Law of the PRC on Foreign-funded Enterprises

Updated : 2012-02-11 By : Source : cnhubei.com

 

Chapter VIII Foreign Exchange Control

Article 52 Foreign exchange affairs of a foreign-funded enterprise shall be handled in accordance with Chinese regulations concerning foreign exchange control.

Article 53 A foreign-funded enterprise shall, on the strength of the business license issued by the administrative department for industry and commerce, open an account at a bank in China that may handle foreign exchange business, which shall supervise the foreign exchange receipts and payments by the foreign-funded enterprise.

The foreign exchange revenues of the foreign-funded enterprise shall be deposited to its account and the foreign exchange expenditures of the enterprise shall be made from its foreign exchange account.

Article 54 Where any foreign exchange account is to be opened at a bank outside China as required by its production and operation, the foreign-funded enterprise shall submit the case to the Chinese administrative department for foreign exchange control for approval and, according to the provisions of the latter, make regular reports on its receipts and payments of foreign exchange, and provide bank statements.

Article 55 Wages and salaries as well as any other legitimate income in foreign exchange of foreign workers and staff members, or of the workers and staff members from Hong Kong, Macao or Taiwan, of a foreign-funded enterprise may be remitted outside China freely after the income tax is paid according to Chinese tax law.  

Chapter IX Financial Management and Accounting

Article 56 A foreign-funded enterprise shall, in accordance with Chinese laws and regulations and provisions of the financial authority, set up its own financial and accounting systems and submit them to the local financial and tax authorities for record.

Article 57 A fiscal year of any foreign-funded enterprise shall begin from January 1 and end on December 31 of Gregorian calendar.

Article 58 A foreign-funded enterprise shall retain certain amount from its profits after the income tax has been paid in accordance with Chinese tax law as reserve funds, bonus and welfare funds for workers and staff members. The amount retained for the reserve funds shall not be less than 10% of the profits (profits after the income tax has been paid), the withdrawal may stop when the accumulated amount withdrawn has been up to 50% of the registered capital of the enterprise. The amount retained for bonus and welfare funds for workers and staff members shall be determined by the foreign-funded enterprise itself.

No foreign-funded enterprise may distribute its profits unless and until its deficits of previous fiscal years have been made up; undistributed profits of the previous fiscal years may be distributed together with the distributable profits of the current fiscal year.

Article 59 Accounting vouchers, account books and accounting statements made by a foreign-funded enterprise shall be prepared in Chinese; if they are written in any foreign language, notes in Chinese are required.

Article 60 A foreign-funded enterprise shall conduct their business accounting independently.

A foreign-funded enterprise shall prepare annual accounting statements and liquidation accounting statements in accordance with the provisions of Chinese financial and tax authorities. If an accounting statement is prepared in a foreign currency, a corresponding accounting statement in which the foreign currency is converted into Renminbi shall be prepared at the same time.

A foreign-funded enterprise shall engage Chinese certified public accountants to verify its annual accounting statements and liquidation accounting statements, and render verification reports accordingly.

The annual accounting statements and liquidation accounting statements of a foreign-funded enterprise, stipulated in the second and third paragraphs, as well as the relevant verification reports rendered by Chinese certified public accountants, shall be submitted within the prescribed time limit to the financial and tax authorities, and to the examining and approving authority and the administrative department for industry and commerce for record.

Article 61 Any foreign investor may engage Chinese or foreign accountants to audit the account books of the relevant foreign-funded enterprise, and shall bear the expenses.

Article 62 A foreign-funded enterprise shall submit their annual statements of assets and liabilities and annual profit and loss statements to the financial and tax authorities, and to the examining and approving authority and the administrative department for industry and commerce for record.

Article 63 The foreign-funded enterprise shall set up account books at the place where it is located, and shall be subject to the supervision by the financial and tax authorities.

If there is any violation of the preceding paragraph, the financial and tax authorities may impose a fine, and the administrative department for industry and commerce may order a suspension of business or revoke the business license, on or of the violating foreign-funded enterprise.