Laws of the People's Republic of China

Circular of the State Administration for Industry and Commerce on Relevant Issues for Enterprises with Foreign Investment in Bonded Zones to Establish Branches

GongShangQiZi [2001] No.363 December 27, 2001

The administrations for industry and commerce of all provinces, autonomous regions, municipalities directly under the Central Government and the authorized municipal administrations for industry and commerce:

In order to further regulate enterprises with foreign investment in bonded zones in their establishment of branches outside the bonded zones, and to support the healthy development of enterprises with foreign investment in bonded zones, relevant issues for enterprises with foreign investment in bonded zones to establish their branches outside the bonded zones are hereby noticed as follows:

I.

An enterprise with foreign investment in a bonded zone may establish a representative office outside the bonded zone, the business scope of which shall be the liaison of work that falls within the business scope of its parent enterprise.

II.

An enterprise with foreign investment in a bonded zone that intends to establish, modify or cancel a representative office outside the bonded zone shall meet the registration conditions, be subject to the registration jurisdiction and go through the registration procedures, in respect of the establishment of representative offices of enterprises with foreign investment.

III.

The registration organ for representative offices established outside the bonded zones by enterprises with foreign investment in bonded zones shall strengthen supervision on such representative offices.

1.

The valid period of the "Registration Certificate of Representative Office of the Enterprise with Foreign Investment" of a representative office outside the bonded zone shall, for the time being, be one year, and can be extended in case no illegal act has occurred.

2.

The registration organ of representative offices shall strengthen its contact with the original registration organ of the enterprises in bonded zones, and do well in its daily supervision work; and shall, after registering a representative office, write back to the original registration organ for confirmation, as well as strengthen its daily supervision work on the representative office. Where a representative office violates the provisions by engaging in business activities, the registration organ of representative offices shall, by distinguishing the category of the parent enterprise of the office, impose punishments separately in accordance with the Regulations on the Registration and Administration of Companies or the Regulations on the Registration and Administration of Enterprises as Legal Persons and the Detailed Rules for the Implementation of the Regulations. The object of punishment shall be the parent enterprise in the bonded zone. When necessary, the registration organ of representative offices may also, on the basis of the situation of the case, transfer the case to the registration organ of the parent enterprise in the bonded zone for punishment.

IV.

Enterprises with foreign investment in bonded zones may not, if establishing their representative offices outside the bonded zones, enjoy the tax preferential policies which are applicable to the enterprises in the bonded zones.

V.

Enterprises with foreign investment in bonded zones shall not set up their foreign currency accounts if establishing their representative offices outside the bonded zones. The account of a representative office shall not include any item of income except for the money allocated by its parent enterprise. The money allocated by a representative office's parent enterprise shall be only limited to the reasonable expenses for its office business.

VI.

An enterprise with foreign investment in a bonded zone shall not establish any operative branch except for the representative office(s) outside the bonded zone.

VII.

As of the date of the distribution of this Circular, the "Circular on the Relevant Issues for Enterprises with Foreign Investment in Bonded Zones to Establish Branches outside the Bonded Zones" (GongShangQiZi [1996] No. 341) distributed by the SAIC in 1996 shall be ceased from execution.