What are the rules for repatriating profits from a business in China?

Repatriating profits from a business in China involves adhering to certain rules set out in China’s Business Ventures Law. Generally speaking, profits are to be paid out from the foreign-invested enterprise (FIE) in the form of dividends through the Chinese currency, the Renminbi. The FIE must first seek approval from the foreign exchange bureau and submit relevant documents, such as its market value evaluation report and distributed profit plan. An FIE is also required to open a foreign-exchange account in China to repatriate profits overseas. An FIE can only transfer profits to its parent company overseas in the amount of dividends approved by the competent authorities. The total amount of repatriated profits cannot exceed the profits declared when submitting the annual inspection report. After an FIE transfers profits abroad, it must deposit the approval documents to the foreign exchange bureau and submit a repatriation report within 20 days. In addition, profit repatriation is subject to a 10% withholding tax, of which 5% goes to the local tax bureau and 5% to the state tax bureau. Moreover, an FIE must pay attention to exchange rate fluctuations when repatriating profits overseas, and ensure that its repatriated profits are in line with the rate at the time of profit distribution. Ultimately, complying with these repatriation rules is essential for a business to operate legally in China.

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What are the rules for repatriating profits from a business in China?

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