Simplified Business Registration Procedures in China

8 January, 2016

 

Simplified Business Registration Procedures in China

 

The PRC State Administration for Industry and Commerce (AIC) has recently launched reform of business registration procedure to simplify administrative procedures for companies. The reform aims to improve administrative efficiency while lowering costs.

 

As of 1 October 2015, the National organization code certificate and tax registration certificate will no longer be issued separately for new enterprises or enterprises changing their registration details in China, instead, the local AIC will issue a special "three-in-one licence" to enterprises with both organization code and tax registration code on it and the registration is made public on the national enterprise credit information disclosure system. The enterprises are only required to complete one application form through one administrative window.

 

Before the reform, these certificates, a Business Licence, Organisation Code Certificate and Tax Registration Certificate are used to be approved and issued by departments of industrial and commercial administration, quality and technology supervision and tax administration respectively, which are now transformed into one business license with a unified social credit code consisting of 18 numbers. The industrial and commercial administration department will issue it to legal entities.

 

This reform reflects government desire to reduce the bureaucracy and cut the red tap in the business administration by simplifying procedures and shortening the application time to facilitate the commercial establishment and build a commercial friendly environment for investment. This reform will definitely have a positive effect on both small and large businesses in China and will bring the Chinese corporate legal system more in line with the western countries although the result still remained to be tested.

 

Written by David Cui, Partner, Hylands Law Firm