WFOE Branches: Differences in Tax Registrations

October 15, 2009 Posted by China Briefing Reading Time: < 1 minute

Oct. 15 – Increasingly, companies that have already invested in a WFOE in China wish to set up branches in other cities to further develop their national business. Branches may have the same scope of business as the parent WFOE, however there are differences in the registration procedures for branches depending upon whether or not the branch is required to issue local invoices or not.

WFOE branches that wish to invoice must register with the local tax bureau and declare, on a monthly basis, taxable items from locally produced invoices such as VAT, business tax as on. Branches that are not required to invoice still have to register for tax but do not obviously declare income. Audits for both types of branches may be consolidated and filed at the parent WFOE and do not require a local audit, although local accounts from invoicing branches, together with supporting documentation from the local tax bureau will need to be folded into the main WFOE accounts.

Richard Hoffmann is a senior associate in the Beijing office of Dezan Shira & Associates where he is a part of the business advisory services division. He has seven years experience in international and Chinese law. He can be contacted for China contractual issues at beijing@dezshira.com.