Building a Stable, Defensible and Explainable Compliance Foundation for China Operations

China Entity Foundation™ is a systematic compliance infrastructure service designed by RTF for foreign-invested enterprises operating in China.

It is not a single accounting, tax filing or standalone advisory service. Rather, it is an integrated compliance framework that aligns accounting, taxation, cross-border payments, export VAT fundamentals and HQ governance logic into one consistent and defensible foundation.

The objectives of China Entity Foundation™ are to:

•        Reduce regulatory and audit risks arising from inconsistent day-to-day compliance handling

•        Ensure that China operations are understandable and acceptable to tax authorities, auditors and overseas headquarters

•        Provide a stable foundation for future specialized compliance advisory, risk management and management decision-making

Why Foreign-Invested Enterprises Need China Entity Foundation™

In China, many compliance risks do not arise from complex transactions, but from basic operational inconsistencies, such as:

•        Misalignment between accounting treatment and tax filing logic

•        VAT, export refunds and outbound payments being handled in isolation

•        Fragmented compliance approaches across different service providers

•        Headquarters lacking a clear understanding of the China entity’s compliance status

By the time these issues surface, companies are often already facing tax inspections, audits or remediation requirements.

China Entity Foundation™ is designed to build the risk-prone foundational layers correctly from the outset, before problems arise.

Core Modules of China Entity Foundation™

Module 1 | Accounting & Statutory Tax Compliance

What we do:

•        Establish accounting structures aligned with Chinese regulatory and audit expectations

•        Ensure long-term consistency between accounting treatment and tax filing positions

•        Support monthly, quarterly and annual statutory filings

•        Provide traceable accounting foundations for tax inspections, audits and HQ reviews

What we do not do:

•        We do not pursue “lowest-cost bookkeeping”

•        We do not accept treatments that clearly contradict compliance principles

Role within the framework:

This is the foundational layer of China Entity Foundation™. Without it, all specialized compliance efforts are prone to repeated failure.

Module 2 | VAT Compliance & Filing Logic

What we do:

•        Design VAT treatment logic aligned with business substance

•        Assist in the correct application of VAT rates, calculation methods and deduction rules

•        Ensure consistency between invoices, accounting records and VAT filings

•        Identify compliance risks related to VAT deductions and tax burden

What we do not do:

•        We do not provide mere form-filling or mechanical filing services

•        We do not promise aggressive or policy-unsupported tax savings

Role within the framework:

VAT is one of the most frequently scrutinized taxes in China. This module ensures that daily VAT handling is defensible and review-ready.

Module 3 | Non-Trade Outbound Payment Compliance

What we do:

•        Assess whether outbound payments qualify as non-trade transactions

•        Design payment structures acceptable to banks, foreign exchange and tax authorities

•        Assist in preparing compliant explanation and supporting documentation

•        Reduce rejection and regulatory risks arising from unclear payment nature

What we do not do:

•        We do not replace bank or SAFE approval processes

•        We do not assist in circumventing foreign exchange or tax regulations

Role within the framework:

This is one of the most underestimated yet high-risk compliance areas for foreign-invested enterprises in China.

Module 4 | Export VAT Refund Consistency (Foundational Level)

What we do:

•        Ensure consistency among invoices, customs declarations and collection records at a foundational level

•        Help establish stable and repeatable operational rules

•        Identify obvious compliance risks prior to refund application

•        Lay a solid foundation for future specialized export VAT refund advisory or agency services

What we do not do:

•        We do not guarantee successful VAT refunds

•        We do not perform high-risk, after-the-fact corrective actions

Role within the framework:

This module is not about “obtaining refunds”, but about avoiding the loss of refund eligibility through daily operational mistakes.

Module 5 | Basic Tax Incentive Applicability Support

What we do:

•        Identify applicable basic tax incentives during routine accounting and tax filings

•        Ensure incentives are applied legally and with clear explanatory logic

•        Prevent inadvertent loss of incentives due to incorrect accounting or filing positions

•        Identify compliance issues that may affect incentive eligibility in advance

What we do not do:

•        We do not handle special incentive applications

•        We do not package or promise government subsidies

•        We do not market services based on “maximizing incentives”

Role within the framework:

This is a loss-prevention module, ensuring enterprises do not unintentionally forfeit incentives they are legally entitled to.

Module 6 | HQ-Ready Reporting & Explainability Support

What we do:

•        Translate China accounting and tax outcomes into information understandable by headquarters

•        Provide compliance logic explanations and risk alerts

•        Support headquarters’ oversight and decision-making regarding China subsidiaries

What we do not do:

•        We do not replace HQ audit or internal control functions

Role within the framework:

This module is a key differentiator between China Entity Foundation™ and traditional bookkeeping services.

Who China Entity Foundation™ Is Designed For

•        Foreign-invested enterprises operating long-term in China

•        Companies with lean China teams requiring clear HQ oversight

•        Enterprises seeking to reduce uncertainty in tax inspections and audits

•        Organizations that prefer not to “start over” each time a compliance issue arises

Relationship with Other Compliance Services

China Entity Foundation™ serves as the compliance backbone of China operations. On this foundation, enterprises may further engage in:

•        Specialized compliance and risk advisory

•        Export VAT refund advisory

•        Governance, equity and restructuring consulting

•        Compliance exit and risk closure services

China Entity Foundation™ is not a collection of standalone services, but the compliance infrastructure for long-term China operations.

Contact Us

We do not make decisions for you; we only help you clarify facts and risks.

Phone : 400 800 7472

Email : info@rtfcpa.com