Annual Return of Guangzhou Corporation

Annual Audit for Guangzhou Company
All Guangzhou Company (whether Representative Office or Limited Company) in China are required to prepare annual financial statements, including balance sheets and income statements for their annual Chinese audit. Such accounts must be in accordance with the Chinese accounting standards for business enterprises.

Guangzhou Company, including their legally responsible persons, must take full responsibility for the truthfulness, legitimacy and completeness of these financial statements. The financial statements must be completed each month for each financial calendar year from January 1st to December 31st. These documents must be completed and audited before end of April of the following year. The audited accounts will then have to be consolidated and submitted for tax purposes by the end of April every year. These statements will be used for computing the Guangzhou Company taxable and distributable profit. Accordingly, an annual audit by a firm of certified public accountants registered in the PRC is required under Chinese law.

Annual Tax Declaration for Guangzhou Company
Guangzhou Company will also need to submit to both the national tax bureau and local tax bureau the Annual Taxation Consolidation Reporting Package, authorized by a CPA firm by the end of April each year. In this reporting package, a CPA firm shall verify all the taxes including VAT, Business Tax, Consumption Tax, Foreign Enterprise Income Tax (FEIT), and other taxes on the basis of the audit result.

The FEIT is obviously the most important issue to be disclosed in this report. The related taxable elements, and in particular items involved in FEIT such as income, cost and expenses, are specified in detail, while the auditing firm shall make the FEIT reconciliation between financial profit and taxable profit in accordance with PRC FEIT regulations.

If the audited taxes are different from the taxes paid by the FIE, the FIE shall discuss the variation with the tax bureau. For example, should the audited tax figure be lower than the figure paid, the FIE will need to apply for a tax rebate or tax reduction for the fiscal year in question. Accordingly; should the audited tax figure be higher than the paid FEIT, once the FIE submits the report, it would have to pay the balance due to the tax bureau.

Annual License Renewals for Limited Companies
Besides an annual audit, Limited Companies, such as Wholly Foreign Owned Enterprises, Foreign Invested Commercial Enterprises and Joint Ventures (NOT Representative offices) also have to submit a range of other documents and licenses to the authorities for checking and renewal if necessary. The so-called annual renewal is a bureaucratic process, but also a good time to take stock and ensure all your paperwork is up to date. The Audited Financial Report, the Foreign Exchange Audit Report, and the Annual Report must be submitted to seven government departments. These documents must be submitted before June 30th each year.

Annual Inspection for Limited Companies
Limited Companies need to apply for and obtain the annual inspection documents from the same office of the State Administration for Industry and Commerce (SAIC) from which they have obtained their original business license. They must also complete the annual inspection report form from the relevant provincial or municipal SAIC website.