Following our China theme for this week, here’s a list of the top 5 tax and finance mistakes to avoid in China. It’s based on an article written by the Shanghai team at WTS China, some of whom my boss / wife / LCN co-founder Xiaofang had the privilege of meeting in person earlier this week.
- Malpractice in VAT invoicing (including inputs as well as outputs)
- Disguising salary as the reimbursement of expenses
- Leaving a company dormant
- Abnormalities in the aging of accounts payable (APs), including failure to report APs to the State Administration of Foreign Exchange (SAFE) within 30 days of the import date
- Irregularities in non-trade payments to overseas parties, including failure to account for the relevant taxes
Perhaps we should add to that list 'Not having appropriate intercompany agreements to support intercompany charges'. Agreements are essential (rather than being just 'best practice') in order to obtain permission to remit funds over the prescribed minimum amount.
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