1. Financial & accounting system
1.1 Basic financial & accounting systems for foreign-funded
enterprises
A. Any enterprise shall develop a financial & accounting
system in accordance with the relevant laws and regulations
of China and in combination with its own conditions, and file
it to the local fiscal and tax authorities. Each record must
be authentic, accurate and complete and have valid documents
as a basis for booking.
B. The accounting year shall be a calendar year, from the
calendar January 1 to December 31.
C. The accounting is conducted on an internationally recognized
accrual basis in accordance with the debit and credit accounting
system. Any self-made accounting vouchers, books, and statements
must be written in Chinese, with an English version attached
if necessary.
D. In principle, RMB shall be taken as the accounting currency.
E. The after-tax profit after payment of the income tax according
to Income Tax Law of the P. R. of China for Foreign-funded
Enterprises and Foreign Enterprises shall be distributed in
order as follows:
— Forfeited financial losses, and payment of late fees
and penalties for taxes and duties.
—Makeup of the enterprise’s loss for previous
years.
—Provision of a reserve fund, and an employee bonus
and welfare fund at a proportion to be decided by the board
of directors. The reserve fund shall be provided according
to a proportion not lower than 10% of the enterprise’s
after-tax profit, and may not be provided any more when the
amount of provision reaches 50% of the registered capital.
—Distribution of profit to investors. The undistributed
profit for previous years, if any, may be added into the profit
for this year and then distributed.
F. The enterprise shall engage a Chinese public accountant
to issue the following documents, and submit them to the investors,
the original approval authorities, the administration for
industry and commerce, and the tax and fiscal authorities:
—Verification of the amount of contribution from each
of the enterprise’s investors, and issuance of a capital
verification report.
—Audit of the enterprise’s annual accounting statements.
1.2. Fiscal registration
Any foreign-funded enterprise shall conduct a fiscal registration
at the local fiscal authority within 30 days after issuance
of the business license.
2. Exchange control
China implements an exchange control system that RMB is
convertible under the current account and partially manageable
under the capital account. Any foreign-funded enterprise,
within 30 days after receipt of its business license, shall
conduct the exchange registration procedure at the local
administration of foreign exchange where it is registered,
apply to open an account for foreign exchange capital fund,
and make settlement at the account bank for the foreign
exchange capital fund in the foreign investment account.
Any foreign-funded enterprise, after commencement of production
and operating activities, may open an account for foreign
exchange under the current account. The enterprise’s
import & export of goods implements a verification &
write-off system for foreign exchange collection/payment.
After export of goods, the administration of foreign exchange
will verify and write off the corresponding foreign exchange
proceeds from export; and after payment for imported goods,
will write off the corresponding arrival of goods. Any enterprise,
if having any need of external payment for imported goods,
may purchase foreign exchange at the account bank in advance,
and deposit it into the account for foreign exchange under
the current account.
Any foreign-funded enterprise may borrow international commercial
loans, but have to register at the administration of foreign
exchange.
|
