To simplify and unify business registrations and corporate filings, the Chinese government has initiated a reform to combine the business license, tax registration certificate and organization code certificate of a PRC-registered entity into one certificate, also known as the "3-in-1 Certificate". As the reform has now been rolled out to the entire country after several pilot periods in certain cities, we summarize below a few things you may want to know about the 3-in-1 Certificate.
1. Before and After
A couple of weeks—to a couple of months—has traditionally been the range of time needed to undergo all of the registrations and filings needed to set up a business, even after a foreign investment project has been approved. The first necessary step has been obtaining a business license (issued by the administration for industry and commerce ("AIC")), followed by a tax registration certificate (co-issued by national and local tax authorities) and then an organization code certificate (issued by the technical supervision authority). Often, the registration process has involved producing many supporting documents during multiple visits to government agencies before finally completing the process.
Now, however, an investor can apply through "a single window" at the AIC. The AIC will in turn process the application with the other two authorities. When the application is approved, a new 3-in-1 Certificate with a "unified social credit code" will be issued. There is no longer a need to apply separately for tax registration and organization code certificates.
After implementation of the 3-in-1 Certificate scheme, the time to set up an entity should be much shorter, with some authorities reportedly able to complete the process in two or three days. However, investors should bear in mind that the system is very new and many local authorities are still finalizing their local application forms and registration rules and policies.
2. Existing Entities and Transition Period
Existing entities are required to apply for the new 3-in-1 Certificate with a unified social credit code from the AIC, and surrender their existing business licenses, tax registration certificates and organization code certificates. There is no application fee for such replacement filings, but all existing entities must submit required application documents to the AIC.
In certain cities, such as Beijing and Shanghai, there is a transition period for the reform: existing certificates that have not yet been replaced with the new 3-in-1 Certificates will remain valid during the transition period (until December 31, 2020 for Beijing, and until December 31, 2017 for Shanghai). After the transition period, the old "non-unified" certificates will become void. Entities operating with void certificates may be subject to administrative fines and other penalties.
If, during the transition period, an entity established before October 1, 2015 needs to apply for any change to its registration, the local AIC will take back the entity's existing non-unified certificates and issue a new 3-in-1 Certificate. Local variations in practice may exist when dealing with existing entities, so we recommend that anyone considering a registration change review the local practice first.
In some cities, such as Guangzhou, no transition period has yet been instituted. In these cities, existing certificates will continue to be effective and will not need to be replaced pending further notice from the local AIC.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.