Increased Penalties for Invoice Fraud

20 February 2011
In China, a simple receipt does not suffice to record a purchase in a company’s accounting books. Only official tax invoices (called fapiao in Chinese) are accepted, making fraud with these invoices a particular problem to (foreign) businesses operating in China. In recent years, efforts to combat invoice fraud have been intensified, as exemplified by […]
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Pursuing Claims in Chinese Employment Disputes

20 February 2011
In a recent case, a German-invested company in Shanghai terminated the employment agreement with one of their managers, but then failed to pay compensation as agreed in the termination agreement. Settlement negotiations failed, and so the manager had no choice but to turn to arbitration. With our help, he claimed for compensation due under the […]
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China and BVI Exchange Tax Information

20 February 2011
The British Virgin Islands (BVI) are the second largest source of foreign direct investment into China. Many foreign companies use this tax haven to establish their holding structure, while many Chinese companies and individuals use BVI entities to park their (trading) income. The effectiveness, on 31 December 2010, of a treaty on the exchange of […]
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Corporate Governance: Global Values vs. Local Practices

20 February 2011
[The below text is an extract from Chapter 10 (Corporate Governance) of “Chinese Commercial Law: A Practical Guide”. Published in October 2010 by Kluwer Law International, author Maarten Roos (Managing Director of R&P China Lawyers) wrote this book for foreign managers with operations in China. It is available through the publisher (www.kluwerlaw.com) or in online […]
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Winding Up Your Business in China

20 February 2011
While China has done relatively well to weather the strong negative trends of the global economic recession, it has certainly not been left unscathed. One consequence which has emerged is a significant increase in the number of foreign invested enterprises pressed with the urgency to liquidate their assets, whether voluntarily or through the bankruptcy system. […]
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The Future of Representative Offices

20 February 2011
Establishing a Representative Office continues to be a popular approach for foreign companies to establish a presence in China. While this office cannot engage in commercial activities such as trade, services or manufacturing, it does allow for the hiring of local employees (indirectly) and expatriates (directly) who can engage in liaison and marketing, and it […]
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Understanding Director Liabilities to the Company and Managing Directors' Authority

20 February 2011
An American company recently learned this lesson the hard way. After hiring a Chinese general manager without outlining the limits on her authority, the GM proceeded to inappropriately use company funds for the benefit of a third-party. Without the evidence that is provided by clear delineation of authority within the articles of association, the employee […]
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Planning for the End: Protecting Your Interest in a Joint Venture before the Worst Happens

20 February 2011
Joint Ventures (JVs) between Chinese and foreign companies have been a prevalent source of dispute and frustration. While these ventures provide advantages to both parties, at some point in the time the interests of the partners often begin to diverge, with at least one of the parties having less incentive to compromise its own interests […]
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Court Rules on Employment Disputes

20 February 2011
Recently, the Supreme People’s Court issued the Third Interpretation on Several Issues on the Applicable Law of Judging Employment Dispute (“Interpretations”), effective 14 September 2010. The Interpretations can have a great impact on how certain kinds of employment disputes will be handled; when managing their human resources, employers should carefully consider the following points in […]
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Tax Official Empowered to Tackle Export VAT Refund Fraud

20 February 2011
With new and potentially onerous requirements for exporters, the Chinese State Administration of Taxation issued Bulletin No.11 Administrative Measures for the Verifications of Taxation on Export Goods by Sending Letter Confirmations (“Bulletin No.11”) on August 30, 2010. Designed to combat and prevent export tax refund fraud, Bulletin No.11 adjusts the procedures for export tax refund […]
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