National toll free hotline:
400-711-2005
1. Unlimited liability; A partnership must pay all its debts with property contributed to the partnership by the partners. If the partnership is a general partnership then the partners bear joint and several liability;
2. Limited business names options: Can't have business name with "Company" in it, eg, can't have name lie XYZ Co., or XYZ Co., Ltd. and could only choose names like: XYZ Firm(Partnership enterprise ), XYZ center (Partnership enterprise)
3. Property rights of partnership enterprise is difficult to be transferring to a third party as according to the Partnership Enterprise Law: the property rights of partnership transfer MUST be agreed by all partners in a PIPE;
4. China has not adopted Natural Person's Bankruptcy system, credibility of the partners would be hard to maintain if FIPE involves into a hard situation
5. As for trading business of a FIPE, it would be difficult for FIPE to get VAT status initially.
A partner may contribute capital to the partnership to garner a share of the partnership's profits or losses. A capital contribution may include money, intellectual property right, land use right or other properties, or labor services at a valuation determined by agreement among the partners. If the partnership is a limited partnership, then the limited partners may not make capital contributions with labor services.
The default distribution scheme of profits or losses follows the proportion to capital contributions made by the partners. However, the distribution scheme may follow an informal negotiated agreement or abide by scheme adopted in the partnership agreement. If the proportions of capital contributions cannot be discerned, then the profits or losses will be distributed equally by the partners. The partnership agreement may not distribute all losses or all profits to just one or a group of partners within the partnership.
No corporate income tax required if partners are individuals. The individual partners shall pay their respective share of the partnership income. Corporate income tax applies if partners are companies.
China Government allows Foreign Invested Partner Enterprises (FIPE) remit their profits out of the country and such remittances do not require the prior approval of the State Administration of Foreign Exchange (SAFE). Dividends cannot be distributed and repatriated to oversea if the losses of previous years have not been covered while dividends not distributed in previous years may be distributed together with those of the current year. Repatriating the Registered Capital to home countries is forbidden during the term of business operation.
In China, terms of 15 to 30 years are typical for a FIPE. It is also possible to obtain extensions of the FIPE's duration.
A new rule on foreign employees’ social security in effect starting October 15, 2011. It is said that if a company hires a foreign employee, the company shall register this employee with the local social security authority within 30 days of the employee receiving their work permit.
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