Foreign Invested Partnership Enterprise(FIPE)

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Foreign Invested Partnership Enterprise(FIPE)

By setting up aForeign Invested Partnership Enterprise(FIPE) in China, your company will be allowed to have all the functions as WFOE except it is unlimited liability and there is no requirement for registered capital.You can partner with one or more foreign and Chinese partners as you wish.

The length of time for setting up a FIPE is much shorter compare with WFOE and it is suitable for small and medium sized foreign enterprises who wish to operate their in China.

Foreign-invested partnership enterprise (FIPE) is an unlimited liability business entity at least one of whose partners is a foreign investor. Both foreign individuals and legal entities can be partners of a FIPE. The term partnership enterprise refers to general partnerships and limited partnerships. A general partnership enterprise may be formed by general partners who bear unlimited joint and several liabilities for the debts of the partnership. The general partners share unlimited liabilities for the debt of the partnership. On the other hand, a limited partnership enterprise is formed by a combination of general partners and limited partners where the limited partners bear the liabilities for the partnership's debts to the extent of their capital contributions.

A partner may contribute capital to the partnership to garner a share of the partnership's profits or losses. The capital contribution may include money, intellectual property right or other properties, and even labor services at a valuation determined by agreement among the partners.

As for profit distribution, the default format is to follow the percentage of capital contributions made by the partners. However, it can be fully decided by the partners provided in the partnership agreement in the way unnecessarily in proportion to the capital contribution.

Generally, a FIPE as a whole is only subject to Business Tax whose rate in most occasions is **5% of the turnover. No corporate income tax is required. The partners shall pay respectively their partnership income tax.