How to Shut Down a China Rep Office

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It is not uncommon for foreign companies that have been doing business in China through a Representative Office to want to shut it down. We get companies coming to us for this from two fronts. One, companies that have succeeded in China and now want to form a WFOE, which is almost always a cheaper and more flexible way to conduct China business. We also get companies that have decided they no longer wish to be in China at all, but do not want to burn their China bridges by moving out of China in the middle of the night.

What does it take to close down a China Representative Office?

The first thing you must do is submit to the Tax Bureau a properly drafted and sealed company resolution along with a cancellation application signed by the Rep Office’s chief representative, along with various other required documents. Since the documents required — like so much else in China — can vary depending on the locale, you always should  contact your local bureau to determine the exact documents they will require. More than anything, the tax bureau wants to make sure your China Representative Office has paid all its taxes.

After you are have obtained a cancellation certificate from the tax bureau to close down your Representative Office, you must then de-register it with other agencies as well, with those agencies depending on where you are and the nature of your business. China wants to be sure your Representative Office has paid all of its China debts, including employees.

Closing a Representative Office (or a WFOE for that matter) is more difficult and time consuming than it should be. In fact, it is one of the things on our short list of legal matters that our China lawyers will not do on a flat fee basis simply because the time involved is too unpredictable. Closing a Rep Office can take as little as three months or as long as 18 months, maybe more. Not fun.

2 responses to “How to Shut Down a China Rep Office”

  1. Uh Dude – you forgot the audit procedure. You need to go through an audit to close down ANYTHING in China. Closure in China is more a financial settlement and checking matter than a legal process in actual fact.

    • Absolutely correct, which is why I mentioned it in the post: “More than anything, the tax bureau wants to make sure that your Representative Office has paid all of its taxes” and then later mentioned that “China wants to be sure that your Representative Office has paid all of its China debts, including employees. But you are right that it would certainly have not hurt for me to have used the word “audit” to describe the procedure that will be used to confirm this and more. I also agree with you that this is at least as much a financial procedure as it is a legal procedure.

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