In the previous article "Unlocking the Door to Foreign Capital Entry: FDI Filing", Mu Qijun shared the basic process of foreign direct investment (FDI), including FDI foreign exchange registration, capital account types, and procedures for the use of funds.
As mentioned in it, after you have completed the FDI filing, the next step is to choose to open a capital account (and a special deposit account for foreign capital into the country). Among them, there are 2 types of foreign exchange capital account and RMB capital account to choose from.
Foreign exchange capital account: can only be remitted from China to a special account in non-RMB currency.
RMB capital account: a special account that can only be remitted into RMB from abroad (for the sake of difference, hereinafter referred to as cross-border RMB capital).
Previously, Mu Qijun had a Macao customer who wanted to come to the mainland to open a company to do e-commerce business, and needed to use overseas funds to contribute.
After reading the above two definitions, you may think, isn't that just a random choice? The bank will most likely tell you the same - if the capital is foreign exchange, open foreign exchange, and if the capital is RMB, open RMB.
But Mu Qijun told you that this is by no means as simple as just looking at the currency - in addition to the different currencies of these two accounts, in fact, in the settlement of foreign exchange, their subsequent domestic reinvestment registration, income payment facilitation thresholds are also very different, the initial account selection will directly affect the subsequent capital use experience.
This article will talk in detail about the type of capital account selection, what is the impact on the use of enterprises, especially for domestic reinvestment, and how to choose the account type according to the follow-up plan, which is full of dry goods!
Of course, if you faint the text, you can also move your little hand to add Mu Qijun's WeChat (woodsstart001), and Mu Qijun will answer your questions at any time~
Onshore reinvestment
Before we take a closer look at the business norms, let's take a look at the definition of "domestic reinvestment by foreign-invested enterprises" discussed in this article:
[Domestic reinvestment by foreign-invested enterprises] refers to the use of capital by foreign-invested enterprises to make equity investment in China again, including foreign exchange capital and cross-border RMB capital.
Use of cross-border capital for onshore reinvestment
Should the invested enterprise be registered for reinvestment?
Do you want to open a special account to receive investment funds?
Will there be restrictions on the use of funds?
These are all questions that Mu Qijun will often ask once he is involved in reinvestment in his work.
At this time, Mu Qijun will directly throw out the three questions of the soul, which will solve the various intractable problems related to the compliant use of reinvestment filing that you want to know:
1
Is the capital in RMB?
Regarding the nature of capital, which can be judged from the capital account opened by foreign-funded enterprises, Mu Qijun made the following summary:
Among them, if the capital is RMB obtained from foreign exchange settlement or cross-border RMB, it belongs to the RMB referred to here.
2
Whether the invested enterprise is registered in a high-level opening up pilot area
The enterprises in the high-level opening up pilot areas here refer to the enterprises registered in six provinces/municipalities directly under the central government: Shanghai, Jiangsu, Guangdong (including Shenzhen), Beijing, Zhejiang (including Ningbo) and Hainan (except real estate enterprises).
*This question will be related to whether or not a reinvestment registration is required.
3
Whether the investment entity is an investment foreign-invested enterprise
Investment foreign-invested enterprises, including:
Foreign-invested venture capital enterprises
Foreign-invested equity investment enterprises
Foreign Investment Companies
In addition to the above three types of enterprises, general enterprises are non-investment foreign-invested enterprises.
After answering the above three questions, you can gradually compare the following mind map to find the answer to reinvestment! (ps: If you still can't judge, you can also consult Mu Qijun directly~)
*On the whole, the procedures for foreign-invested enterprises to reinvest in China using cross-border RMB capital are relatively convenient, while the reinvestment of RMB capital obtained from foreign exchange or foreign exchange settlement is only more convenient in the high-level opening-up pilot areas. Therefore, Mu Qijun also recommends that everyone take these factors into account from the beginning.
Facilitation of payment of capital account income
Who doesn't know that capital holders can apply for income payment facilitation?
As long as the application is completed, the enterprise does not need to submit the authenticity certificate materials in advance and one by one when using the capital, and can directly handle the payment business by submitting electronic documents online.
The popular understanding is that you can use the online banking function to realize payment, without going to the bank counter in person to handle business, which greatly improves the efficiency of enterprise capital use.
In addition to the above-mentioned differences in the procedures for reinvestment registration, the requirements for income payment facilitation will also be different for foreign exchange capital and cross-border RMB capital accounts.
What conditions do different types of capital accounts need to meet in order to facilitate the payment of income under the capital account, Mu Qijun made the following comparisons, and you can judge by yourself:
Note: The above requirements for high-quality enterprises refer to the "Cross-border RMB Settlement Facilitation Plan for High-quality Enterprises under the Self-Regulatory Mechanism of Guangdong Province (2023 Revised Edition)" issued by the Self-Regulatory Mechanism of Guangdong Province.
Scope of use of capital
As for the scope of use of capital, whether it is cross-border RMB or foreign exchange, it should actually be used in accordance with the principle of authenticity and self-use, and cannot violate the management of the negative list:
1. It shall not be directly or indirectly used for expenditures prohibited by national laws and regulations;
2. Unless otherwise expressly stated, it shall not be used directly or indirectly for securities investment;
3. It shall not be used to issue loans to non-affiliated enterprises (except for the circumstances expressly permitted by the business scope and pilot areas);
4. It shall not be used to purchase residential real estate that is not for self-use (except for enterprises engaged in real estate development and real estate leasing operations).
Analysis:
1. The pilot areas here refer to:
- Lingang New Area of Shanghai Pilot Free Trade Zone
- Guangdong Pilot Free Trade Zone, Guangzhou Nansha New Area
- Yangpu Economic Development Zone, Hainan Free Trade Port
- Beilun District, Ningbo City, Zhejiang Province
2. Regarding point 4 of the negative list, there is no restriction for real estate enterprises, but for non-real estate enterprises, it should be noted that the investment involving real estate can be summarized as follows:
√ Residential or non-residential properties such as residences, factories, office buildings, and shops for self-use
√ Non-residential properties such as office buildings and hotels that are not for self-use
x Non-owner-occupied dwellings
summary
From the perspective of capital account reinvestment registration and income payment facilitation, foreign exchange capital and cross-border RMB capital have their own advantages and disadvantages, and it is recommended that foreign investors should make a general plan for the operation of capital before opening an account with a foreign-funded enterprise, and then decide on the currency of the inward remittance.
Generally:
If the foreign-invested enterprise is a simple reinvestment enterprise in China, opening a RMB capital account can reduce the subsequent registration procedures;
If a foreign-invested enterprise has other business other than a controlling shareholder, and foreign exchange payments are relatively frequent, opening a foreign currency capital account will be more flexible in terms of foreign exchange settlement and payment.
Back to the Macau customer at the beginning, which currency should he choose, do you have the answer?
END
Do you have a deeper understanding of the different types of capital? If you have any doubts about the above articles, or want to discuss more knowledge about foreign exchange, please leave a message in the comment area, or you can add Mu Qijun wx (woodsstart001) or join our foreign exchange group for more information!
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