The Shanghai “A” foreign company is a WFOE with the headquarter in Europe. It has established nine years. But recently because of the difficult business, the headquarter has decided to deregister the WFOE formally and made an announcement.
After the financial manager of “A” foreign company has formally submitted tax—material to the local tax department, it has soon received information of local development zone investment promotion department that it has required the company to return obtained local financial subsides totally amount more than 100m. The local investment promotion department has showed agreements on preferential policies for investment promotion when it had signed with the local department. It’s clearly stipulated in agreement if the company has run a business under 10 years in this developed zone, it has needed to return all subsides which it has gained.
It’s made the A foreign company even worse, however the headquarter has released log-off notice, in order not to delay the log –off process, the company only has gotten back 100 mills of investment policies pay-back so that it has finished process in time.
DongJin Remind:
Not only when companies have deregistered paying attention on business or fiscal status in recent few years, but also knowing the whole history business records from setting up to now. Especially notice the restriction agreements, for example, the agreements on preferential for investment promotion that companies sign with local investment department.
For the above cases, if the “A” foreign company can thoroughly check all his history business records before they decide to deregister, formally apply to log out can wholly be completely delayed. It’s that companies appoint and manage in a low cost, after waiting for 10 years business then it submits application, so it can legally avoid to return the subsides.
If companies have a log-out or recombination planning, please pay sufficient attention. If there is any problem, please contact us at any time.
Mike Chang
Partner
mikechang@shanghaiinvest.com