The term of a Representative Office normally is one year only. The investor could apply to have its Representative Office deregistered before its term expired. If the RO of a foreign enterprise wishes to terminate its business operations upon or before the expiration of its term; or if the parent company of the RO declares bankruptcy, a mandatory process called de-registration has to be done at the registration office.
Documents have to be submitted to relevant authorities such as the tax authorities, Customs and banks to certify the clearance of the entity’s liabilities. This is a prerequisite to obtaining the approval for de-registration and cancellation of the certificate of registration.
Should the RO leave any matter unsettled, the foreign enterprise or economic organisation represented by the RO shall be held responsible.
2. China Representative Office Deregistration Procedures
(1) De-registration of Tax Certificate
Step 1: Apply to the Tax Bureau for de-registration.
Step 2: Tax clearance for any outstanding tax issues and on-site inspection by the Tax Bureau.
Step 3: Formally de-register the Tax Certificate. The RO needs to submit the following documents to the Tax Bureau:
• Liquidation Audit report (audit on the latest 3 years expenses and taxes payable by the RO)
• Individual income tax returns of RO’s chief representative and other representatives
• RO’s representative’s individual income tax assessment forms
• RO’s tax assessment forms
• Unutilised invoices (if any)
• Tax Certificates with stamp duty
The process will take approximately 45~50 working days if there are no complications, for example, unpaid taxes or instances of non-compliance.
(2) De-registration of Customs Registration Certificate
Customs Registration Certificate de-registration can be carried out simultaneously with Tax Certificate de-registration.
If the Representative Office has never acquired a Customs Registration Certificate before, it needs to apply for one first and then de-register it.
Upon successful de-registration by the Customs Bureau, a notice of De-registration of Custom Registration Certificate can then be issued.
(3) Closure of Representative Office’s Bank Account
(a) All un-issued cheques of the RO must be returned to the bank.
(b) All unutilised debit slips of the RO have to be returned to the bank as well.
(c) All money in the RO’s bank account should be transferred out.
(d) ROs are discouraged from keeping large amounts of unutilised money in their bank accounts at the time of the liquidation. If an RO intends to transfer the account to its parent company or affiliate company, it is required to provide reasons and seek approval.
After the bank account is closed, a Bank Account Closure Notification will be issued.
This process will take about 5~10 working days.
(4) Official De-registration with the Local Administration of Industry and Commerce
The following documents are to be submitted to apply for a de-registration from the local AIC:
• RO’s Registration Certificate
• Notification from the parent company documenting that the Chief Representative will no longer be legally representing the parent company
• Notice of Tax Certificate De-registration
• Notice of Customs Certificate De-registration
• Bank Closure Notification
• Chief Representative’s Certificate
• RO’s Seals
The AIC will issue a De-registration Notification stating the official termination of the RO. The RO’s seals should be destroyed in front of the registration officer.
If any of the certificates were lost, an announcement should be publicized in the newspapers. A letter stating the loss of the certificate, a photocopy of the newspaper announcement and the related payment invoices should be submitted to the relevant government authorities.
This entire process should take approximately 7 working days.
Notwithstanding various de-registration processes, it is important that the investor keeps the originals of all accounting records and business documents after the closure of the RO. This is to safeguard his interest as the investor. In accordance with the Stipulations of the Finance and Accounting System of the Foreign Investment Enterprise in the People’s Republic of China and other relevant laws and regulations, the ROs accounting books shall be kept by the parent company for up to 10 years after winding up of the RO. The original accounting and business documents may be necessary as a form of defense against any allegations.
(5) Deregister Other Certificates
In accordance with prevailing PRC laws and regulations, the RO is also required to de-register all its other certificates, including:
• Organisation Code Certificate (To be done at the Shanghai Technology Quality Supervision Bureau; takes approximately 3 work days)
• Statistics Certificate (To be done at the Statistics Bureau; takes 1 work day)
Employee Permit & Resident Permit (EP/RP) for Chief Representative or other Representatives (To be done at the Labour Bureau and the Exit/Entry Bureau respectively; takes 5 work days)
It is important to highlight the significance of going through a proper liquidation process. In some cases, especially with regards to foreigners who are EP/RP holders, if the EP/RPs are not properly de-registered, the parent company of the RO will be responsible for the activities carried out by the EP/RP holder if he continues to act on behalf of the RO.
3. Time Frame for Deregistering a China Representative Office
The time needed for completion of the de-registration procedure will be around 5 months from the complete submission of required documents.