3 Things You Must Know About Chinese Accounting Standards
China is a very different place comparing to the west, including Chinese accounting standards (CAS). For foreign companies coming to China, getting good local China accounting service is almost a necessity once you're on the ground (Contact ChinaLegalService and see how we can streamline your China accounting process). Here we offer some insights on what you should know about Chinese accounting and the differences between accounting in China and Western (and other foreign) countries...
1. What is required by the law as regards accounting
Your China company must file financial statements and business tax returns monthly, in Chinese
China corporate income tax must be filed quarterly
Every employee must have a written, signed, and stamped contract (in Chinese) which specifies their salary and overtime matters
Profit and Loss statements must be produced in both Chinese and English
Both staff and management need to pay IIT (individual income tax), even if there are few managers and many staffs
Annual China accounting audit where a CPA (certified public accountant) will assess your accounts' compliance and report back to the local MOF authorities, earning you a higher grade of trust
Before repatriating profits will be allowed, companies must have undertaken an annual China accounting audit, and have paid corporate income tax.
2. Differences Between Chinese Accounting Standards & International Accounting Standards
Chinese Accounting Standards is 90% the same as international accounting standards. The important differences are listed as follows:
Companies must deal directly with the Ministry Of Finance (MOF) when submitting accounts in China.
Foreign transactions must be done in RMB, using the official rate.
The financial year begins on Jan 1st in China, running until the 31st.
Chinese accounts are generally classified by function, as opposed to the international standard to classify them by their nature.
Companies need to inform the MOF of the identity of their business partners.
Accounts must be filed monthly, and indirect cash-flow statements and comments on fairness of transactions must be provided within them.
Accounting rules in China may differ from city to city, and even between districts of a certain city.
Doing business in China is not simple. Since Chinese accounting standards differ to those that you're familiar with, and accounting must completely be done in Chinese, your company will need reliable local assistance (Please read ChinaLegalExpress Tax & Accounting Service Proposal. With out local accountancy expertise, we will handle everything from completing your books, to paying taxes for you). Getting good help means you don't need to spend all your time vetting your China accountant, to make sure he/she is not cutting corners and getting you in the stormy water.