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China Focus – April 2018

China reduces VAT rates and thresholds

Following the sweeping changes to China’s tax laws in 2016, when business tax was effectively replaced by an enhanced value-added tax (VAT) system, there will be further changes to the VAT system on 1 May 2018.

Regulations can change very quickly in China and, as we always advise, it is essential to take action to adjust and determine how your operations will be affected. This is especially true for foreign firms when it comes to any tax-related matters. This article will briefly outline the changes to the system and highlight what actions, if any, you may need to take.

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Closing down a China WFOE

There are many reasons why a foreign-invested company might seek to close their China operations – financial difficulties, bankruptcy, reorganisation or merger, relocation or a change in circumstances to an overseas parent company – but dissolving and liquidating a Wholly Foreign-Owned Enterprise (WFOE) in China can be a confusing and frustrating process.

We have received a number of queries recently from clients asking for advice and assistance and it therefore seems like a good time to explain the process that needs to be followed to close a foreign invested enterprise in China, and highlight the many related issues that you will need to address if you want to achieve a clean exit.

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Sovereign (China) Limited


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Sovereign Trust (Gibraltar) Limited
Tel: +350 200 76173