1. Company’s Background and Requirements

1) Company main business

- Sends Spanish and Latin American tourist to Asia, mainly to China 

- Expected number of tourists is over 2,000 per year

2) Company requirements

- Establish an inbound travel agency company in Beijing to receive tourist from Spain and South America in China

- Employment of 2 expatriate managers to China

3) Company questions

- Whether to form a newly Wholly Foreign Owned Enterprise (WFOE) or take over an existing local travel agency

- Whether to set up the company in HK for the purpose of saving taxes or directly set up the company in Beijing, China

2. RTF Analysis

1) Set up a Wholly Foreign Owned Enterprise (WFOE) or take over an existing local travel agency.

RTF does not suggest taking over an existing local travel agency due to the following reasons:

- Tax issues: The tax office will inspect the previous 3 years’ enterprise accounting books and there might be the risks of detecting unpaid taxes and unpaid taxes, which may result in fines and penalties.

- Timing: The set up process will be longer, up to 6 months to 1 year

- Costs: The costs incurred will be far more beyond that of setting up a new WFOE

2) Set up the company in HK or China

RTF does not find it necessary to establish a company in HK based on the reasons below: 

- Tax challenge: The tax rate in Hong Kong is lower compared to that mainland China so the International Tax Bureau will arrange related parties transaction inspection work on a frequent basis

- Timing: The set up process will be longer, requiring at least another 2 months 

- Costs: Daily Maintenance fees might apply

3. RTF Solutions

Below are the relevant policies and regulations applicable to the registration of a foreign invested travel agency in Mainland China:

- Registered Capital: The registered capital should be at least 300,000.00 RMB

- Security Deposit:  Hold a security deposit bank account with amount worth of 200,000.00 RMB

- Business Operating Address: The business operating address and the registered address should be the same.  The lease agreement should be at least one year.  The operating address should be in line with the applicant business needs

- Operating Assets and Equipment: Possess at least 2 fixed telephone, a fax machine, a photocopier, computer network, owned vehicles

- Business Scope: The enterprise business scope should include domestic tourism, inbound tourism (Note: Foreign invested travel agencies cannot be engaged in outbound tourism)

- Employment:  The respective employees must hold and provide the relevant required certificates and documents

• The legal representative should provide CV and passport copy

• The agency accountant should provide qualification certification 

• The agency manager should provide proof of experience

• The travel agency should employ at least 3 tour guides based on a fixed or unfixed signed labor contract agreement