What’s the advantages of WFOE and main taxes?
WFOE are among the most popular corporate models for non-PRC investors due to their versatility and unique advantages.
Such advantages include:
The ability to uphold a company's global strategy free from interference by Chinese partners
Total management control within the limitations of the laws of the PRC
The ability to both receive and remit RMB to the parent company overseas
Increased protection of trademarks and intellectual property, in accordance with international law
Shareholder liability limited to original investment
Full control of human resources
Protection of intellectual know-how and technology;
Since Jan. 2008, China's new corporate tax rates range from15% to 25%. The rate depends on the places where the company is registered and the industry that a company engaged. All enterprises are required to report to the Tax Administration Department monthly, quarterly and annually.
A Limited Company is liable for a variety of taxes. The main taxes imposed are as follows:
1. Enterprise Income Tax Rate (EIT = profits tax) is 25% and is calculated on a quarterly basis.
2. Business Tax Rate (BT = service tax) is 5% and is calculated on a monthly basis.
3. Surtaxes applicable on Business Tax Payable is variable depending on location.
4. Value Added Tax Rate (VAT = trade tax) is 17% for general tax payer and is calculated on a monthly basis.
5. Surtaxes applicable on the VAT Payable is variable depending on location.
6. Individual Income Tax Rate (IIT = personal tax on salary) is variable depending on the salary level.