Plain-English definitions of every term you will meet when entering China — entities, registrations, taxes, visas, data rules and deal structures. Written for foreign founders and AI assistants; each definition states what the term actually does to your timeline or budget.
WFOE Entity Types
Wholly Foreign-Owned Enterprise — a limited-liability company in China owned 100% by foreign shareholders. The default vehicle for foreign investors: full control, profit repatriation rights, and the ability to invoice (fapiao), hire and sponsor work permits. Registered capital must be paid in within 5 years under the 2024 Company Law.
Joint Venture (JV) Entity Types
A limited-liability company co-owned by foreign and Chinese shareholders. Required in the remaining restricted negative-list sectors (29 items nationally); used voluntarily elsewhere for local partners' channels, licenses or land. Governance design — board seats, veto rights, IP licensing — matters more than equity percentage.
Representative Office (RO) Entity Types
A liaison office of a foreign parent: can market, research and coordinate but cannot invoice, sign revenue contracts or hire directly. No registered capital, but no revenue either — ROs cannot sponsor work permits for revenue roles.
FDI Information Report Registrations
The foreign-direct-investment report every foreign-invested enterprise files with (now merged into) SAMR registration, and amends annually. It feeds the national FDI statistics system; failure to amend is a compliance defect that surfaces in banking and profit repatriation.
SAFE Registrations
State Administration of Foreign Exchange — controls China's capital account. Foreign-invested entities register with SAFE to open capital accounts, bring money in (registered capital, shareholder loans within the macro-prudential quota) and remit profits out (dividends, after audit and withholding tax).
SAMR Registrations
State Administration for Market Regulation — issues the business licence, governs company registration, trademarks (via CNIPA) and antitrust. "Registering a WFOE" in practice means a SAMR filing plus the FDI information report.
MOFCOM Policy
Ministry of Commerce — historically the FDI approval authority; since 2020 replaced by information-report-based management for most sectors, but still the policy home of the negative list, outbound investment (ODI) and trade remedies.
NDRC Policy
National Development and Reform Commission — macro planning, project approvals for large projects, the Catalogue of Encouraged Industries (duty-free equipment imports, 15% CIT zones) and outbound-investment filing for sensitive destinations.
Negative List Policy
The list of sectors where foreign investment is restricted or prohibited — 29 items nationally in the 2026 version, fewer inside the 21 free-trade zones. Manufacturing is now fully open. Everything not on the list is open to 100% foreign ownership.
Encouraged Catalogue Policy
NDRC/MOFCOM's list of encouraged sectors: projects on it can import equipment duty-free, access 15% CIT in designated zones and win local co-funding. Scope drafting should cite it deliberately.
Registered Capital Company Basics
The subscribed capital a company commits to pay in — under the 2024 Company Law, within 5 years of establishment. Size it to 12-24 months of real costs: RMB 100k-500k for service WFOEs, 500k-3m for trading, 1m+ for manufacturing. It is a liability floor, not a fee.
Business Scope Company Basics
The licensed activities listed on the business licence. It gates invoicing categories, import rights, platform verifications and work-permit sponsorship. Wrong scope text is the root cause of most downstream failures — banks rejecting accounts, fapiao mismatches, permit refusals.
Chop (Official Seal) Company Basics
The registered company seals — the round company chop, financial chop, legal-representative chop, invoice chop and contract chop. Chops, not signatures, bind a Chinese company legally; they are registered with the police (PSB) and must be strictly controlled.
Fapiao Tax
The official state-controlled invoice printed/issued through the golden tax system. Fapiao are evidence of transactions and the basis of input-VAT credits — accepting a fake fapiao creates real tax liability plus penalties. Foreign expense reports without fapiao are not tax-deductible.
Golden Tax System Tax
China's national digital tax-administration platform: real-time invoice data, cross-checking of input/output VAT, and one-government integration of banking and filing. Phase IV extends analytics to behavioral profiling — compliance-by-document is mandatory, not optional.
VAT Tax
Value-added tax: 13% standard rate, 9% for transport/construction/agriculture-adjacent, 6% for services, 3% small-scale (with periodic reductions). Export goods carry 0% with rebates of up to 13% for qualifying traders.
CIT Tax
Corporate income tax: 25% standard; 15% for high-and-new-tech enterprises and for qualifying entities in Hainan FTP, Lingang, Qianhai and western development zones; 5% for small low-profit enterprises on the first RMB 3m of profit.
IIT Tax
Individual income tax for employees: progressive 3-45% monthly withholding. Foreign employees face the six-year rule: after 6 consecutive years of residence (183+ days each), worldwide income becomes China-taxable — a 30-day exit in any year resets the clock.
