CHINA “THREE IN ONE” REFORM
Published on November 24, 2015
In October 2015, the Chinese government enacted a series of policies to simplify the business registration process. Previously, all newly established companies, including foreign enterprises (Whofe and JV), were required to obtain three basic licenses, including a business license, organization code certificate and tax registration certificate. A company visited the relevant authority to apply for each license separately. The above three licenses are now combined into a single integrated business license, referred to as “Three in One” or “One License, One Code.”
“Opinions of the State Council on Promoting Fair Market Competition and Maintaining the Normal Market Order”, issued by the State Council in June 2014, regulates the market supervision system in China, and establishes the basis for industrial and commercial registration reform. More specificially, “Three in One” simplifies the materials required for submission, shortens the time requirement, and ultimately encourages new business formation in China.
The above regulation has been implemented since October 1, 2015 in China. The General Office of the State Council issued “Opinions of the General Office of the State Council on Accelerating the Registration Reform of Consolidating Three Certificates into One Certificate”, and the related national authorities consequently issued new guidelines. Following the official announcement, the new registration process has taken effect in many Chinese cities, and the new documentation requirements for enterprises under the new procedures have been clarified.
Organization Code Certificates and Tax Registration Certificates will not be issued in the future. The new integrated business license with a single code will be adopted and replace the three separate licenses.
This registration reform, “Three in One” or “One License, One Code”, applies to all enterprises and professional farmer’s cooperatives (including branches), and excludes individual businesses. After completing the enterprise registration process, a new Business License complete with a uniform social credit code will be issued to the company and published in the National Enterprise Credit Information Publicity System.
When applying for the new business license, newly established companies should bring one application form and one set of required documents to the local office of the State Administration for Industry and Commerce. In the past, companies needed to submit three separate documents to three separate government authorities.
Previously established companies should apply for the new Business License and return the original licenses to the relevant authorities. When the new Business License is issued, the original documents will automatically become invalid. However, in order to avoid problems caused by possible error and misunderstanding, there will be a transition period for the reform from October 1, 2015 to December 31, 2017. During this period, the previously issued Business License, Organization Code Certificate and Tax Registration Certificate will retain their validity. Therefore, previously established companies should apply for new licenses during the transition period; the assistance of an experienced lawyer can simplify this procedure.
Many newly established companies have already obtained the new Business License. For authorities, the new registration policy will reduce administration costs, increase efficiency and simplify administrative procedures. Due to a simplified application, shorter registration time and fewer company establishment procedures, business registration in China is now a much faster process. The “Three in One” registration policy is truly a breakthrough, for it could also provide information sharing among the industry and with commerce, taxation and quality supervision administration.
This article is intended solely for informational purposes and does not constitute legal advice. Although the information in this article was obtained from reliable official sources, no guarantee is made with regard to its accuracy and completeness.
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