Additional post-establishment requirements for companies leasing properties in Shenyang

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Shenyang is currently a hotbed for foreign investment, particularly in the high-end retail, real estate and manufacturing sectors. When establishing a company or a branch office the State Tax Bureau requires a Certificate of Tenancy to be issued by the Housing Management Bureau. This sounds straightforward enough, however in order to obtain this document a foreign invested enterprise must present the following documents to the Housing Management Bureau:

  1. A statement issued by the parent company (in Chinese) indicating that their Shenyang company/branch is entitled to use the outlet that the parent company leased from the landlord. The Housing Management Bureau requires two originals of this document chopped with the stamp of the parent company.
  2. A statement issued by the parent company (in Chinese) indicating that the parent company signed the lease contract for its Shenyang entity because the Shenyang entity is not able to sign any contract before the issuance of its business license, and the parent company authorizes the Shenyang branch to apply for the certificate of tenancy. One original, chopped by the parent company, must be provided.

These two similar documents must be submitted separately. As the period between issue of the business license and completion of post-license registrations should not exceed one month (fines may be imposed by the tax bureau if this deadline is not met) it is recommended that investors prepare these documents in advance as the approval procedure and issuance of this Certificate of Tenancy can take time.

The Shenyang government, noted for their bureaucracy, is also charging for this document. The fee is equal to 0.5 percent of the annual rental fee for the premises. This fee is imposed every year.

Although minor, this is another example of a creeping tax on business in this area of China and an opportunity for the government to punish companies who have not applied for this document. Its actual purpose remains unclear to us at the moment.