In establishing your company’s accounting structure, one of the first tasks is to identify and to reconcile the differences in accounting practices used by your parent company and the rules in China.
The PRC does not exactly follow international accounting policies and guidelines, although it is moving on this direction and so far, many of the rules and regulations are the same or similar. Therefore, it will be important for your organization to realize the differences. Reporting for statutory purposes in the PRC and reporting to your home office may vary significantly as a result in differences in different accounting rules.
Tax deductibility issues, for example, are significantly different between your parent company and your company in China. They are similar to, but may be more complex than, your dealings in most other countries. Capitalization of assets and depreciation can be another area where the PRC accounting rules will likely vary with the rules in your parent company’s country.
