Annual Audit and Compliance in China: Prepare for 2021 - Preview

C hina B riefing · Issue 193 · December 2020 2 Introduction 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 © 2020 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.vietnam-briefing.com www.silkroadbriefing.com www.china-briefing.com Credits Publisher / Asia Briefing Media Ltd. Editors / Dorcas Wang, Qian Zhou, Zoey Zhang, Melissa Cyrill Contributors / Amber Liu, Daisy Huang, Tammy Tian, Jess Feng, Sam Jiang Designer / Aparajita Zadoo www.russia-briefing.com The start of a new year can 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 NewYear celebrations. During this period, companies must also begin to prepare for the annual audit – if they have not started to do so already. To meet the various compliance deadlines scattered throughout the year, they need to begin the long and complicated process of financial reporting, months in advance. If companies fail to comply, they risk being hit with deteriorating credit, additional fines and penalties, and might not be able to remit their profits overseas. Beyond facilitating compliance requirements, however, the annual audit presents anopportunity for the entity to conduct a deepdive 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 addition, foreign invested enterprises can get themselves ready for the upcoming new China Accounting Standards. In this issue of China Briefing magazine, we walk foreign businesses through the annual audit and compliance process from start to finish. We begin by exploring the significance of annual audit on FIEs and strategies on how to make the most out of the annual audit. Then, we offer a comprehensive step-by-step guide to completing the annual compliance process and highlight the changes in the past year. Finally, we provide a comprehensive introduction to the newChina Accounting Standards that will affect most businesses, starting January 1, 2021. We hope this magazine helps your business add value to its annual statutory audit and compliance reporting in China. If you and your company want to learn more about how to get ready for the annual audit and compliance, please get in contact with Dezan Shira & Associates. For more information, please email us a t china@dezshira.com. SABRINA ZHANG Partner Dezan Shira & Associates Beijing Office With kind regards, Sabrina Zhang