Deregister a Company in China

Our Company Deregistration Solution will help you to close a company in China in a compliant way.

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Company Deregistration in China

Companies in China may want to deregister their business for various reasons such as failure to adapt in the market, or due to financial crisis. Another important factor that has hit China market recently is the COVID-19 pandemic.

Irrespective of what factors might trigger this decision to shut down the business, investors cannot simply abandon the company and walk away without following proper closure procedures. PRC law requires a formal deregistration procedure to be followed for closing any foreign entity.

Deregister a company in China is not an easy task for many companies. The procedure is long and and problems with government, tax bureau, banks may arise. These are all situations that can cause losses and problems in the future to companies that do not understand the Chinese law and regulations.

The process of a company deregistration normally takes anywhere between 6 to 8 months, depending on the type of company that has been established. Regardless of the company you are operating in China, we will help guide you through painless and hassle-free process for company cancellation.

Procedure to deregister a Company in China

Below we list the general procedure to deregister a company in China
*Please be advised that this procedure may be different for each city in China. Contact us in case you want to know more about the procedure for a specific city in China):

  1. Check the status of the company – the purpose of the step is to check if the company has any legal issues, active arbitration case or any related financial problem.
    To check the company situation, FDI China needs the legal name of the company and three financial reports from the last three years. The reports are: Balance Sheet, Profit and Loss Statement, Cashflow Report
  2. Cancel the tax account
  3. Cancel the custom account – only if the company has conducted import/export activities (foreign currency account and China electronic port account also need to be cancelled)
  4. Announcement of the company deregistration on appointed local newspaper
  5. Create a task force to manage the company deregistration
  6. Verify the authenticity of the company chops
  7. Cancel the business licence
  8. Cancel social insurance and housing fund account
  9. Cancel the bank account and transfer the balance to another bank account (foreign account is also possible)

Documents needed to close a company in China

To start the procedure for the deregistration of a company in China, you will need these documents:

  • Originals of Certificate of approval, Letter of approval, Business License
  • Written board resolution of Cancellation of WFOE
  • Originals and copies of Legal Representative’s passport (first page, signature page, and most recent immigration records’ page)
  • Bank Account Certificates
  • All chops of WFOE (Company chop, finance, Legal representative)
  • All accounting related documents: balance sheet, profit and loss statement, cashflow report
  • Unused Fapiao
  • Tax control disk

*All the above-mentioned documents are for reference purposes only. Actual documents required might vary for different locations, nature of the business, company’s situation and change in policies.

Average Time to Close a Company in China

In China, the procedure for company deregistration is rather complicated, particularly concerning compliance with China Customs and the Tax Authority.

Depending on the facts of the dissolution (i.e. the number of employees at the time of dissolution, location, local labor bureau offices, labor suits, debt and tax issues, etc.), the process can take up to 6 to 12 months.

The most time-consuming step in this regard is Tax Deregistration. It is the longest and perhaps the most difficult part of the deregistration process.

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Our Solution Includes:

  • Assistance to check the status of the company and advise on how to solve any issues

  • Assessment of the taxation risks in deregistering the company

  • Clean up the tax situation in case the financial reports are not in line with the government requirements

  • Preparation of relevant documents

  • Advise on the establishment of the liquidating group

  • Cancellation of tax account, business licence, bank account, custom account, social insurance and housing fund account

  • Assistance to transfer the balance of the bank account

In the first part of the procedure, there are two situations that can arise:

  • The company does not have any legal issues or active arbitration cases
  • The company has legal issues or active arbitration cases

For these situations, FDI China can help offering two kinds of solution:

  • Employer of Record (EOR) – FDI China will handle all the procedure to manage staff, including payroll, taxes, and social security on behalf of your company.
    *This solution is for companies that do not have any legal issues, but they have a small business in China that would like to maintain.
  • Company Secretary – FDI China will handle the administrative procedures, maintaining statutory documents and assisting the deregistered company in all the relationships with tax bureau, court, and also maintaining an address for the company.
    *This solution is for companies that have legal issues or active arbitration cases and they need more time to successfully deregister the company.

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