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Q：
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After a representative office “RO” is set up in Beijing, what are the annual compliances the RO need to pay attention to?
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A：
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The Beijing RO needs to arrange tax filings of value-added tax “VAT” and its surcharges, enterprise income tax “EIT” and individual income tax “IIT” for its representative(s) during each tax filing period, prepare annual audit report, arrange annual tax returns for EIT reconciliation and annual report with Beijing Administration for Market Regulation “BAMR”, which is formerly named as Beijing Administration for Industry and Commerce “BAIC”.
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Q：
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Our Beijing representative office does not generate any income, do we need to pay tax?
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A：
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In this case, there is no need to pay VAT and its surcharges, but you will still need to pay EIT. Besides, zero tax returns for VAT and its surcharges will still need to be filed within the stipulated tax filing period.
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Q：
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As per my understanding, EIT is charged on taxable profits, since our Beijing RO has no income or profit, how to assess and calculate EIT?
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A：
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The EIT liability of RO with no income is assessed and calculated by either deemed profit method or cost conversion method and the most common used method is cost conversion method by converting the expenses of RO into deemed income or taxable income:
EIT taxable income = Expenses of RO/(1-Deemed Profit Rate)
The deemed profit rate applicable to RO in Beijing is usually 15%.
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When does our Beijing RO need to file tax returns?
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A：
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For representative office adopting cost conversion method for EIT assessment, its VAT, surcharges and EIT returns are filed on quarterly basis before the 15th day of April, July, October and January of the next year. The IIT returns must be filed on monthly basis and before the 15th day of each month. In case there are public holidays, the tax filing period will be extended accordingly.
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Q：
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When do we need to prepare annual audit report for the Beijing RO?
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A：
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It is advisable to get the audit report ready in April or May each year since the audit report is an essential document for annual report with BAMR.
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Q：
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What kind of materials are required to be provided by the Beijing RO for annual audit?
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A：
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The audit required documents mainly include:
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Financial documents, including but not limited to balance sheets, income statements, general ledger and detailed ledger, etc.
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Bank statements and bank advice
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Tax returns
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Lease agreements of the office used by the RO
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Registration certificate and other license obtained.
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Q：
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When does the Beijing RO need to file annual report with BAMR?
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A：
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In accordance with the Regulations on Administration of Registration of Permanent Representative Office Foreign Enterprises Article 6, the representative office shall submit annual report to the registration authority during the period from March 1 to June 30 each year.
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What documents are required for preparation and filing of the annual report with BAMR?
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A：
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The required documents mainly include the proofing materials on the legal status and standing information of the foreign enterprise, the report of ongoing business activities of the RO and an audit report, details are as below:
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Annual report (template is stipulated by BAMR)
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Photocopy of Registration certificate of the RO
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Electronic version of audit report
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Photocopy of incorporation documents of the foreign enterprise legalized by Chinese Embassy in the country where the foreign enterprise resides and its Chinese translation
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Photocopy of approval documents if special approval is involved in the RO’s business
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Q：
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Is there any penalty if annual report cannot be submitted on time?
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A：
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Penalty ranges from RMB10,000 to RMB30,000 will be imposed if the RO fails to file the reports before June 30. Furthermore, in case there are false information in the reports, there will be a penalty from RMB20,000 to RMB200,000. Fraud in the report may result in revocation of the registration certificate. It is advisable to engage professionals like Kaizen to handle the annual report preparation and filing work.
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Q：
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When does the Beijing RO need to submit annual tax reconciliation of EIT?
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A：
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Annual tax return of EIT must be filed to the competent tax authorities before May 31 each year for RO registered in Beijing to do the annual tax reconciliation for the previous year. Difference between the audited tax payable and the actual tax paid will cause refund or repayment of tax. In case difference incurs, it is advisable to consult with tax professionals like Kaizen before submitting the annual tax return of EIT.
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FAQ
