Chinese Annual Returns Explained
The Chinese annual return reports financial details, business performance, investment information, and shareholder information to the State Administration of Taxation (SAT).
Many components need to be validated to ensure that the company with which you are contemplating doing business is legitimate. A valid Chinese annual return provides you with important pieces of that inquiry.
At Nuna Network, we continue to provide small and medium-sized businesses doing business in China with valuable guides, tips, and other practical information to help you navigate the sometimes complex landscape with Chinese businesses. In this piece, we explore the details of the Chinese annual return, a valuable document that reveals detailed information about a Chinese company. It is a required filing for all companies registered in Mainland China, and must be submitted by a registered Chinese tax accountant professional who was responsible for reviewing and auditing the company’s financial information.
Accessing a Chinese annual return
Consistent with the United Sates, the Mainland Chinese fiscal year runs from January 1st to December 31st. Chinese companies have until June 30th following the close of the previous year to file their tax submissions. Failure to submit the return by this date results in an “abnormal business operations” designation which remains in effect until the company resolves the discrepancies.
You can obtain a Chinese annual return and its registration records from China’s National Enterprise Credit Information Publicity System, administered through the Administration for Industry and Commerce (AIC). Note that each company remains responsible for the validity and legality of the information it provides on its Chinese annual return, and not the AIC system.
Information included on a Chinese annual return
China business license certificate (the 18-digit Chinese business registration number which is also known as the Unified Social Credit Code)
Core business activities
Number of employees, including number of female employees
Controlling interest type
Changes to shareholders
Type (informational website or e-commerce)
It’s important to note that while all companies in Mainland China are required to submit their financial details to the government in a Chinese annual return, they are not required to make that information public. Some studies suggest that the vast majority – more than 99% -- choose not to disclose this information. If a company does choose to make its information public, it would include the following information:
Total operating income
Income from main operations
Total tax paid
Total owners’ equity
If the company holds investments in another company it also must provide that information, including:
Company name in which the investment is held
Company registration number
Chinese annual returns must provide details about each shareholder, including:
Subscribed capital amount
Paid-up capital amount
Companies must provide any changes to their shareholder structure, and include the following information:
Previous and current shareholder holding
Shareholding change date
This part of the Chinese annual return provides details of commitments received from or made to other business entities, including:
Creditor name, including type and amount of debt own
Debt repayment deadline
Guarantee period and form
Companies also must disclose details of its social security commitments, including the number of employees for which it has paid benefits along with the amounts. Often companies do not disclose this information to the public.
Companies also must include details on any changes to the Chinese annual return, including:
Amended item, including the original and edited amendment
As with all Chinese documents, you should take steps to ensure that the China annual return is official and valid. We’ve outlined the steps you can take to verify the validity of a Chinese document in our companion article “Certifying Chinese documents’ authenticity.”
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