So, you’ve decided to shut down your Representative Office (RO) in China. Thankfully, closing an RO is typically easier than shutting down other business types. But it’s still important to get it right.
Why Companies Close ROs
First up, a quick refresher: An RO is simply a liaison office that:
- Cannot make sales or generate profit in China
- Mainly handles market research and product promotion
Many companies close their ROs not because they’re leaving China, but because they’re growing. Often, businesses start with an RO to test the market, then close it to establish a more substantial entity that can actually sell products and hire employees directly.
Whether you’re upgrading your presence or exiting China completely, the closure process works the same way.
If your business is a Representative Office (RO), this guide is for you. If you operate a Wholly-Owned Foreign Enterprise (WOFE), see our guide on how to close a WOFE in China.
Triggering Deregistration
Time is of the essence when it comes to closing your RO in China. As soon as one of these triggers happens, you have just 60 days to start the deregistration process:
- Your RO’s permission to operate is revoked by Chinese authorities
- Your RO’s registration period expires and you’re not renewing
- Your company decides to shut down the RO
- Your parent company is closing down entirely
Miss this deadline, and you could face penalties or complications in the closure process.
PRO TIP: Staff Matters!
Even though your RO doesn’t directly employ anyone in China (they’re hired through agencies like FESCO), you’ll still be responsible for proper termination costs and any disputes. Check your service agreements – they almost certainly make you liable. Start terminating staff at least 1-2 months before beginning the official deregistration process to avoid delays or unexpected costs later!
The Deregistration Process
\Plan your timeline carefully! Your business registration AND office lease MUST remain valid until you receive your final deregistration notice from the State Administration for Market Regulation (SAMR) in step 4.
Step 1: Tax Clearance and Audit
To deregister an RO, you start by applying to the tax bureau for tax clearance and deregistration. This is often the longest and toughest step, taking about six months. You’ll need to hire a local Chinese CPA firm to audit the RO’s accounts over the past three years to generate a tax clearance report for the tax bureau. Meanwhile, keep filing your monthly taxes until everything is cleared with the bureau.
Step 2: Tax Deregistration
Submit the tax audit report, tax deregistration application, and other documents to the tax bureau.
- If cleared, you’ll get a tax deregistration certificate.
- Any unpaid taxes or issues may require additional action.
Step 3: More Deregistration
After sorting your tax situation, you’ve got two more certificates to cancel:
- Your foreign exchange certificate with SAFE (that’s the State Administration of Foreign Exchange)
- Your customs certificate with the customs authorities
Now here’s the bit that catches many people out: You MUST get deregistration certificates from both these authorities EVEN IF you never registered with them in the first place!
Step 4: Getting SAMR to Say Goodbye
Now for the main event – getting the SAMR to officially recognize your RO no longer exists.
What you’ll need to hand over:
- Your deregistration application letter (basically your “please let us close” formal request)
- That tax deregistration certificate
- Proof from customs and SAFE that you’ve either cancelled your registrations OR never had them in the first place
- Any other bits and bobs the SAMR decides they want
If all goes well, SAMR will issue your “notice of deregistration” – your golden ticket that says “you’re officially done.” They’ll also publicly announce your RO’s closure.
Step 5: Closing Your Bank Accounts
The final step is wrapping up your banking affairs:
- Close all your RO’s bank accounts
- Hand back any unused cheques and deposit slips (don’t chuck these in the bin!)
- Transfer any remaining money out of the accounts
If you’re transferring the money to your parent company, you’ll need to explain why to the bank and get their thumbs up first. It’s not impossible but be prepared for some extra hoops to jump through.
