INTRODUCTION

Accounting period refers to the period when a company accounts for its transactions and prepare its financial statement, over the continuing operation of production and business activities. It is successive as long as the business is on going. Therefore financial statements are prepared at periodic intervals for purposes such as performance evaluation and determination of taxes. In China, the calendar year is adopted as the statutory accounting period, i.e. from 1 st January to 31 st December. All businesses in China are restricted to carry out their accounting period in accordance to the statutory. This is different from other countries, whereby companies are allowed to determine their own accounting period.

WHO NEED TO FOLLOW THE CHINESE ACCOUNTING PERIOD?

All companies, whether local domestic China companies or foreign invested enterprises (FIEs) established in China are subject to the accounting period of 1 st January until 31 st December , including: limited liability companies, non-company business legal persons, partnership enterprises, individual sole proprietor investment enterprises and its branch offices, Wholly Foreign Owned Enterprises, Joint Ventures, as well as other management units.

THE TAX COMPLIANCE PERIOD

Based on the requirements of the China State Administration of Taxation, companies’ tax compliances are to be filed on monthly, quarterly and yearly base. For example, value added tax, business tax and additional tax will be filed on monthly basis; enterprise income tax on quarterly basis; and an overall assessment on both the value added tax and enterprise income tax annually.

STATUTORY AUDIT PERIOD

Based on the regulations in China, all foreign companies are subject to annual statutory PRC audit. The audit period should cover the statutory accounting period of 1 st January to 31 st December. It should be completed and submitted between April and June of the following year.