Entity Health Checks

China Compliance​ 

• Clarification of your Chinese entity’s legal structure (e.g., Joint Venture, Wholly Foreign-Owned Enterprise, Representative Office).
• Review of necessary licenses and permits required for lawful operation.

Governance Structure​ 

• Updating the Articles of Association in accordance with the new Company Law.
• Filing of the Ultimate Beneficial Owner (UBO) with local authorities (new 2025 requirement).
• Clarification of senior executives’ specific legal liabilities.
• Filing of accurate senior executive records with government authorities.

Operation and Controlling​ 

• Review of the funding legality of the China entity (e.g., proper reporting of overseas loans, etc.).
• Joint Venture majority shareholders: confirmation of controlling power.
• Joint Venture minority shareholders: confirmation of access rights to accounting books, financial statements, audit reports, and board resolutions.
• Evaluation of dividends receiving and remitting process (e.g, legal or regulatory obligations or hurdles).
• Review management and control of company seals.
• Review of due diligence performed on business partners in China.
• Review of in-place intellectual property rights protections.
• Supplementary discussion regarding relocation, or overseas expansion.

Sales revenue and China VAT invoice management  

• Identify potential mismatches between VAT invoice limitations and business needs.
• Identify the distinction between accrual-based revenue recognition and VAT invoice issuance timing.
• Identify any unusual fluctuations in monthly income.

Goods exports and imports  

• Review of whether export records match declared income for export tax rebates.
• Review of complexities and difficulties in the export rebate application process.
• Assessment of risks associated with exporting under another company's name, which may impact tax rebate eligibility.
• Verification of whether import VAT is fully deductible.

Overseas receipts and payments under non-trade items  

• Fulfillment of proper tax declaration obligations and eligibility for corresponding tax preferences.
• Compliance with foreign exchange declaration requirements.
• Evaluation of tax deduction compliance related to enterprise income tax.
• Clarification of procedures for profit repatriation and assessment of financial and tax implications.

Accounts Receivable ​ 

• Consideration of an aging analysis report.
• Verification that collections are accurately settled against corresponding sales invoices.
• Identification of long-term risks associated with accounts receivable and potential bad debts.

Accounts Payable and Employee Reimbursements ​ 

• Consideration of a structured supplier management process.
• Differentiation of the validity of value-added tax invoice when claiming reimbursements and arrange vendor payments for employees and the company.

Inventory Management and Cost Accounting ​ 

• Assessment of whether inventory data is obtained accurately and in a timely manner.
• Identification of potential asset losses due to poor management.

Other issues 

• Review of the fixed asset depreciation methodology.
• Review of double taxation in cross-border business.
• Understanding of Chinese accounting and taxation explanations from finance and tax consultants.

Recruitment ​ 

• Review of labor contracts for employees in China.
• Understanding legal procedures for hiring part-time employees.
• Optimization of expatriate compensation packages to minimize tax burdens.
• Review of the lawful handling of employees' personal information.

Termination​ 

• Implementation of risk mitigation strategies when terminating high-level employees.
• Understanding of key points and procedures for mass layoffs in China.
• Development of a response plan for cases where employees copy confidential company files/documents.

Regulatory ​ 

• Assessment of how evolving Chinese data regulations impact business operations.
• Establishment of an internal data compliance program.
• Preparation for ongoing changes in China's cross-border data transfer regulations.

Technical ​ 

• Conducting regular audits of IT infrastructure.
• Verification of compliance regarding permitted hardware/software deployment in China.
• Addressing concerns about data leaks due to infrastructure configurations.
• Implementation of a well-defined and compliant procurement program.