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JOINT VENTURE (JV) IN SHANGHAI

2019-03-11

Foreign Equity Joint Venture is also called equity joint venture. It is a corporation jointly invested and incorporated by foreign companies, other economic organizations or persons and Chinese companies or other economic organizations, which is featured by joint contribution, joint operation of all parties to the joint venture, and sharing of risk, profits and losses in proportion to their respective contributions towards the registered capital.

Although the demands from overseas investors for creation of enterprises with foreign investment in the form of joint ventures are diminishing, some special industries are still relying on this mode of joint venture incorporation.

Advantages for Sino-Foreign Equity Joint Venture
- Sharing resources and complementation of advantages, giving full play of the network and the famous brand already established by the Chinese enterprise, as well as smooth entry into the Chinese market
- Utilizing the geographic advantage of the Chinese enterprise for reasonable and lawful reduction of various fiscal charges and large reduction of operating cost
- Entitled to foreign investor preferences

Registered Capital
No specified requirement (except specific industry)

Documents Required
(1)For the trading enterprise, the following documents are required:
1) Board of director's meeting minutes or resolution of two parties;
2) One proposed name (in Chinese), and provide two back-up names in case the first name is not available;
3) Detailed information about the business scope and registered capital;
4) Feasible study report;
5) Original Articles of Association;
6) Duplicate copy of the business license and certificate of incorporation of two parties;
7) The original and copies of identity certification of pre-established company's legal representative;
8) Two original bank reference letters (from foreign investor's bank) indicating foreign investors' creditability, issued within 6 months;
9) Lawyer's notarization
10)Chinese investor's annual audit report and seals;
11)The office address: your own house property or the rented commercial building (three original copies of lease signed and sealed by the local Housing Management Authority, showing the recognized registered address of joint venture. The signing party should be in the name of one shareholder or the foreign company; the purpose must be for commercial use)

(2) For the manufacturing enterprise, the following documents are required:
1)-9) The same as above
10) Production address: your own house property or the rented commercial workshop (two original copies of lease with signature by Housing Management Authority, showing the recognized registered address of joint venture. The signing party should be in the name of one shareholder or the foreign company; the purpose must be for workshop use)
11) Approval of environmental and fire departments.

(3) For the abroad natural person, the following documents are required:
1) Board of director's meeting minutes or resolution of two parties;
2) Duplicate copy of identity certification of foreign investors& Legal representative, directors of pre-established company;
3) Lawyer's notarization of foreign investor's identity certification;
4) Duplicate copy of ID & two color photos of the pre-established company's legal representative;
5) Feasible study report;
6) Original copy of Articles of Association;
7) Two original bank reference letters (from foreign investor's bank) indicating foreign investors' creditability, issued within 6 months in both English and Chinese language;
8) Chinese investor's business license, annual audit report and company's seals.

Duration
Around 60 working days

Tax Preferences
Value-added Tax
The foreign joint venture, being a general taxpayer, is entitled to the tax "Exemption, Credit and Tax Rebate" policies on the exported goods produced by itself, where:
“Exemption” shall be exempt from value-added tax production and
“Credit”sales payable on the export

"Tax Rebate" shall be the rebate of the remaining tax after crediting

Tax Preferences
- The especial support and encouraged development industry or project shall be levied at the corporate profits tax rate of 15%
- The Technology transfer profit within RMB5,000,000 does not need to levy the corporation profit tax, the profit beyond RMB5,000,000 levy the halve corporation profit tax.
The Especial Support High-Technology Advanced Corporation enrolled in Special Economic Zones (Shenzhen, Zhuhai, Shantou, Xiamen and Hainan Especial Economic Zone) and New Pudong District in Shanghai after 1 January 2008 does not need to levy the corporation profit tax since the first annual gets income taxable year till the second taxable year. From the third year to fifth year shall be levied the halve corporation profit tax rate of 25%.