China could be a notoriously difficult place for foreign companies to business. With strict rules for entities and complex tax regulations, just getting on the ground could be a pain in itself. But while sales may roll into your Chinese entity, there's an extra complication foreign companies face: How can I move that cash back home?
It's not as simple as you may think. Take the example of 1 High Street Partners client, a U.S.-based web services company with significant operations in China. With growing foreign profits, they wished to repatriate those funds back to the U.S. regularly, to aid further business growth. They made plans for twice monthly repatriation tied to management service fees and royalties.
Unfortunately, this client underestimated the thing that was necessary to defend myself against repatriation. Their timeline was too aggressive, creating significant costs for preparing documentation such short amount of time. This is exacerbated by inadequate allocation of resources, causing major delays through the process. Furthermore, the whole process ground to a halt once the royalty rate payable was deemed to be "too high" by the neighborhood tax authority.
How can your company avoid complications like those experienced by this client? Consider these seven best practices for making your repatriation of cash from China go smoothly:
Plan ahead. Understand that, with document preparation and approval times, repatriation can take months. Have all the right resources and knowledge in position; be familiar with the nature/types of remittances and, ideally, stay glued to the ones that are clearly defined in tax directives.
Understand impact of tax treaties. Consider the effects of treaties that exist between China and your company's home country 소액결제 현금화 . Consultation from a skilled tax professional is essential to structuring the most truly effective and efficient agreements.
Ensure documentation is in order. Don't get caught in a predicament where you have to scramble at the final minute to find the appropriate paperwork. Generally in most instances, original documents must be produced at the lender and to the authorities.
Register agreement with authorities. This will begin the process of obtaining your approvals and tax clearance, permitting you to maneuver forward with repatriation. Generally, outward remittances cannot happen without showing proof that the underlying agreement has been approved, and that the right taxes have been paid.
Be realistic about timing. Approvals and processes could have a week to months, with regards to the type and nature of repatriation. And, if an audit will become necessary included in the conditions of repatriation, it is even lengthier. Allocate additional time to complete any audits and obtain tax clearance, before the intended timing of repatriation.
Follow the order of events to avoid delays. In China (and elsewhere), repatriation usually follow a very strict process and activities need to follow a specific order. Know which type of approval to obtain first predicated on remittance type (e.g., state tax bureau approval normally has to be obtained before the neighborhood tax bureau would approve).
Work with a partner who knows the process. Choose a provider who understands the neighborhood environment, procedures, and who will help come up with the mandatory documentation. The local provider will require usage of the respective authorities to help seek clarification, so reputation and credibility of the provider is important.