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Doing business in China as a foreign company usually starts with a decision about presence. Selling to Chinese customers in renminbi, employing staff on Chinese contracts, running a factory or a sourcing team, or holding a licence for a regulated activity all need a legal person registered on the mainland. Exhibitions, market research and liaison for the parent can be handled by a representative office, which may not earn income of its own.
The usual vehicle is a limited liability company owned by the foreign investor, which Chinese law calls a foreign-invested enterprise. Since the Foreign Investment Law took effect on 1 January 2020 it is formed under the same Company Law as a Chinese-owned company. Hong Kong, a separate legal system with its own registry and tax, is the alternative many foreign groups weigh first, as our Hong Kong company guide explains, and for a regional base the mainland is also compared with Singapore.
| Form | Who registers it | Typical use by foreign investors |
|---|---|---|
| Limited liability company | Local market regulation administration (AMR) | Trading, services, manufacturing and holding; the standard choice |
| Joint stock limited company | Local AMR | Larger ventures and companies preparing to list |
| Partnership | Local AMR | Ventures run by partners, outside fields with equity requirements |
| Branch of a foreign company | Approval, then the AMR | Operations without a separate Chinese legal person |
| Representative office | Registered under the representative office regulations | Liaison, research and promotion only, no income of its own |
Individual businesses and sole proprietorship enterprises are reserved for Chinese investors. Capital, officers and the registration file for each form are explained on China WFOE and company registration.
| Tax | Position in 2026 |
|---|---|
| Corporate income tax | 25% standard rate |
| Small low-profit enterprises | Effective 5% on taxable income up to RMB 3 million, until the end of 2027, subject to staff and asset limits |
| Reduced 15% rate | High and new technology enterprises; encouraged enterprises in the Western Regions, Hainan Free Trade Port, Qianhai and Hengqin |
| VAT | 13% on goods, 9% on transport, construction, real estate and listed goods, 6% on most services, 0% on exports, under the VAT Law in force since 1 January 2026 |
| Small-scale VAT | Collection rate of 3% in the law, reduced to 1% until 31 December 2027, for annual sales up to RMB 5 million |
| Dividends to foreign companies | 10% withholding; 5% for a Hong Kong company owning at least 25% that is the beneficial owner |
| Dividends to foreign individuals | 20% individual income tax, withheld by the company, since 1 September 2026 |
| Share transfers | Stamp tax of 0.05% of the price on the transfer instrument |
Until 31 August 2026 dividends that foreign individuals received from foreign-invested enterprises were exempt under a 1994 notice; MOF and STA Announcement 2026 No. 27 abolished that exemption, so owners who hold the company personally now see 20% withheld on every distribution. MOFCOM’s 2024 investment guide adds that profits foreign investors reinvest in China are temporarily exempt from withholding tax.
China opens every field to full foreign ownership unless the national foreign investment Negative List says otherwise. Its 2024 edition, in force since 1 November 2024, has 29 entries spread over seeds and fisheries, rare earth mining, nuclear power, tobacco, transport and post, telecoms and internet services, legal services, surveys and mapping, education, medical institutions and the media. A wider Market Access Negative List binds Chinese and foreign businesses alike, and the Catalogue of Industries for Encouraging Foreign Investment, 2025 edition, in force since 1 February 2026, has 1,679 entries for activities where the state wants foreign capital.
No local officer is required. The Company Law contains no nationality or residence condition for the legal representative, directors or supervisors of an LLC, and the law provides a board secretary only for listed companies. What the company does need is a registered domicile at its main administrative office and, as a foreign-invested enterprise, a recipient of legal documents filed with the registration authority.
Beneficial owners are filed with the registration system when the company is formed and within 30 days of any change, under rules of the People’s Bank of China and SAMR in force since 1 November 2024. A beneficial owner is anyone ultimately holding 25% or more of the equity, profits or votes, or controlling the company in fact. The information goes to the central bank and is open only to state bodies and, for anti-money laundering checks, to financial institutions: there is no public search.
Banking comes after the licence, not before. The company opens an account in its own name with its business licence and the identity documents of the people concerned, and that account receives the capital, because the Company Law requires cash contributions to be paid into it. The foreign investment itself is registered for foreign exchange purposes with the bank, and MOFCOM confirms that foreign investors may freely remit contributions, profits and capital gains in or out. Which documents banks ask for and how account opening runs for a foreign-owned company is set out on bank accounts for China companies.
Form a new company in nearly every case. The AMR registers a complete file on the spot or within three working days, the capital clock starts at zero and you choose the name, scope and domicile. The steps are on China WFOE and company registration.
Buy an existing company only when a particular company has something you need and its record is clean. A foreign buyer passes the same Negative List check as a founder, takes over any unpaid capital and inherits the company’s history, and a company left idle for six months can lose its licence. What to check is on ready-made shelf companies in China, and the general idea in our guide to off-the-shelf companies.
We form new mainland companies and supply existing ones, draft the papers for a formation or an equity transfer, prepare the registration filings and help build the bank application. Where we have a working contact at a suitable bank we can introduce you; the bank makes its own decision.
Under the VAT Law in force since 1 January 2026, general taxpayers charge 13% on goods, imports and leasing of movable property, 9% on transport, postal, basic telecoms, construction, real estate and certain listed goods such as farm produce and books, and 6% on most other services. Exports are zero-rated. Small-scale taxpayers, with annual sales up to RMB 5 million, pay at a reduced 1% until the end of 2027.
The standard corporate income tax rate is 25%. Qualifying small low-profit enterprises pay an effective 5% on taxable income up to RMB 3 million until 31 December 2027. High and new technology enterprises pay 15%, as do encouraged enterprises with real operations in the Hainan Free Trade Port, the Western Regions, Qianhai and Hengqin, each scheme with its own end date.
It is the list of fields where foreign investment is prohibited or limited, issued by the NDRC and MOFCOM. The 2024 edition, in force since 1 November 2024, has 29 items: some fields are closed, such as news media and compulsory education, others carry caps or joint venture conditions. Everything outside the list is open to foreign investors on the same terms as Chinese ones.
No. A Hong Kong company is formed under Hong Kong law with the Hong Kong Companies Registry and taxed under Hong Kong rules. A mainland subsidiary it owns is registered with a mainland AMR under mainland law, and the Negative List applies to it, with any more favourable treatment the CEPA arrangement with Hong Kong provides. Dividends paid up to a qualifying Hong Kong parent bear 5% mainland withholding tax.
Dividends paid to a foreign company without a presence in China bear 10% withholding tax unless a treaty lowers it, as the Hong Kong arrangement does to 5% for a qualifying parent. Since 1 September 2026 dividends paid by a foreign-invested enterprise to a foreign individual bear 20% individual income tax, which the company withholds and files by the 15th of the following month.
Weighing a mainland company against Hong Kong or another base? Tell us what the company will do and who will own it, and we will say which route fits and whether an existing company is available now. Telegram and WhatsApp reach us at +48 663 247 166.