Foreign Accounting Firms See RO Registrations Cancelled

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Sept. 2 – If a foreign accounting firm in China does not extend its representative office (RO) registration when it expires, the registration may face automatic cancellation by the Chinese authorities. Accordingly, a recent circular by the Ministry of Finance has just announced the cancellation of five foreign accounting companies’ RO registrations in China.

According to the “Circular on the Cancellation of Several Foreign Accounting Firms’ RO Registration (caibanhui [2011] No. 24)” released on August 18, the official approval certificates for the following five foreign accounting firms’ RO establishments have expired and will be cancelled since those companies did not apply for an extension of the governmental approval:

  • The Xiamen RO of BDO (Hong Kong) Limited (approval for RO expired on March 6, 2010)
  • The Beijing RO of Mazars (France) (approval for RO expired on April 26, 2010)
  • The Shanghai RO of “Orient Queen (United States) Accounting Company”(translated company name from “Meiguo Dongfang Huanghou Kuaiji Gongsi” on Circular No.24) (approval for RO expired on August 7, 2010)
  • The Shanghai RO of Rödl & Partner (Germany) (approval for RO expired on May 9, 2011)
  • The Beijing RO of “Nao (Japan) Public Accounting Agency” (translated company name from “Nao Kounin Kaikeisi Jimusyo,” the registered corporate name in Japanese) (approval for RO expired on July 30, 2011)

According to the “Interim Method for Management of ROs of Foreign Accounting Agencies (caihuixiezi [1996] No.1), ” the government’s approval certificate for foreign accounting firms’ ROs in China – whose period of validity lasts three years – can be automatically cancelled if companies do not apply for an extension after its expiry.

The circular also emphasizes that the ROs with their approval certificates cancelled will no longer be allowed to be engaged in related RO business activities, which – according to the “Interim Method No.1” – include accounting and tax consulting services for foreign investors and domestic entities. Companies may receive heavy penalties if the authorities find their cancelled RO continues to operate in China.