China Insight - Corporate

On 14 July 2014, the Shanghai Government issued the Supplementary Regulations for Implementation of the Opinions on Encouraging the Establishment of Regional Headquarters by Multinational Companies (the “Regulations”). The Regulations took effect on 14 July 2014 and are valid till 30 June 2017 (and may be extended afterwards).

The Regulations extended certain incentives which are granted to Regional Headquarters of multinational companies (“RHQs”) to so-called “Functional RHQs”. The term “Functional RHQs” is newly introduced by the Regulations and refers to wholly foreign owned enterprises (“WFOEs”) or their branch companies located in Shanghai, which do not fulfill the conditions of formal RHQs (e.g. total group assets of above USD 400 million, total capital investment in China of above USD 10 million and more than 6 companies to be managed by the RHQ), but carry out actual RHQ functions.

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