US Company Formation from China (2026): US LLC or C-Corp for Mainland Residents and Chinese Companies, Capital Rules, Tax on Overseas Income and Selling into the US

More US companies are formed for owners in mainland China than for almost any other country. Most of them belong to cross-border sellers in Shenzhen, Guangzhou, Yiwu and Hangzhou, or to manufacturers that want a US importer, warehouse or sales office. Software and gaming teams in Beijing, Shanghai and Chengdu make up the rest.

Forming the company in the USA is easy and can be done from China. The hard parts are on the Chinese side:

• How capital may legally leave China.
• How China taxes a US company and the person who owns it.
• How tariffs and US marketplace rules affect goods made in China, whoever sells them.

This guide covers all three, and treats US LLC formation and US C-Corp formation separately.

In short: a mainland Chinese citizen or company can own 100% of a US LLC or C-Corporation, formed remotely. A Chinese company investing in a US subsidiary normally completes ODI filings (NDRC, MOFCOM and a bank-handled SAFE registration) before sending money. A mainland individual has no routine channel to make direct overseas investment, and the US$50,000 personal foreign exchange quota is not for investing abroad. China taxes residents on worldwide income. A resident individual's dividends from a US company are generally taxed at 20%, with a credit for US tax. Profits kept in a low-taxed foreign company the individual controls can be deemed distributed. A US company effectively managed from China can be a Chinese resident enterprise at 25%. The US–China treaty limits US withholding on dividends, interest and royalties to 10%. Tariffs apply to goods of Chinese origin, whoever imports them. With UCB, a Wyoming LLC with EIN is $249 and a Delaware corporation with EIN is $358, all-in.

Who can own a US company from China

US states do not restrict owners or directors by nationality or residence, and Chinese citizens are no exception. A resident of mainland China can own a US company outright, alone or with partners, and be its sole manager or director. A Chinese company can own a US subsidiary. Nobody needs a US visa, SSN or US address, or to visit. The company needs a registered agent in its state, which is included for the first year in every UCB formation (see registered agent explained), and an EIN from the IRS, which does not require an SSN or ITIN (see EIN for non-residents).

For identity, US banks need a passport. The resident identity card (居民身份证) is not accepted, so a founder without a passport should apply for one first. Use your pinyin name exactly as it appears in the passport on every document. For proof of address, a recent bank statement or utility bill with an English translation works.

Whether US banks and payment platforms will accept you is a separate question from forming the company. It is covered under banking below.

Getting capital out of China legally

This section comes first because it shapes every structure that follows.

A Chinese company investing in a US subsidiary

A Chinese enterprise making an outbound direct investment (境外投资, ODI) normally goes through three steps before money leaves:

• NDRC. A filing with the National Development and Reform Commission (or its provincial office), or approval for sensitive projects.
• MOFCOM. A filing with the Ministry of Commerce (or its provincial commerce department), which issues the Enterprise Overseas Investment Certificate (企业境外投资证书).
• SAFE. Foreign exchange registration, now handled directly by the company's bank under SAFE rules.

After that, the capital can be remitted to the US company's bank account, and later profits can come back through the same registered channel. Projects in sensitive sectors or countries face more scrutiny. A typical trading or sales subsidiary in the USA is a routine filing, but it takes weeks, so start it while the US company is being formed.

Operating without ODI filings, by funding the US company informally or simply diverting export receipts into it, causes problems later. Profits cannot easily be repatriated through formal channels, and the Chinese parent's books do not show the investment it actually holds.

A mainland individual investing directly

China's rules provide no general, routine channel for a resident individual to make direct overseas investment. The annual US$50,000 personal foreign exchange quota is for current-account purposes such as travel, study and family support. When buying foreign currency, the buyer confirms the money will not be used for overseas investment, securities or property.

In practice, individual founders often start with minimal capital in the US company. The company then earns its own revenue directly in the USA, through marketplace payouts or client payments into its US bank account. Anyone planning to put significant personal money into a US company should take advice from a Chinese lawyer. Do not use informal money channels: they carry real legal risk.

Where Chinese resident individuals set up an offshore company that will hold or control assets in China, the classic "red-chip" structure used to raise foreign investment, the individuals must also register under SAFE's Circular 37 through a bank. A Delaware corporation that owns a wholly foreign-owned enterprise (WFOE) in China is exactly such a structure.

How China taxes a US company and its owner

The individual owner

China taxes resident individuals on worldwide income. You are resident if you have a domicile in China, or spend 183 days or more there in a year. Income from a US company reaches the owner mainly as:

• Dividends, taxed at a flat 20% as interest, dividend and bonus income, with a credit for US withholding tax (limited to the Chinese tax on the same income).
• Pay for services, taxed as comprehensive income at progressive rates of up to 45%.
• Gains on selling the shares, taxed at 20% as property transfer income.

Foreign income is reported in the annual reconciliation between 1 March and 30 June of the following year.

China does not have an explicit published rule on how a US LLC is classified. Chinese practice usually looks at the LLC as a foreign company, because it is a separate legal person under US law. On that view, profits kept in the LLC are not yours until distributed, subject to the anti-avoidance rules.

Controlled foreign companies. Article 8 of the Individual Income Tax Law lets the tax authority treat profits as distributed in three conditions together:

• A resident individual controls a foreign company, alone or together with other Chinese residents.
• The company is in a country where the actual tax burden is markedly low. The enterprise rules use 50% of China's 25% rate, so below 12.5%.
• The company does not distribute without a reasonable business need.

