1. OVERVIEW ABOUT QUANZHOU
Quanzhou, located in the southeast of Fujian Province, is one of the three largest central cities of Fujian.With Fuzhou, the provincial capital to the north,Xiamen Special Economic Zone to the south, Zhangzhou, Longyan and Sanming to the west and facing Taiwan Island to the east across the Taiwan Strait, Quanzhou covers a land area of 11,015 km2 and a resident population of 7.69 million (excluding that of Kinmen County). Minnan dialect and Putonghua are spoken in the city.

With its eastern face to the sea and against the mountains, Quanzhou is dotted with undulating hills, valleys, basins and gentle undulations of the landscape.　Quanzhou is of sub-tropical oceanic monsoon climate with an annual average temperature of 19.5℃~21℃. It is warm, wet and pleasant all the year round. In an ancient poem, Quanzhou was described as "Flowers and rains are seen in the four seasons and rain, no snow but thunder are heard in winter", hence Quanzhou's nickname "Wenling".

2. CONCEPT OF RO
A Chinese representative office (RO) is an office of the foreign enterprise established in China for liaison with Chinese businesses and customers on behalf of its parent company.

A RO is not considered to be a separate legal entity. It can not directly engage in operational activities. However, its parent company can enter into contracts with its supplier/customers in China in its own name, but not in the name of its RO. Therefore, before a foreign investor establishes its presence in China using wholly foreign owned enterprise, equity joint venture and cooperative joint venture, it could first set up a representative office to test the market.

3. REPRESENTATIVE OFFICE NAME
The format of the RO Name is: country (area) + parent company name + Quanzhou Representative Office

4.  FUNCTIONS OF RO
RO enjoys a great popularity in Chinese market since its simple procedure, short time consuming and comparatively loose requirements for formation.

The simplicity and short time required for establishing a RO is the main reason for its popularity in China market. Unlike foreign investment enterprises ("FIEs"), representative offices are not required to meet stringent requirements for items such as capital contribution.

The functions of a RO are as follows:
1. Can handle market research, sourcing, project investigation for parent company, who in turn to execute trading function.

2. It cannot enter into purchase/sales contracts and receive payment for services, issue invoices.

3. A RO can open bank accounts and employ staff to maintain liaison with customers and suppliers.

4. Apply for work permit and residence permit more easily.

5. RO is not considered to be a separate legal entity, so it only works as liaison purpose.

6. Limitation in activity. No trading or invoicing is allowed.

7. Local staff should be hired via government admitted agents.

8. Although not profits, cost expenses still attract tax liability

5. PROCEDURE
Fill in the application form→ sign the agreement→ pay for the service→ submit all the needed documents→ name checking→ apply for the certificate of registration→ go to the public security bureau to carve seal→ apply for Organization Code License & card→ apply for Registration license of National &Local Administration of Taxation

6. DOCUMENTS REQUIRED
1. Parent company's original copy of business licenses, certificate of Incorporation & stamp;

2. Original copy of bank reference letter for the parent company, issued within 6 months & in both English and Chinese translation;

3. Original copy of identity certification, 5 color photos and one copy of resume of the chief representative (CR); the CR’s address and contact way.

4. Original copy of lease with signature and sealed. (The signing party should be in the name of general representatives. In the meanwhile, the purpose must be for commercial use only). If it is for non-commercial use. The agreement from the property management company or Neighborhood Committees with signature and sealed is necessary.

7.  OUR SERVICE
1. Original copy of Certificate of Registration;
2. Registration license of National &Local Administration of Taxation;
3. Seal carving registration card;
4. Organization Code License & card (IC card);
5. Three seals.

8.  FOLLOW UP
TANNET can provide a series of follow up services to customers, such as bank account opening, book-keeping and auditing, annual return service, company alteration, financial planning and so on.

9. TIME NEEDED
Once all the necessary documents for application are ready for submission, government approval can be got within 20-30 working days.

10. TAXATION
In General a RO is subject to foreign enterprise income tax (FEIT) and Business tax (BT) under the PRC FEIT Law and the PRC Provisional Regulations of BT. There are different ways in which a representative office may be taxed but the most common basis is the cost-plus-basis. As at April 2002, the total tax burden under this assessment method is approximately 5-10% of the operating expenses incurred by the representative office. The FEIT and BT for a RO should be filed on a quarterly basis within 15 days after the end of each quarter.

Although a RO is not to conduct business, it attracts tax as stated below:

1. Chief Representative and local staff’s Individual Income Tax (IIT), rating from 5% to 45%, IIT depends on salary amount. Presently starting point is RMB2000 for people in mainland China and RMB 4800 for overseas people. It is levied every month.

2. RO income tax is calculated according to the formula:  Expenses/ (1-15%) ×10%×25%.
3. RO business tax is calculated according to the formula: Expenses/ (1-15%) ×5%.

NOTE:
1. Hand over of such as for non- Chinese document, need to translate into Chinese, and hand over together.
2. Carry out time to hand over a well-found day by consigning down payment and data since start computing.

Tannet——Global Corporate Solution Provider, Value Investment & Strategic Development