Annual compliance is of crucial importance for every company in China. After the end of every fiscal year (31st of December in China) all companies in China have statutory annual requirements to fulfill.
These statutory annual requirements can be separated into 3 types:
Year-end statutory audit
The Statutory Annual Audit report is the general financial report, which has to conform to the Chinese GAAP standards, and must be conducted by a Certified Public Accountant (CPA), authorized in China. This report includes the auditor's opinion on whether the financial statements reflect a true and fair view of the financial position, operating results and cash flow in all material aspects.
Under normal circumstances the audit procedure takes around two to three months to conclude. The report should best be completed during February - March of the next fiscal year.
Annual Corporate Income Tax Filing
The next step following the audit report is to proceed with the Annual Corporate Income Tax. The Corporate Income Tax rate in China is 25% and every year companies need to do the CIT filing before the deadline of May 31st. The tax paid has to be reconciled by the tax authorities to see if the tax due has been paid fully. Subsequently, depending on under- or overpayment, companies can apply for reimbursement or payment of supplementary tax.
Penalties are imposed on corporations that miss the deadlines scheduled by the authorities, so it is of importance to do the CIT filing on time.
In the beginning of 2019, the government has published a number of preferential measures with strongly reduced CIT rates for small and medium companies. According to these measures, the effective tax rates can drop as low as 5% on the profit generated in China.
We are specialized in supporting our clients with their annual CIT filing making sure that the entity will be able to claim reduced CIT taxation according to the legal requirements.
Annual Publication Report
After completing the Statutory Audit Report and the Annual CIT Filing, companies have to publish the information related to the Audit Report, the CIT filing and other certificates in the Annual Publication Report. This information needs to be provided and updated annually with several government authorities such as the MOFCOM, AIC, SAFE and Finance Authority.
Normally the deadline for this is 31st June, but this can differ depending on the district of the city in China where the company is registered.
Our Assurance Services
In cooperation with licensed Moore audit partners, we offer professional services in corporate and statutory requirements of small and medium-sized enterprises active in Mainland China and in Hong Kong. We assist foreign-invested companies with all compliance within the company.
We support with:
- Year-end Statutory Audit
- Corporate Income Tax Filing
- Annual Publication Report
Group Audit support / IFRS & IAS
We further support clients with the ongoing group audit with respect to the Chinese entity. These audits are done according to Chinese standards or if required to the IFRS & IAS compliance rules.