Above-the-line distributions are expenses charged to China operations, usually by the foreign parent directly, and thus are legitimate fees for which an invoice is presented to the China business as part of its normal operational procedure.

These can include: royalty charges for trademarks or patents owned by the parent; ?foreign management expertise,? full expenses and pay for any head of office or overseas personnel visiting China, even if just for a short period; and royalty fees for technology transfers interest on loans, including penalties for late payment.

Above-the-line distributions need to be agreed upon and identified in the articles prior to submission to the authorities for approval of an operation?s business license. When levying such charges onto a China business, it is important to be aware that such payments are subject to Chinese tax (amounts vary depending upon the service), prior to the China entity being able to remit back to the foreign parent. But even accounting for this, the amount of money able to be remitted back to the parent pre-tax can be quite significant with careful preparation and planning.

To know more, the whole issue is available (after a free subscription) on China Briefing website with others archives
For more information on China’s legal and tax issues or to ask for professional advices in related matters, please write to info@dezshira.com

When setting up in China, foreign investors are confronted with a myriad of complex issues, from local
regulatory variances, to confusing tax compliance issues and licensing procedures. With all the complexities over submitting business license applications, scant regard is often paid to one of the
most important parts of overall business planning, the mechanism to facilitate the effective repatriation and maximization of profits. This is something that should be dealt with during the planning stages of setting up in China.

The following article will present some issues to consider when preparing to repatriate profits out of China, as well as the way withholding and business taxes affect an enterprise in China. Understanding the processes and having proper structures in place from the beginning can vastly improve an enterprises ability to maximize and repatriate profits.

To know more, the whole issue is available (after a free subscription) on China Briefing website with others archives
For more information on China’s legal and tax issues or to ask for professional advices in related matters, please write to info@dezshira.com