The Business Scope of a Consulting Company

According to Chinese laws and regulations, wholly foreign-owned consulting company is allowed to be established to offer services related to consultancy on international economy, technology and environment protection, and to provide market information and other business services which are not prohibited by the Chinese laws and regulations.

Registered Capital

According to the Chinese Company Law, to register a consulting company in China, the registered capital is required to be at least RMB100,000 (USD13,000). Some local governments would require a higher amount which could be RMB300,000 (USD37,000).

The registered capital does not need to be contributed when applying for the registration of the Company. After the Company being registered, 20% of the registered capital needs to be put into the bank account of the Company within 90 days after the registration.

The requirement of the registered capital is to ensure that the company will have enough funds for its operation after being registered. The registered capital is to be used for the expenditures of the company, and it is not allowed to be returned to the investor(s) unless the company is to be terminated (dissolved).

The Government Fees for the Registration of a Consulting Company

The government fees include relevant registrations fees, such as the Industry and Commerce Registration Fee, which is 0.08 % of the registered capital, and other registration fees such as the tax registration fee (RMB30), code registration fee (RMB150). If, for example, a company's registered capital is RMB300,000 (USD37,000), the total amount of government fees is around RMB900 (USD120).

Documents Needed for the Registration of a Consulting Company

The following basic documents are required to be submitted to the relevant government departments:

(1)  Identification certificate (such as passport or business registration certificate) of the investor(s);

(2)  Bank Reference Letter issued by bank of the investor(s);

(3)  Documents (such as an office tenancy contract) to prove the use right of an office of the company in China;

(4)  Application Letter for the establishment of the company;

(5)  Feasibility Study Report on the establishment of the company;

(6)  Articles of Incorporation (Articles of Association) of the company;

(7)  Letter with the pre-registered name of the company, issued by the registration authority;

(8)  Name(s) of the board director(s) of the company;

(9)  Agreement between/among the investors.

All the above documents shall be in Chinese. If some of them are in foreign language, they need to be translated into Chinese.

We will help our clients to prepare the documents needed. On the above list, documents from item (3) through item (9) could be drafted by our law firm for our clients.

Taxation

According to the Chinese tax laws and regulations, there are mainly two kinds of tax which a consulting company needs to pay. One is called the Business Tax, which is 5% of the service fees charged by the consulting company. The other is called the Corporate Profit Tax, which is usually 25% of the net profits (earnings minus costs) of the company if the company could not enjoy tax preferential treatment.

Director(s) of a Consulting Company

The investor may appoint himself or other Chinese or foreigner to be the director(s) of the Company.