China Tax and Business Consulting

Our team assists a wide range of organizations looking to establish and carry on business in China.

Lee Cadesky and Company Limited is a Hong Kong consulting company which combines Cadesky Tax and Thomas Lee and Partners Limited. With offices in Hong Kong, Macau and Shen Zhen, and a network of working relationships with professionals in major cities in China, we advise on all aspects of doing business in China. Formed in 1996, we have a long history of helping foreign corporations establish in Asia, with a special focus on China.

Establishing a presence in China is far more complex than in Europe or America.  Many organizations encounter challenges associated with:

  • language barriers,
  • cultural differences,
  • rapidly evolving laws and regulations, with many based on local practice and interpretation,
  • lack of a Western-style legal and court system, and
  • high level of government regulation at many levels.

Our team can help maximize advantages, reduce costs, avoid delays, and prevent expensive errors.

Services Required

Our team provides foreign investors with guidance on how to best establish and carry on operations in China. In particular, we help investors:

  • choose the right form of entity (representative office, wholly owned foreign company, or equity joint venture);
  • meet joint venture partners, conduct due diligence reviews, and negotiate joint venture agreements;
  • prepare and submit feasibility studies and obtain government approvals;
  • determine where to locate, considering especially local regulations and tax incentives;
  • manage foreign currency issues;
  • obtain all accounting and legal advice;
  • adhere to government statutory filings;
  • obtain premises and understand land-use rights;
  • obtain local financing;
  • hire personnel;
  • manage environmental issues; and
  • work within a system based partly on common law, partly on civil law, and partly on relationship and local practice.

Our firm has experience helping clients through every stage of their business’ life cycle – from establishing their initial operations in China through to assisting with exit strategies. In particular our experience includes the following.

Initial investigation of business opportunities

The initial investigation of a business opportunity is a critical step that lays the foundation for what is to come. The initial investigation into setting up business in China involves:

  • assessing initial feasibility, including whether the project will be approved by the authorities;
  • determining possible locations within China;
  • planning the tax aspects of the structure (income tax, transfer pricing, withholding tax, value-added tax, business tax, and customs duty);
  • developing projections of income and cash flow, and a critical path of tasks to be done;
  • visiting China; and
  • identifying joint venture partners and preliminary negotiations with them (if the business is structured as a joint venture).

We assist in all of these areas, through our contacts in Hong Kong and China. In particular, we

  • assess the overall feasibility of the plan, based on experience with similar situations;
  • advise on possible locations;
  • advise on tax matters including the form of the business, how it will be owned, transfer pricing, international tax treaties;
  • review projections and advise on cost estimates;
  • advise on the overall incorporation and approval process; and
  • find joint venture partners and make introductions if required.
Setup of operations in China

The second phase involves setting up operations in China. To establish the business, the following will be needed:

  • developing a feasibility plan to submit to various government bodies for approval,
  • negotiating with state and local authorities,
  • obtaining various approvals,
  • finding a physical location and negotiating a lease or purchase of land-use rights,
  • incorporating a corporation or establishing an equity joint venture,
  • setting up an accounting system,
  • hiring staff,
  • setting up banking facilities, and
  • making various tax and other filings (including foreign exchange registration).

Our fundamental approach is to provide a professional adviser in China who is dedicated to the client in a one-on-one relationship and to bring in specialists, (legal, accounting and tax) as needed.

We also advise on Canadian tax issues concerning

  • transfer pricing
  • deductibility of initial start-up losses,
  • ownership of the China business,
  • characterization of the China income,
  • withholding tax issues,
  • application of the Canada-China tax treaty; and
  • repatriation of income back to Canada.
Maintenance, development, and growth

Clients typically need ongoing assistance with a host of issues, including

  • tax filings and remittances (several filings are needed on a monthly basis);
  • accounting services (accounting must be done monthly);
  • legal issues (copyright, contracts, leases, annual directors’ minutes),
  • government filings (income tax, VAT, payroll, foreign currency); and
  • labour and staffing issues.

We supply persons who can handle routine filings and prepare China tax returns. We also advise on handling problems and issues as they arise.

Sale, merger, and public offering

Clients may also require advice and assistance to

  • expand into other areas and locations;
  • seek mergers, joint venture partners, or go public in Asia (typically on the Hong Kong or Singapore exchanges);
  • sell the business;
  • obtain financing; and
  • buy a China business.

Together with our associates in Asia, we advise on all of these matters.