- Least capital injection required. As RO is not a legal entity, actually no minimum share capital is required
- Can hire local staffs
- Can handle market research, sourcing, project investigation for mother company, who in turn to execute trading function
- Limitation in activity. No trading or invoicing is allowed
- Local staff should be hired via government admitted agents
- Although not profit center, cost expenses still attract tax liability(ies)
- Takes around one (1) month to apply
- A chief representative (CR) is to be appointed
- Company should be able to present bank reference letter showing 6 digit average balance in past 6 months (in HK$ terms).
- An office premise rental agreement (or ownership document) which is valid for foreign investor use. The term should be at least 12 months long.
- Certificate of Incorporation
- Member register
- Director register
- Last filed return to company registry
- Last filed return to tax department
- Company/Business profile and reason of setting up RO
- Minutes of board meeting to setup RO
- Minutes of board meeting to authorize chief representative
- Bank reference letter
- Valid Passport copy
- One to Foreign Economic Relations & Trade Commission
- Another one to Administrative Council of Industry & Commerce
Although a RO is not to conduct business, it attracts tax on:
- Chief representative and local staff’s individual income tax (IIT)
- Business tax base on monthly operational expenses (BT)
- Income tax base on annual operational expenses (IT)
- IIT above depends on salary amount while BT 7 IT roughly amounts to 10% of annual operational expenses.
- License renewal – RO license has to be applied again once permit is expired. Maximum 3 years approval will be granted and depends on rental lease terms.
Accounting, tax filing and auditing
- Tax filing has to be done on monthly and annual basis.
- Moreover, there are statutory audit on the expenses account and foreign currency back account
- Service fee for monthly accounting and tax filing starts from RMB 2,500 while annual audit starts from RMB 5,00