Annual Compliance, License Renewals & Audit Procedures

Published: January 2013

In this issue, we discuss annual compliance requirements for China foreign-invested entities (FIEs), with notes on regional differences and tips from experienced accountants and auditors. We detail the full audit processes for Representative Offices, Wholly Foreign Owned Enterprises and Joint Ventures in China, as well as discuss the procedures for individual income tax filings for 2012 earned income by expatriates in China.

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In this issue, we discuss annual compliance requirements for China foreign-invested entities (FIEs), with notes on regional differences and tips from experienced accountants and auditors.Many Western parent companies today are concerned by the perfunctory nature with which annual compliance procedures are carried out in China, and with good reason. Chinese audit reports roll into group audit reports, and thus it is imperative to have confidence in these figures. Furthermore, annual compliance procedures, when conducted with care, can tell stories about what’s going on behind the scenes in a company’s operations. We detail the full audit processes for Representative Offices, Wholly Foreign Owned Enterprises and Joint Ventures in China.

In addition to company audits, expats in China must file their annual individual income tax (IIT) declaration for 2012 earnings. We discuss IIT liability in China (which depends on income source and time period spent in China), IIT rates and calculation (taking into account number of days spent in China), permissible tax deductions, and how working for a permanent establishment can change tax liabilities.

Finally, we look at the current U.S. Securities and Exchange Commission proceedings against the Chinese arms of the “Big Four” accounting firms from the perspective of SME foreign investors.

Including:

  • The Annual Compliance Process for China FIEs
  • Individual Income Tax Finalization for Expatriates
  • Current U.S. Securities and Exchange Proceedings

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