General accounting treatments on significant audit areas

All foreign invested enterprises in China are required to prepare annual financial statements, including balance sheets and income statements for their annual Chinese audit. Such accounts must be in accordance with the Chinese accounting standards for business enterprises ? there are now no differences between standards for domestic and foreign enterprises.

Foreign invested enterprises (FIEs), including their legally responsible persons, must take full responsibility for the truthfulness, legitimacy and completeness of these financial statements. These documents must be completed ahead of the submission of consolidated accounts for tax purposes by the end of April every year, for the financial calendar year ending the previous December 31.

These statements will be used for computing the FIEs taxable and distributable profit. Accordingly, an annual audit by a firm of certified public accountants registered in the PRC is required under Chinese law.

Trade debtors

Generally speaking, enterprises could provide reasonable bad debt according to ending balance of account receivable account. However, the tax authority has the power to adjust any unreasonable provided bad debt.

Next :
China?s Annual Corporate Tax Considerations

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