China Business Series: repatriation of funds out of China
By Thomas M Shoesmith, Woon-Wah Siu and Julian Zou
China imposes controls on the inflow and outflow of foreign exchange. Given the involvement of State Administration of Foreign Exchange (SAFE) and various other governmental agencies in the process, repatriating funds from China can be a trap for the unwary. Foreign investors should familiarise themselves with the approval requirements and procedures.
This advisory is one of a series prepared by Pillsbury’s China practice on questions frequently asked by our clients doing business in China. Here, we outline the general procedure for repatriating funds from a subsidiary in China upon (a) distribution of profits to an offshore parent company and (b) dissolution of the subsidiary. A list of the principal applicable regulations appears in the appendix.
The Chinese government still maintains foreign exchange control, although it has been gradually relaxing some of the restrictions. SAFE is the lead agency in foreign exchange control in China. Other agencies that are involved include the provincial branches of the State Tax Bureau, local tax bureaus and the Ministry of Commerce…
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