Introduction of Service Company

Service-type companies operate within defined service sectors, offering activities such as product development, design, manufacturing support, sales, installation, maintenance, and system solution services.

The term "service-type" reflects a shift in industrial focus from traditional manufacturing to service-oriented operations.

I. Introduction to setting up foreign service companies in China

• China’s per capita GDP has surpassed USD 6,000, reaching the global middle-income level. 
• At this stage, the service sector has become a key driver of economic growth and a pillar industry. Expanding new service industries can significantly boost growth, increase effective supply, better meet consumer demand, improve public welfare, and enhance quality of life.
• In this context, agreements like the General Agreement on Trade in Services (GATS) provide a framework for international service trade. They facilitate negotiations among trading partners on issues such as Most-Favored Nation (MFN) treatment and tariff exemptions. GATS defines four modes of service trade: cross-border supply, consumption abroad, commercial presence, and presence of natural persons. The agreement aims to eliminate trade barriers and discriminatory practices in the service sector.

II. Notices to establish a foreign investment service-type company

• Service-type companies typically issue 3% VAT invoices. If annual revenue exceeds RMB 8 million, the company can apply for general taxpayer status and begin issuing 6% VAT invoices, which are deductible.
• There are no strict capital requirements for setting up a foreign-invested service company in China, but a registered capital of over RMB 300,000 is recommended.
• An initial capital payment of 20% is required, with the remaining balance payable during the business operation period. Once the funds are injected, a capital verification report must be issued for regulatory reference.
• Based on business needs, a service company can be upgraded to a commercial trading company.
• When opening a bank account, the legal representative must be present or authorize a qualified agent to handle the process with appropriate documentation.

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