The article was first published in Asian-Counsel
magazine, issue September 2009 www.pbpress.com
The government of Beijing has published the "Several
Provisions on Encouraging Multinational Companies to Establish
Regional Headquarters in Beijing" on 21 May 2009 which update
the previous version from 1999. Rules regarding the implementation
of the new policies were further issued in June 2009 to clarify
recognition criteria and details of the incentives available to
regional headquarters by multinational companies in Beijing.
Beijing was the first Chinese city to publish policies on
encouraging multinational companies to establish regional
headquarters in 1999, offering regional headquarters preferential
policies on taxation, foreign currency management as well as entry
and exit administration etc.. With the development of the economy
in Beijing, some provisions have become common polices and others
became outdated. Thus, the government of Beijing, worked nearly
nine months with the relevant departments to complete the latest
I. Recognition of Regional Headquarters by Multinational
The new policies lower the threshold for establishing regional
headquarters in Beijing, reducing the cumulative amount of paid-in
registered capital contributed by foreign parent companies from USD
30 million to USD 10 million.
Under the new implementation rules, foreign-invested holding
companies and foreign-invested management companies may apply for
the recognition as regional headquarters, where the
foreign-invested management companies should satisfy the following
the total assets of the parent company shall be no less than
USD 400 million;
the aggregate capital actually contributed by the parent
company in China shall be no less than USD 10 million and the
parent company shall invest in (or authorize the management to
manage) at least three domestic or overseas companies,
alternatively the parent company shall invest in (or authorize the
management to manage) at least six domestic or overseas
the registered capital of the management company shall be no
less than USD 2 million; and
the management company shall have the highest administrative
authority over all the Chinese subsidiaries of the parent
II. Government-funded Subsidies and Awards
One-off subsidy shall be granted to regional headquarters newly
registered in or relocated to Beijing after 1 January 2009. The
subsidy amounts from RMB 5 million to 10 million based on the level
of the registered capital of the regional headquarters and such
subsidy shall be paid during a three year period at 40%, 30% and
30%. Moreover, existing regional headquarters may also be eligible
for these incentives depending on the extent of the capital
increase. The accumulated amount of the subsidy shall not exceed
RMB 10 million.
Starting from 2009, regional headquarters that reach a certain
annual turnover for the first time can be granted a one-off reward
of RMB 1 million, RMB 5 million or RMB 10 million. For office rent,
office construction and office purchase, regional headquarters
shall also be granted certain subsidies.
New policies provide incentives for regional headquarters
personnel as well. For instance, for the top-10 regional
headquarters with the largest increase of paid corporate income
taxes within one year, one of its principals shall be rewarded by
III. Expansion of Business Scope
Under the new policies, regional headquarters of multinational
companies are not only permitted to engage in investment, operation
management, fund operation and management, technical support and
R&D, marketing services, personnel training and management
activities, but also to be involved in import and export, domestic
distribution, logistics and service outsourcing.
IV. Talent Introduction
The new policies also include measures to facilitate talent
introduction, entry and exit administration, residence and transfer
of personnel. For instance, foreign senior executives and technical
personnel of regional headquarters, e.g. legal representatives,
general manager, vice general manager and financial controller may
be granted a visa with multiple entries for no more than five years
or a residence permit for expatriates valid for five years.
Moreover, expatriates of regional headquarters are allowed to
purchase real estate in Beijing without a restriction related to
their working period in China.
At present, there are over 160 foreign-invested companies with
their headquarters in Beijing, among which 41 companies have been
recognized as regional headquarters. The new policies will enhance
the functions of the regional headquarters by multinational
companies and promote the economic development in Beijing.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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