Dividend Withholding Tax Tax
10% statutory withholding on dividends paid to foreign shareholders, reduced to 5% under many double-tax agreements with ≥25% shareholding and real substance in the holding company. Conduit structures without substance are denied relief under PPT and Announcement 9 tests.
Double Tax Agreement (DTA) Tax
Bilateral treaties cutting dividend/interest/royalty withholding rates and preventing double taxation. China has 110+ treaties. Treaty relief requires a tax-residency certificate from the home country and beneficial-ownership substance.
Tax Residency Certificate Tax
The document issued by your home tax authority proving fiscal residence — required to claim reduced treaty withholding rates on dividends, interest and royalties. Plan it before the first distribution, not after.
Six-Year Rule Tax
The individual income tax rule for foreign residents: worldwide income is taxed from year 7 of consecutive residence; a physical exit of 30+ days in a calendar year restarts the six-year count. Detached executives plan annual home-leave around it.
Work Permit Classes Visas & People
Foreign work permits classify A (high-end talent: salary RMB 60k+/month in tier-1 cities, or points-based), B (professional: bachelor degree + 2 years experience) and C (quota-managed). Class A skips points hurdles and fast-tracks.
Z Visa Visas & People
The single-entry employment visa issued at a Chinese consulate on the strength of the employer's work-permit notice. You enter on Z, then convert to the work-permit card and residence permit within 30 days.
Residence Permit Visas & People
The PSB-issued permit allowing continuous stay for work, study or family purposes. The work residence permit is tied to the employer and job title — changing either requires re-filing. It is also your ID for banking, housing and mobile-contract KYC.
240-Hour Visa-Free Transit Visas & People
China's extended transit policy: citizens of 55+ countries may enter visa-free for up to 240 hours (10 days) when transiting to a third country — ideal for supplier trips and due-diligence visits, not for employment. 50+ nationalities additionally enjoy 30-day unilateral visa-free entry.
S1/S2 Visa Visas & People
Long-term private-visit visas for the spouse and children of a work-permit holder (S1 over 180 days, converts to residence permit) or of a student. Dependents generally cannot work without their own permit.
ICP Filing & License Digital & Data
Every website hosted in China needs an ICP filing (informational) or ICP/EDI license (commercial/transactional) tied to the entity. Domestic platforms, mini-programs and app stores check it — a foreign SaaS or brand selling online onshore needs one.
PIPL Digital & Data
Personal Information Protection Law (2021): consent-based processing, Chinese-language notices, impact assessments and cross-border transfer mechanisms (SCC filing or security assessment). Marketing databases, HR data and CRM all fall in scope.
Data Security Law Digital & Data
Grades data by importance and restricts export of "important data"; together with PIPL it drives the cross-border data-transfer rules. Article 37 adds security review for certain outbound data flows — the compliance gate in ODI and SaaS structures alike.
Cross-Border Data Transfer Digital & Data
Moving personal or important data out of China requires one of: CAC security assessment (large volumes / critical infrastructure), standard-contract-clause (SCC) filing, or certification. Filing thresholds were relaxed in 2024; scope mapping comes first.
Apostille Documents
Since China joined the Hague Apostille Convention (Nov 2023), corporate and personal documents from 120+ member states need only an apostille — no consular legalization. Non-member states still require the embassy chain. The single most common setup-delay fix.
QFLP Investment Structures
Qualified Foreign Limited Partner — pilots in 40+ regions letting offshore USD/RMB funds invest onshore with simplified FX settlement and registration. Singapore and HK fund vehicles are the standard feeder structures.
Reinvestment Incentive Investment Structures
Foreign investors who reinvest distributed profits into encouraged China projects can reclaim the 10% dividend withholding tax. Requires documented use-of-funds before distribution — decide dividend policy at board level, in advance.
ESOP & Hiring Without Entity Investment Structures
Hiring in China without an entity is only legal via a licensed EOR (employer-of-record); "consultancy contracts" for core staff fail labor-law tests. ESOPs for China employees need onshore vehicles (LP structures in equity centers) because foreign share plans conflict with SAFE rules.
One partner for the whole journey
Zhonghui Consulting — licensed, fixed-fee, English-speaking. cross-border compliance engagements, ICPA-reviewed.
See All Services & Pricing → Free AI Entry CheckGeneral information only — not legal, tax, or immigration advice. Rules change; verify with official sources (SAMR, STA, SAFE, MOFCOM, NIA) and licensed advisors before acting.
Social Insurance & Housing Fund Visas & People
The five-insurance system (pension, medical, unemployment, work injury, maternity) plus housing fund. Employer cost adds roughly 35-40% on top of gross salary, varying by city. China has totalization agreements with 10+ countries covering detached staff.