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Q&A Regarding Foreign Exchange Management of Direct Investment (3)

Answer
Q:
What is the upfront expenses of overseas direct investment?
A:
The upfront expenses of overseas direct investment refer to the expenses related to overseas direct investment that domestic institutions need to pay overseas before setting up projects or enterprises overseas.

Q:
What are the upfront expenses of overseas direct investment included?
A:
The upfront expenses of overseas direct investment mainly include:
  1. The security deposit required for the acquisition of the equity of an overseas enterprise or the equity of overseas assets according to the local laws of the project or the requirements of the transferor;
  2. The bid security required to be paid during the bidding process of overseas projects;
  3. The expenses required for conducting market research, renting office space and equipment, hiring personnel, and hiring overseas intermediaries to provide services before conducting overseas direct investment.

Q:
Is there a limit on the amount of the upfront expenses remitted overseas by a domestic institution?
A:
The upfront expenses remitted overseas by a domestic institution shall generally not exceed 15% of the total amount of overseas direct investment.

Q:
Are the remitted upfront expenses included in the total amount of overseas direct investment?
A: The upfront expenses remitted overseas by a domestic institution shall be included in the total amount of overseas direct investment of a domestic institution. The upfront expenses remitted overseas by a domestic institution shall be included in the total amount of overseas direct investment of a domestic institution. Designated foreign exchange banks shall deduct the amount of the upfront of initial expenses that have already been remitted when remitting the overseas direct investment funds of domestic institutions.

Q:
Can the profits from overseas direct investment remitted back to China be settled in foreign exchange?
A: The domestic institutions that remit their profits from overseas direct investment back to China can keep them in their current account foreign exchange account or settle foreign exchange.

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