policies. Import can be

done so long as the PRC buyer has import right or the transaction is done through an E/M. For certain restricted goods, normal import license and quota requirements are still applicable to

such transactions.

 

Documents Required:

- Bank Statement of the Credit
- Project Proposal (purpose, business scope, period, investment amount, among others)
- Certificate of Registration and Testimony
- Statement on the Products and Technologies
- Duplicate of Confirmation Letter of the 3 Applied Company Names
- Report on Feasibility Study
- Memorandum & Articles of Association
- A Namelist of the Board and Senior Executives
- List of Equipment to be Provided (if any)
- Passport or Residential Card of the Legal Person
- Lease Agreement or Purchasing Contract of Company Premises
- Certificate of Property of the Lessor
- Authorisation Documents for the Board and Senior Executives
- Two Photos of Legal Person and Two Photos of Contact Person
- Other Documents (relevant authorities may require additional documents as per specific cases)

 

Setup requirements:

Registered place:

The only registered place is WaiGaoQiao Free Trade Zone (hereinafter as WGQ FTZ), the price reference of an office of a minimum of 50sqm in WGQ FTZ is about RMB 28,000 per year. This office can be used as service center or sales office.

Authorized capital:

The minimum authorized capital for a Wholly Foreign-Owned Enterprise with nature of trading is US$ 200, 000.

The installment of investment contribution:

Although investor may make the investment contribution by installments and the final installment can be made within 1 year, the entire functions of Trading WOFE shall not be actualized until the total amount be made. 

Besides, to prevent the certificate of approval from becoming invalid automatically, the first installment shall be made with no less than 15% of the total amount within 90 days from the day when the business license is issued, the second installments shall be made strictly within 3 months afterwards.

After each installment of investment contribution, a Chinese CPA should be engaged to prepare a report on the verification of capital, and submit it to Industry and commerce for the record.

 

Setup procedure:

 

REGISTATION

 

Note: Project Proposal and Feasibility Study Report can be skipped.

Item 

Scope of Work  

Government Fee(RMB)

1

Submitting the Proposed name of  company to BAIC, at least 3 optional names are required.   

80

2

Submitting the Articles of Association

        

3

Preparation of appointment of legal representative letter. (only the Chinese version will be used for application purpose)

 

4

Compilation of applicant company's background information, passport copy of legal representative, photos of legal representative and all other necessary information for the application

 

5

Preparation of application form and arrangement of the form to be signed by Chairman of the applicant company

 

6

Filing of form and submission of application for obtaining temporary  institution and organization code certificate issued by quality supervision bureau 

 

7

Preparation of application letter, submission of application for registration of company with the Municipal of Foreign Trade and Economic Commission (MOFTEC) for approval

50

8

Application for the Business License from BAIC.                        

 

0.8% of the authorized capital (i.e. RMB 1338 if authorized capital is US$ 200, 000.)

9

BAIC Announcement

4000

10

IC card of BAIC                                                                                    

280

11

Photocopy of business license                                                                     

58

12

Approval of the company name from BAIC                                                           

230

13

License preparation                                                                                

80

14

Since all the documents submitted to the government authorities must be conducted in CHINESE language by special institution, there is a translation fee.

300

Total

5078+0.8%*the authorized capital

 

POST REGISTRATION

 

Item 

Scope of Work  

Government Fee(RMB)

15

Application of institution and organization code certificate issued by quality supervision bureau                                                              

              263

16

Making of company stamp, company stamps for contract and finance and tax purpose

              350

17

Arrangement of having the company chop being endorsed by the public security bureau

  

18

Opening of capital bank account and normal bank account at a bank chosen by the applicant company

              300

19

Application for registration with Bureau for Administration of Foreign Exchange(BAFE), opening foreign currency bank account

300

20        

Preparing required documents for the application for registration with local Tax Bureau and state Tax Bureau.

100

21

Preparing required documents for the application for registration with local Statistics Bureau.

195

22                   

Preparing required documents for the application for registration with Finance Bureau.

80

23

Social insurance registration certificate issued by labor authority

               200

24

Capital verification report issued by CPA firm.                              

2500-3000(for each time)

25

Registering certificate for self- declaration units issued by custom (if any)                                                                                  

180

Total   

Ranging from 4468 to 4968

 

The registration of a wholly foreign owned enterprise will normally take 50 working days to obtain business license from BAIC.  A company is formally incorporated when business license is obtained.  In order for it to be fully operational, post-registration process must be completed and it will take around 30 working days to complete.