Accounting and Auditing for China Entities
A WFOE or joint venture must keep books under Chinese Accounting Standards, file monthly tax returns, and complete an annual statutory audit before profits can be repatriated. We handle this recurring compliance for foreign-owned entities.
What We Cover
Bookkeeping
Chinese GAAP-compliant ledgers, AP/AR, fapiao issuance and verification.
Payroll
IIT withholding, social insurance and housing fund contributions.
Tax Filing
Monthly or quarterly corporate income tax, VAT and withholding tax.
Annual Audit
Coordination with a China-licensed auditor ahead of the filing deadline.
Filing Calendar
| Obligation | Frequency | Who it applies to |
|---|---|---|
| VAT filing | Monthly or quarterly | All entities with taxable turnover |
| Individual income tax withholding | Monthly | Any entity with payroll |
| Corporate income tax | Quarterly provisional, annual final | All WFOEs and JVs |
| Statutory audit | Annual | All WFOEs and JVs, before profit repatriation |
| Annual company inspection | Annual | All registered entities |
Bookkeeping and Fapiao
China's fapiao (official invoice) system is not optional paperwork - it is how revenue and expenses are recognised for tax purposes, and incorrect fapiao handling is one of the most common audit findings we see in newly established entities. We manage issuance and verification as part of monthly bookkeeping.
Payroll and Social Insurance
Individual income tax withholding, social insurance and housing fund contributions vary by city. We run monthly payroll so employer obligations are met without your HR team tracking local city-level rules directly.
Why Audits Get Delayed
- Fapiao gaps - missing or incorrectly issued invoices are the most common audit finding
- Late bookkeeping handover - records prepared just before the audit deadline leave no time to fix issues the auditor flags
- Related-party transactions - transfers between the WFOE and its parent company need documentation an auditor will specifically request
Related Services
Frequently Asked Questions
Why does my China entity need a fapiao system, not just an invoice PDF?
Fapiao are the only invoices Chinese tax authorities recognise for tax deduction and revenue recognition purposes - a standard PDF invoice has no tax standing on its own. Issuing and collecting fapiao correctly determines whether your expenses are deductible and your revenue is properly recorded, which is why fapiao handling is one of the first things a statutory auditor checks.
What happens if my bookkeeping is not current when the audit is due?
The audit cannot proceed on incomplete books, so out-of-date bookkeeping delays the entire annual filing timeline, not just the audit itself. We bring records current before handing them to the auditor rather than presenting a partial year and hoping the gap is minor - that approach routinely turns a scheduled audit into a multi-month catch-up project.
Can I use my home country's accountant instead of a China-based one?
Day-to-day bookkeeping can be coordinated from anywhere, but the statutory annual audit must be performed by an accounting firm licensed in China - this is a legal requirement, not a preference. We coordinate directly with a licensed China auditor as part of the engagement so this requirement is met without you needing a separate local relationship.
How are related-party transactions with my parent company treated?
Transactions between your WFOE and its overseas parent - management fees, cost allocations, intercompany loans - attract specific scrutiny from both auditors and tax authorities, and generally need supporting agreements and transfer pricing documentation. We flag these transaction types early so documentation is prepared alongside the transaction, not reconstructed at audit time.
What are the consequences of late or missed tax filings in China?
Late filing typically carries a fine plus late payment interest, and repeated non-compliance can affect your entity's standing with SAMR and complicate future filings, licence renewals or bank dealings. We track the filing calendar as part of the engagement specifically to avoid this - the fine itself is rarely the biggest cost; the downstream compliance flag is.
