Having multiple companies under one owner in China is legal and common: there is no ban on 'splitting' businesses. However, the 'nominee Chinese owner' scheme is expensive in the literal sense: the dividend tax for a nominee is 25% instead of 5%, and that is not even its main risk.
Multiple firms: when it works
The tax authorities in China are indifferent to one owner having multiple legal entities, provided each conducts real business and maintains separate accounting. They can see the connection between companies—via the founder, passport, or address—so a violation in one firm may lead to an audit of all of them.
- risk mitigation: an audit of one category does not stop sales in another
- analytics: profit and loss are visible for each business line separately
- the small business limit of 5 million ¥ in annual turnover is calculated per legal entity: three firms with 4 million ¥ each retain their preferential status, whereas one firm with 12 million ¥ loses it
- flexibility: a successful business line can be scaled, while an unprofitable one can be closed without consequences for the others
Nominee Chinese owner: the cost
The motivation is understandable—avoiding travel and bureaucracy, thinking 'a local will handle everything.' The math says otherwise. Withdrawing profit through a nominee owner is subject to a 25% dividend tax; with direct registration in your own name, it is 5%. For every million yuan in profit, the difference is 200,000 ¥.
| Parameter | Via nominee | Direct registration |
|---|---|---|
| Dividend tax | 25% | 5% |
| Net from 100,000 ¥ | 75,000 ¥ | 95,000 ¥ |
| Control over the firm | with the nominee | full |
| Accounts and seals | with a third party | with you |
| Court dispute in China | court favors the registered owner | you are the owner |
Money is not the main risk. Formally, the company, accounts, seals, and licenses belong to the nominee: they can change the terms or disappear, and proving your ownership in a Chinese court is practically impossible. 'Insurance' contracts with a nominee are not enforceable in China.
Working strategy
- start with one company, registered directly in your name
- as turnover approaches 5 million ¥, open a second firm for a separate business line
- each firm: separate accounting, separate account, separate business logic
- no nominees in any of them
Frequently asked questions
Is it legal for me to own multiple companies in China for my business?
Yes, having multiple companies under one owner is legal and common in China, provided that each entity conducts real business and maintains separate accounting.
What are the benefits of splitting my business into several legal entities?
Splitting allows you to keep each firm under the 5 million ¥ annual turnover limit to retain preferential tax status, while also providing better analytics and the flexibility to scale or close specific business lines independently.
Why should I avoid using a nominee Chinese owner for my company?
Using a nominee is expensive because the dividend tax is 25% compared to 5% for direct ownership, and it carries the major risk that the nominee legally owns your accounts, seals, and licenses.
How long does it take to register a company in my own name?
The entire registration procedure takes 3–5 working days, and a personal visit is recommended to ensure you maintain full control over your business.