5 Steps to close a Representative Office

By Richard Hoffmann, ECOVIS Beijing China

Compared to other legal entities, closing a Representative Office (RO)  is much easier.

Common reasons for closing a RO:

• The holding company ceases business activities in China or has closed down
• The RO is terminated by Chinese authorities. Examples include: failure to meet government regulations, or acts that damage the public interest
• The RO wants to change its location to another city
• The company wants to set up an entirely new legal entity to expand its business activities in China, such as a WFOE

The following are the most  important procedures to close a Representative Office.

Step 1: Complete outstanding business activities

• Pay all outstanding taxes
• Receive final tax clearance certificate from both local and state tax bureau
• Complete any other outstanding business activities

Step 2: Send closing applications to local and national tax bureau

• A signed board resolution to close the RO together with the cancellation application should be submitted to the local and national tax bureau
• Eventually the RO should obtain Notice of Cancellation of Tax Registration

Timeline: 1-3 months depending on the completeness and correctness of the documents provided to the authorities.

Step 3: De-register with Customs: 

• Provide Customs with all the relevant documents.

Step 4: Close bank account

• The RO legal code certificate and other related documents have to be cancelled and given back to the bank before the account can be closed.

Step 5: Officially de-register with State Administration of Industry and Commerce (SAIC) as well as other authorities:

• The RO should receive a “Notice of Approval of Cancellation of Registration from the SAIC.
• Cancellation of documents from governmental authorities such as Statstic Bureau, SAFE, Quality and Supervision Bureau and PSB.

Timeline: Up to 1 month.

Audit:

One tax audit from the local CPA is required. Copies of receipts of the RO’s tax returns and the staff’s personal tax return also have to be provided to the local CPA.