Regaining Control of a China Subsidiary

Introduction: 

Who: An American technology company with a representative office in China.

Background: The headquarter decided to temporarily slow down its operations in China, which was controlled by its local representative office.

Objective: The headquarter wanted to transfer the financial management duties from a local third party accounting firm to Dezan Shira & Associates,in order to have better control over this crucial part of operations.

Dezan Shira & Associates Approach

Dezan Shira & Associates´ expert team worked closely with the company to solve the following issues:

1. The local representative office was uncooperative in the transfer of the company’s local financial materials to the headquarter.

Our advisory team located the accounting firm hired by the local representative office. We further negotiated with the local representative office and established a deal by which it will transfer over all of the financial materials to the headquarter

2. The local representative office understated the companies expenses when filing taxes, the company would therefore have to pay higher penalty fees in the future if it neglects to become compliant with the tax bureau.

After our audit team reviewed the financial statements, we advised the company to settle the unpaid taxes with the local tax bureau as soon as possible to mini ize penalty fees and avoid further investigation from the tax authorities. 

With our assistance and advisory, the company resolved all of its representative office's financial issues and regained control of the business operations in China which allowed them to temporary slow down operations in China as planned. Through the financial review, the headquarter was informed of the problems in a timely fashion, which helped reduce any unnecessary costs, and avoid potential criminal liabilities.

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