Foreign invested enterprises in China: Guide to annual compliance procedures

Foreign invested enterprises (FIEs) in China are required by law to submit an annual compliance report, which includes the annual audit report and annual tax reconciliation. Failure to comply with these requirements could lead to severe consequences, such as the revocation of business licenses. 

The following is a guide to annual compliance procedures for FIEs in China

Step 1: Annual audit report

The annual audit report should be prepared by a qualified accounting firm and signed by two certified public accountants registered in China. The deadline for submitting the report is the end of April, as annual tax filing starts in May.

Step 2: Corporate income tax reconciliation

The deadline for conducting the annual corporate income tax (CIT) reconciliation and filing is 31 May. FIEs have a time frame of five months from the year before to determine whether all tax liabilities are met or if a payment of supplementary tax is necessary. Only the CIT requires annual reconciliation to the tax bureau at the company level.

Step 3: “Many-in-one” annual reporting

The deadline for the “many-in-one” annual reporting is 30 June. FIEs must report to multiple government offices certifying their compliance and updating each department’s information accordingly. Among other things, the report must include basic company information, investor profile, company website and online shop URL, information on equity change, balance sheet information and details of company operation.

We cooperate closely with our partner ECOVIS Ruide in Shanghai. Together we will support you in creating the compliance report.

Richard Hoffmann, Lawyer, Ecovis Heidelberg, Germany

Serious consequences for failure to comply

Failing to submit the annual compliance requirements within the given deadline, providing fraudulent evidence or concealing information will result in the company being listed in the Catalogue of Enterprises with Irregular Operations.

Staying on this list for more than three years can have severe consequences, such as being blacklisted for operations and investments in the future. It is therefore essential for foreign companies operating in China to pay close attention to their legal and regulatory compliance and obtain advice on the legal and financial issues, say the Ecovis experts.

For further information please contact:

Richard Hoffmann, Lawyer, Ecovis Heidelberg, Germany
Email: richard.hoffmann@ecovis.com