China has been attracting many businesses over the years due to its booming economy along with an impressively large domestic market with strong spending habits. Fortunately, starting a business in China isn’t complicated—as long as entrepreneurs take note of government regulations and follow them to the letter. If you’re expanding your existing company in China, or if you’re starting a new one from the ground up, one thing you must prioritize is tax compliance.
Basic Taxation Laws for China-Based Businesses
Businesses have to file and pay either monthly or quarterly provisional income taxes within fifteen days after the end of each month or quarter. They’re also required to file and pay their annual income tax return at the end of the tax year, although they’re allowed to complete the process within five months after this date, and they should be able to present an audit certificate from a local registered public accountant.
What Happens If You Won’t Pay Your Taxes?
Tax authorities will collect the amount owed by businesses when they fail to pay their taxes on time. Depending on the situation, they may coordinate with the business’s bank to withhold the amount due (along with late payment surcharges) from the business’s account. The authorities might also seize and sell the business’s assets that are equivalent to the amount owed plus overdue payment fees. On top of this, authorities can also impose a fine on businesses that have underpaid and/or overdue tax payments, with the fine reaching up to five times of the owed amount.
Steps to Make Tax Compliance Easier
Complying with tax laws is less complicated if you know what rules and regulations you need to adhere to. So, learn more about local and national taxation laws and know how to keep your business compliant at all times.
It’s also important to carefully track your earnings and outlays. Create separate bank accounts and credit cards for your company so you can avoid combining your business and personal expenses. Categorize tax-deductible expenses from those that are not, and remember to save all receipts and invoices. Having detailed and well-kept records will make tax filing much easier and help you avoid making mistakes when preparing your tax paperwork.
You’ll also want to reach out to trusted business tax experts in the area. They’ll help you with calculating your tax payments and preparing the required paperwork, and they’ll file your returns on time so you can avoid paying late submission penalties and keep your tax compliance costs low. They’ll also identify which tax incentives your business is eligible for, and they’ll ensure you can take advantage of these programs.
Of course, your tax team will monitor changes in both local and regional tax laws on your behalf and ensure these changes are applied to your tax returns, leaving you with two fewer things to worry about.
Make Tax Compliance a Priority Today
Complying with tax laws is one step to achieving long-term business success in China. Use the tips above to ensure that business is always compliant and avoid any tax-related issues down the road!
