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Shanghai Free Trade Zone

Updated on Thursday 29th April 2021

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Shanghai Free Trade Zone.jpgSFTZ or Shanghai Free Trade Zone is the first special economic zone established in mainland China in 2013, and one of the most significant. With approximately 121 square kilometers, Shanghai FTZ provides a series of business opportunities and also advantages for foreign investors wanting to develop their operations in this special and highly-developed zone in China. A WFOE in China is the proper business structure for international players in China, but for more information about the company registration in China, we kindly invite you to talk to our specialists in company formation in China.
 

Short facts about Shanghai FTZ

 
Waigaoqiao Free Trade Logistic Park, Yangshan Free Trade Port Area, Waigaoqiao FTZ and Pudong airport Comprehensive FTZ are the four bonded zones in Shanghai FTZ, completed by newly added areas like Zhangjiang Hi-Tech Park, Shanghai Jinqiao Economic and Technological Development zone and Lujiazui Financial and Trade Zone. Foreign investors looking for business in Shanghai FTZ can benefit from varied advantages like no minimum share capital for opening a limited liability company in China or for establishing joint-stock companies. Moreover, the shareholders of a company in Shanghai FTZ can establish at their own discretion the financial contribution in the firm.
 

Advantages of Shanghai Free Trade Zone

 
Being the first special economic zone in China, the authorities took the privilege of establishing a wide range of excellent business policies and measures. Foreign investors can benefit from numerous advantages, like:
 
  1. Shanghai has a one-stop application processing platform for those wanting to open a business here.
  2. The Industry and Commerce Authority in China issues the relevant approvals for businesses in Shanghai.
  3. The same authorities simplified the procedure for acquiring the needed licenses and permits in Shanghai.
  4. The foreign exchange is permitted in Shanghai and it is supervised by the State Administration of Foreign Exchange.
 
Companies established in Shanghai FTZ can operate under the local currency or can exchange into foreign currencies without any restrictions in this matter and with tax-free benefits for at least 10 years. If you would like to start a business in China and especially in Shanghai FTZ, we kindly invite you to address your inquiries to our company formation agents in China.
 

Preferential business climate for investors from abroad

 
Shanghai FTZ is the first special economic zone in China and the one that provides a series of benefits for international investors. For instance, foreigners can establish any kind of activities without any restrictions. Medical services, international shipment & ocean freight, banking, telecommunications, e-commerce, trading and many more. However, it is good to know that sectors like education, social industries, health, public facilities management, sports and entertainment, real estate and finance might be subject to specific regulations. Let our team of experts in China help you in company registration in China and provide the needed assistance with the entitled authorities. 
 

Special business sectors in Shanghai FTZ

 
Transportation, warehousing, and logistics are well-developed sectors that host a multitude of international companies. The import and export sector is controlled by the authorities in Waigaoqiao Port, Pudong International Airport and Yangshan Deepwater Port. Companies wanting to activate in the insurance field are welcomed in Shanghai FTZ. It is good to know that Shanghai Institute of Marine Insurance is the authority that approves such companies in this important free trade zone. Foreign entrepreneurs might be interested in the healthcare sector where they are allowed to open WFOEs or cooperative joint ventures. Among the conditions imposed, we mention that a total investment of at least CNY 20 million is needed. In matters of telecommunication, the restrictions are well-known in China, and are also applicable to special economic zones, considering the state-owned companies activating in this sector. However, foreign investors can develop non-core telecom services which are different from basic messaging and voice calls. It is extremely important to know from the beginning what the business restrictions are in the country you wish to activate, in this case, China. Do not hesitate to solicit complete information about Shanghai FTZ and the sectors in which you can develop your business.
 

Conditions for business in Shanghai Free Trade Zone

 
Besides the current benefit regarding the company registration in SFTZ that says there is no need for a minimum share capital to operate in this zone, international entrepreneurs do not need to contribute with a 15% capital at the time a foreign-invested enterprise (FIE) is incorporated. This regulation was replaced with the possibility of contributing with an amount at their own discretion. Even so, the stockholders are still responsible for the accuracy and validity of capital payments in the company established in SFTZ. It means that such contribution needs to be considered in the company’s accounting aspects, in compliance with the subscribed shares or capital. Here are other aspects to consider for opening a company in Shanghai Free Trade Zone:
 
  • The authorities allow company owners to use a wide range of currencies.
  • A 10-year tax-free period is offered to international business owners in SFTZ.
  • Certain type of transactions requires the use of the local currency.
 
If you would like to know more about how you can register a company in Shanghai Free Trade Zone, please discuss with one of our company formation agents in China.
 

The one-stop applications and advantages involved

 
The one-stop application process allows the registration of companies in SFTZ in a simple and fast manner. If there are specific approvals or licenses to obtain, the registration will prolong for a while. This is normally the case of import and export companies for which a license is needed, being issued in a couple of weeks. There is no need for minimum share capital, so, the registration is made quite rapidly, also helped by a specialist in company formation in China. The one-stop application for companies in SFTZ comes with varied advantages, like the annual inspection system that has been replaced with the annual reporting. Moreover, if you consider it is best to buy virtual office packages in SFTZ, you may do so without restrictions.
 

Financial advantages in SFTZ

 
Business owners in SFTZ have different financial advantages, not only obligations. Besides the fact that there is no need for a minimum share capital at the time of registration, the transfer of funds outside China is free of charge. Another regulation regards the offshore loans and the possibility of using the FTAs (Free Trade Accounts) to apply for offshore loans from outside mainland China, up to twice the capital of the enterprise. Overseas RMB loans are also permitted in STFZ.
 

