Evgeny Voronov, Lawyer
More and more Chinese companies are becoming our clients and getting help when opening branches and representative offices. This article is intended to help them avoid problematic situations when accreditation of their branches and representative offices passes.
Branches and representative offices of foreign companies have the right to start their activities after their accreditation carried out by the Inter-district Inspectorate of Federal Tax Service No. 47 in Moscow (hereinafter — the Federal Tax Service). This procedure can be carried out if a complete set of documents, including the documents of the parent company, is provided. For Chinese companies a statute (articles of association), an extract from the trade registry and a certificate from the tax service are usually required. Business licences are being used as an extract from the trade registry, but other certificates issued by government bodies containing the company’s registration number can be used too. Since fall of 2015, the Administrations for Commerce and Industry of the cities and provinces of China had been issuing new business licences, the nuance of which is that they usually substitute an extract and a document from the tax service. However, the Federal Tax Service can issue a refusal because of inconsistency with the list of documents, therefore, along with a business licence, there must be also requested a certificate from the tax service containing the taxpayer’s number.
In the case of companies from Hong Kong and Macao — a completely different situation — the registrar of companies issues not a business licence, but certificates of registration, shareholders, directors and registered office, the tax service issues a certificate of tax residence.
The company will also need a resolution to open a representative office / branch and appoint its head, a power of attorney for this person and regulations of a representative office / branch. The preparation of these documents has its own nuances, so it is better to delegate it to specialists.
We draw your attention to the fact that each of the documents must be issued not earlier than 12 months before applying to the tax service (the same requirement is related to the date of getting a copy of the Articles of Association notarised). It is to be noted that they must be legalised. The legalisation of Chinese documents takes from two weeks to a month or more as they are to be brought to the Ministry of Foreign Affairs of China and then to the Russian consulate. In Macao and Hong Kong, there is another order of legalisation in Macao and Hong Kong: documents are subject to apostilisation which takes less than a week.
It is important to take into account that each of the documents for applying to the Federal Tax Service should be fully translated into Russian. Chinese documents are translated before the legalisation procedure, however, it is needed to translate the cover of documents and the seal of the Ministry of Foreign Affairs of China, otherwise due to incomplete translation there is a big risk of losing 120,000 rubles of state fees, and you will have to form a new set of documents again. Thus, any shortcoming may lead to huge losses of time and money.
Special attention should be paid to the formation of the staff of the branch / representative office. Chinese companies tend to employ Chinese citizens, in this case they should be aware that there cannot be more than 5 foreign employees working at the representative office (this limitation is not applicable to a branch), and each foreign employee must be registered with the migration authorities and obtain a work permit, a work visa and personal accreditation at the Chamber of Commerce and Industry of the Russian Federation. It takes a long time to obtain these, and if a representative office / branch needs to start its activities as soon as possible, we recommend appointing a citizen of the Russian Federation as its head for this time, the information about the head of the representative office can be changed later within a little time and without paying any state fees.
The accreditation procedure is complicated with a number of practical features, therefore it is recommended to contact specialists at the stage of document collection. They are qualified enough to draft documents on opening a branch / representative office, check the set of documents of the Chinese company along with the accuracy of translations. Preparation of documents without taking into account the above characteristics will not be complete, and the accreditation itself will not be successful.