The annual compliance calendar for a company in China

Most compliance failures are not disputes about tax. They are calendar failures: a company that files eleven months correctly and misses the twelfth pays a fine, a daily surcharge and a credit-rating downgrade that takes a year to repair.

The year at a glance#

The two dates with the most money attached#

31 May. The annual CIT reconciliation settles the difference between the quarterly prepayments and the actual liability, and it depends on the statutory audit being finished. A company that leaves the audit until May is asking a CPA firm to work in its busiest four weeks; the file arrives late and the reconciliation goes in incomplete.

30 June. Two separate reports fall due in the same month. The market regulator’s annual report is public, free to file and shared with the tax, customs and social insurance authorities — a company that ignores it appears on the abnormal operations list, which any counterparty running a credit check can see. The SAFE registration is the annual confirmation of the entity’s foreign-invested equity position, filed through the bank that holds the capital account.

What the annual audit actually requires#

• A licensed Chinese CPA firm. The report is issued and signed by that firm, not by the bookkeeper: Chengli prepares the file and coordinates, and engages a partner firm for the opinion.
• PRC GAAP statements — balance sheet, income statement, cash flow statement and notes, with the prior-year comparatives.
• Bank confirmations, a physical inventory count where stock exists, and a review of related-party transactions and balances.
• A file that reconciles to the tax returns. The usual delay is not the audit itself but a ledger that does not agree with the VAT filings.

Fees start at RMB 6,000 for a straightforward trading entity and rise with turnover, headcount and group reporting requirements. The audit is quoted separately from the monthly retainer because the work is performed by a different firm.

What happens when a filing is missed#

• A fine of up to RMB 10,000 per breach, plus a 0.05% daily surcharge on unpaid tax.
• A downgrade in the tax credit rating. Invoicing limits tighten, refunds slow down, and the rating follows the entity into tenders and bank facilities.
• For serious or repeated failures, the legal representative can be restricted from travelling and from being appointed a director of another company.
• Deregistration is blocked until the back filings are complete, which turns a one-year oversight into a two-year exit.

The first twelve months of a new WFOE#

1. Month 1 — tax registration, invoice cap application, social insurance registration, and the first payroll if staff are already hired.
2. Months 2–3 — first VAT and IIT filings; confirm the taxpayer status, small-scale or general, against actual invoicing rather than the plan.
3. Month 4 — Q1 CIT prepayment; check that the ledger agrees with the VAT returns before the first quarter closes.
4. Month 7 — Q2 filings and the social insurance base reset; review whether the entity still qualifies as a small low-profit enterprise.
5. Month 10 — Q3 filings; start the audit file so that April is not the first time the CPA firm has seen the ledger.
6. Month 12 — annual closing, then the audit, the CIT reconciliation and the two June reports prepared in one workstream.

The monthly retainer covers the cycle at RMB 200, 400 or 1,200 depending on taxpayer status and headcount; the audit is separate. What the calendar above adds is sequencing — the reports due in June are decided by how the ledger was kept in January.