Taxes in SFTZ

 
Even though the authorities allow a 10-year tax exemption in the Shanghai Free Trade Zone, there are other tax facts to consider:
 
  • The consumption tax and the import-level VAT is imposed on companies producing varied goods in SFTZ, for sale purposes in mainland China.
  • Machinery and equipment are exempt from customs duties and import-level VAT.
  • Finance leasing enterprises can refund the export taxes.
 
If you would like to know more about the taxation in the Shanghai Free Trade Zone, it is recommended to talk to a specialist. Our company formation agents in China can assist in this field.
 

Other interesting facts about SFTZ

 
There is no need for formal custom declarations for overseas shipments. The authorities can accept a shipping bill only, in SFTZ. Retailers with online activities can store their products, in SFTZ special areas, with minimal and affordable costs. In order to avoid agency fees, the Direct Imported Goods Market can be a great option for international suppliers with activities in SFTZ. Shenlan Bonded Exhibition Centre is dedicated to alcoholic beverage producers and retailers operating in Shanghai Free Trade Zone. Transportation and logistics, medical institutions, plus the financial services are on debate for a series of important liberalization policies that will soon be implemented in SFTZ. These important changes are meant to attract more international investors to Shanghai Free Trade Zone and to smooth the business operations as much as possible. You can discuss with our team of company formation representatives in China and find out all the details concerning the business registration in SFTZ and about the new policies. Here are some interesting facts and figures about China:
 
  1. China ranks 31st out of 190 economies in the world, according to the 2020 Doing Business report.
  2. USD 1,769 billion was the approximate total FDI stock for China in 2019.
  3. China is the second-largest foreign direct investment recipient after USA.
  4. Around USD 61 billion was the value of greenfield investments in China in 2019.

 

Ask for accounting services for your company in Shanghai FTZ

 
Tax and accounting services can be solicited from our team of specialists in China. All companies with activities in China, including the ones operating in the free trade zones must align with the accounting requirements enforced. Entrepreneurs from abroad might not be acquainted with the tax legislation in China, hence, a dedicated team with experience in tax and accounting matters can be hired right away. Bookkeeping, payroll, preparation of financial annual statements, tax registration, and tax minimization methods are among the tasks that can be properly managed by our team of specialists with experience in the accounting field. 
 

Choosing our company formation agents in China

 
Doing business in China might be quite challenging for some entrepreneurs from abroad who do not have a clear picture of the applicable legislation. A dedicated team of specialists in company formation in China will prove extremely helpful right from the beginning of the collaboration. A foreign investor can rely on comprehensive assistance and support in matters of business formation that respects the rules and regulations in the field.
 
Professionalism, confidence, transparency, and competence are top attributes of our company formation agents in China who dedicate their attention to all customers interested in a fast start on the Chinese market. We believe that a good communication and collaboration will lead to excellent results for our customers.

 

FAQ about Shanghai FTZ

 
1. Is there a minimum share capital for opening an LLC in Shanghai FTZ?
No, there is no need for a minimum share capital in Shanghai FTZ for LLCs (or WFOE for foreigners) and it represents a solid benefit for international investors in China. Moore details can be discussed with our specialists in company formation in China.
 
2. What authority issued business approvals in Shanghai FTZ?
Companies and businesses in Shanghai FTZ are approved by the Industry and Commerce Authority in China. All the company formalities in this free trade zone can be handled by one of our experts.
 
3. Are there any tax exemptions in Shanghai FTZ?
Yes, companies registered in this important free trade zone in China can benefit from tax exemptions for 10 years. There are other tax advantages that can be explained by one of our specialists.
 
4. Can business owners of companies in Shanghai FTZ transfer funds outside China without fees?
Yes, the transfer of funds in the home country or other states is not subject to taxation. The formalities in this sense can be discussed with our team of company formation agents in China with experience in the tax field.
 
5. Is the use of more than just one currency available in Shanghai FTZ?
Shanghai FTZ offers a wide range of business advantages, among which the possibility of using more than just one currency. Some entrepreneurs might have specific business needs, so this a great benefit.
 
6. What types of businesses are permitted in Shanghai FTZ?
There are many types of activities available in Shanghai FTZ. International entrepreneurs can develop operations related to warehousing, transportation and logistics, fishery, trading, telecommunication, IT, and many more. Feel free to talk to our agents if you want to start a company in China.
 
7. Is company registration a complex process in China?
No, there is no need to worry about the company formation process in China and particularly in the free trade zones. There are simple formalities that can be entirely managed by one of our specialists.
 
8. Do I need special licenses and permits for opening a company in Shanghai FTZ?
Yes, some activities might require special licenses and permits that can be easily obtained. Complete assistance is offered by our company formation agents in China.
 
9. Can joint-stock companies be established in Shanghai FTZ?
Yes, besides registering LLCs one can also consider doing business under the rules of a joint-stock company in Shanghai FTZ. This is another type of structure that can be registered with the help of our agents.
 
10. Is Shanghai FTZ good for business?
Shanghai Free Trade Zone is one of the most appreciated special areas for business development in China. Entrepreneurs from abroad can benefit from a wide range of advantages like tax exemptions. Support for opening a company in Shanghai FTZ can be offered by one of our specialists in company formation in China.
 
Please feel free to contact our team of company formation representatives in China at any time and ask for comprehensive support and information.
 
 

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