Considering the government setting up the China Shanghai (Pilot) Free Trade Zone (“FTZ”) and caused from the hot media effect, a lot of investors asked the questions whether he/she should have his/her company registered in the FTZ. We suggest that the below points should be considered before you make the final decesion.
Advantages
The related policy documents regarding FTZ which have been published mainly involve these two aspects, transformation of government functions and open up investment sectors, preferential policies to enterprises need further detailing from the government. In terms of foreign exchange controls, the overall policy in free trade zone is further the reform of cross-border use of RMB, RMB free convertible under capital accounts, market-oriented reform of interest rates and foreign exchange areas of management. Although specific details currently are not introduced, the future trend is under the authority of the bank's management certain financial freedom will be provided to enterprises.
Since the FTZ was established on the old ones, the old free trade zones were set up for intermediary trade and export processing trade, and the preferential policies for the old free trade zone continue to be effective. You can decide according to its needs and business strategy (for example, whether engaged in international trade, intermediary trade, bonded warehousing, etc.) whether it needs to establish a new company in the new free trade zone.
Disadvantages
Considering the popular of FTZ new company need to have a registered address in the FTZ and the rent becomes more and more expensive
If you want to close your company which is registered in the FTZ, at least extra 2-3 months will be taken. You handle extra procedure as to get the pre-approval from all authorities in the FTZ. As a result, we advise you should consider not only the establishment procedure but also how to operate there and even if you quit it.
According to our experience, it takes more time to register a WOFE in FTZ than in Pudong New Area.
In all, the tax policies are the same for both in and out of the FTZ. It is better to choose the premise according to your own situation.
If you want to know more details, please contact our senior consultant.
Ms. Jojo Hu
TEL: 0086-21-68868335 ext 324 / FAX: 0086-21-68868021
Email: jojohu@shanghaiinvest.com
