Annual Audit and Compliance in China

2 Introduction SABRINA ZHANG Partner Dezan Shira & Associates Beijing Office The start of a new year tends to be a hectic time for foreign companies in China. Businesses must renew their annual licenses and adapt to new laws and regulations that are coming into effect, all while managing the workflow interruptions of the holiday season and upcoming Chinese New Year celebrations. During this period, businesses must also begin to prepare their annual statutory audit – if they have not started to do so already. To meet the various deadlines scattered throughout the year, businesses need to begin the long and complicated process of financial reporting months in advance. If businesses fail to comply, they risk being hit with additional fines and penalties, and might not be able to remit their profits overseas. Beyondmeeting statutory requirements, however, the annual audit represents an opportunity for businesses to conduct a deep dive into their finances and internal operations. A comprehensive audit might reveal unexpected irregularities or suboptimal business practices, or discover eligibility for tax incentives that had not previously been captured. In this issue of China Briefingmagazine, we walk foreign businesses through the annual audit and compliance process from start to finish. We begin by answering the common questions that foreign investors ask about annual audit in China, before offering a comprehensive step- by-step guide to completing the process. Finally, we offer six recommendations for businesses to better conduct annual audit and make the most out of the opportunity. We hope this magazine helps your business add value to its annual statutory audit and compliance reporting in China. With kind regards, Sabrina Zhang Credits Publisher / Sabrina Zhang Managing Editor / Adam Pitman Contributor / Hannah Feng, Susan Ma, Ivy Gu, Daisy Huang Editor / Qian Zhou Design / Belén Rodríguez Reference China Briefing and related titles are produced by Asia Briefing Ltd., a wholly owned subsidiary of Dezan Shira Group. Content is provided by Dezan Shira & Associates. No liability may be accepted for any of the contents of this publication. Readers are strongly advised to seek professional advice when actively looking to implement suggestions made within this publication. For queries regarding the content of this magazine, please contact: editor@asiabriefing.com All materials and contents © 2018 Asia Briefing Ltd. Asia Briefing Ltd. Unit 507, 5/F, Chinachem Golden Plaza, 77 Mody Road, Tsim Sha Tsui East Kowloon, Hong Kong. www.asiabriefing.com www.dezshira.com www.aseanbriefing.com www.india-briefing.com www.indonesiabriefing.com www.vietnam-briefing.com www.china-briefing.com