De-registration of an RO in Shanghai
The application by a foreign company to wind up a representative office in Shanghai is a complicated and challenging process. We hereinafter provide an insight into the key steps to be taken in the process of de-registration of a Representative Office (RO) in Shanghai.
Documents have to be submitted to relevant authorities such as the tax authority, Customs, and banks to certify the clearance of the entity’s liabilities. This is a prerequisite to obtaining the approval for de-registration and cancellation of the Registration Certificate.
Should the RO leave any matter unsettled, the foreign enterprise or economic organization represented by the RO shall be held responsible.
PHASE ONE – DE-REGISTRATION OF TAX CERTIFICATE (the most complicated and challenging phase)
Step 1: Application with the Tax Bureau for de-registration.
Step 2: Liquidation audit.
Step 3: Tax clearance for outstanding tax issues and on-site inspection by the Tax Bureau.
Step 4: Formally de-register the Tax Certificate. The RO is required to submit the following documents to the Tax Bureau:
Liquidation Audit report (audit on the latest 3 years’ expenses and taxes payable by the RO)
Individual income tax returns of RO’s chief representative and other representatives
RO’s representatives’ individual income tax assessment forms
RO’s tax assessment forms
Tax Registration Certificate
Other documents required by the competent Tax Bureau
PHASE TWO – DE-REGISTRATION OF CUSTOMS CERTIFICATE
Customs Certificate de-registration can be carried out simultaneously with Tax Certificate de-registration.
If the RO has never acquired a Customs Certificate before, it needs to apply for one first and then de-register it.
Upon successful de-registration by the Customs Bureau, a notice of “De-registration of Customs Certificate” can then be issued.
PHASE THREE – CLOSURE OF RO’S BANK ACCOUNT
All un-issued checks of the RO must be returned to the bank.
All unutilized debit slips of the RO have to be returned to the bank as well.
All money in the RO’s bank account should be transferred out.
ROs are discouraged from keeping large amounts of unutilized money in their bank accounts at the time of the liquidation. If an RO intends to transfer the account to its parent company or affiliated company, it is required to provide reasons and seek approval.
After the bank account is closed, a Bank Account Closure Notification will be issued.
PHASE FOUR – OFFICIAL DE-REGISTRATION WITH SHANGHAI ADMINISTRATION OF INDUSTRY AND COMMERCE
The following documents are to be submitted to apply for a de-registration with the SHAIC:
RO’s Registration Certificate
Notification from the parent company documenting that the Chief Representative will no longer be legally representing the parent company
Notice of Tax Certificate De-registration
Notice of Customs Certificate De-registration
Bank Closure Notification
Chief Representative’s Certificate
The SHAIC will issue a De-registration Notification stating the official termination of the RO. The RO’s seals should be destroyed in front of the registration officer.
If any of the certificates were lost, an announcement should be publicized in the newspapers. A letter stating the loss of the certificate, a photocopy of the newspaper announcement and the related payment invoices should be submitted to the relevant government authorities.
PHASE FIVE – DEREGISTER ORGANIZATION CODE CERTIFICATE, STATISTICS CERTIFICATE, EMPLOYMENT PERMIT AND RESIDENCE PERMIT
In accordance with prevailing PRC laws and regulations, the RO is also required to de-register all its other certificates, including:
Organization Code Certificate (To be done at the Shanghai Technology Quality Supervision Bureau)
Statistics Certificate (To be done at the Statistics Bureau)
Employee Permit & Resident Permit (“EP/RP”) for Chief Representative or other Representatives (To be done at the Labor Bureau and the Exit/Entry Bureau respectively)
It is important to highlight the significance of going through a proper liquidation process. In some cases, especially with regards to foreigners who are EP/RP holders, if the EP/RPs are not properly de-registered, the parent company of the RO will be responsible for the activities carried out by the EP/RP holder if he continues to act on behalf of the RO.
Important Disclaimer: While utmost care has been taken to ensure accuracy with the relevant laws at the time of writing, no person should rely on the contents of this article without first obtaining advice from a qualified professional person. This article is issued on the terms and understanding that (1) the author is not responsible for the results of any actions taken on the basis of information in this article, nor for any error in or omission from this article; and (2) the author expressly disclaims all and any liability and responsibility to any person, whether a reader of this publication, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this article.