A disregarded US LLC pays no US income tax at all, so it is the obvious case for this rule.

The 2025 overseas income campaign. Starting in March 2025 and continuing into 2026, tax bureaus in Shanghai, Beijing, Zhejiang, Shandong, Hubei and elsewhere contacted residents about unreported overseas income for 2022–2024. They sent reminders through the Individual Income Tax app and SMS, then phone calls, then written notices. Late payment interest runs at 0.05% a day. The USA does not exchange account data under the Common Reporting Standard, but that changes nothing about what is taxable. A founder who keeps profits in a US company should report the income on the correct basis from the first year.

The resident enterprise rule

Under China's Enterprise Income Tax Law, a company formed abroad whose place of effective management (实际管理机构) is in China is a Chinese resident enterprise, taxed at 25% on its worldwide income. A US company whose owner and only decision-maker sits in Shenzhen, and whose books, contracts and decisions all live there, can fall within this rule. US companies with real US management, staff or a US board are far easier to defend.

A Chinese company that owns a US subsidiary

A Chinese company pays 25% enterprise income tax on its worldwide income. Dividends from a US subsidiary are taxable, but Chinese companies holding at least 20% of a foreign subsidiary (directly or through up to five tiers) receive an indirect foreign tax credit. The credit covers both the US withholding on the dividend and the US corporate tax already paid on the profits behind it. Excess credits can be carried forward for five years. As the example below shows, this often means no extra Chinese tax on profits that have already borne US corporate tax.

US LLC formation from China

The US side

A single-member LLC owned by a non-resident is disregarded for US tax. If the business is run from China with no US office, US employees or US agents, and no US inventory, its income is generally not effectively connected with a US trade or business, and no US federal income tax is due (see effectively connected income explained). It files Form 5472 with a pro forma Form 1120 every year. Missing it carries a $25,000 penalty (see Form 5472 explained).

Inventory changes this. Stock held in US warehouses, including Amazon fulfilment centres, and sold to US customers raises a real risk that the business has a US trade or business. In that case the LLC's owner files a US return and pays US tax on the connected profit.

The Chinese side

Taken together, the rules above mean a Chinese resident's LLC is seldom tax-free in China. Whichever applies, China taxes the profit:

• Distributed profits are taxed at 20%.
• Retained profits can be deemed distributed under the CFC rule.
• An LLC effectively managed from China can itself be a resident enterprise.

The LLC is useful for its commercial access, not as a tax shelter.

An RMB example

These are illustrative figures, not a client case, at ¥7.2 to the dollar.

Zhang is a software developer in Chengdu who sells a WordPress plugin to American agencies. He forms a Wyoming LLC that holds the customer contracts and receives payments in dollars. Profit is US$80,000, about ¥576,000. He brings US$50,000 to China during the year and leaves the rest in the LLC.

In the USA, no federal income tax is due, because there is no US office, staff or inventory. The LLC files Form 5472 and a pro forma 1120.

In China, his adviser reports the US$50,000 distribution as dividend income: 20% of ¥360,000 is ¥72,000. On the US$30,000 left in the LLC, the adviser considers the CFC rule. The LLC pays no tax and Zhang controls it, so unless there is a business reason to keep the cash there, such as an upcoming US marketing budget, it is safer to treat it as distributed as well. The adviser documents the reason either way.

US C-Corp formation from China

The US side

A C-Corporation pays 21% federal tax on its profits, plus state income tax where it does business, and files Form 1120 and Form 5472 each year (see the 21% corporate tax explained and the C-Corp guide for non-residents). The US–China treaty of 1984 limits US withholding on dividends, interest and royalties paid to China to 10%, claimed on Form W-8BEN or W-8BEN-E (see W-8BEN-E vs W-8BEN).

For a business with US inventory, US staff or a US office, which describes most Chinese manufacturers and serious sellers, the corporation is usually the better vehicle. It is the US taxpayer itself, rather than exposing a Chinese owner or parent to US tax directly. It also fits the ODI framework, which is built around a Chinese enterprise owning a foreign company.

A Shenzhen seller's US subsidiary

These are illustrative figures. A Shenzhen consumer electronics company completes its ODI filings and forms a US corporation. The US company is the importer of record and keeps stock with a third-party logistics provider in California. It sells through Amazon, its own Shopify store and a few US retail chains, buying from the parent at documented arm's-length prices. In a year it earns US$300,000 profit.

The US corporation pays 21% federal tax, US$63,000, plus California franchise tax. To keep the arithmetic simple, ignore state tax. It pays the remaining US$237,000 to its parent as a dividend, with US$23,700 withheld at the treaty rate.

In China, the parent's taxable foreign income is grossed up to the underlying US$300,000. At 25% that is US$75,000. The indirect credit covers US$86,700 of US tax (US$63,000 corporate plus US$23,700 withholding), so no further Chinese tax is due, and the US$11,700 excess carries forward. Total tax on the US$300,000 is about 29%, and the profit is back in China through the registered ODI channel.

Selling goods into the USA from China

A US company does not change where goods come from. Tariffs, including those that apply specifically to Chinese-origin goods, depend on country of origin, not on who imports. The US company as importer of record pays them, and US Customs looks closely at attempts to disguise origin through third countries.

The duty-free de minimis treatment for low-value parcels ended for China-origin shipments in 2025, so direct-to-consumer parcel models now pay duty on every shipment. Rates have changed several times since 2025. Check the current ones with a licensed customs broker before you price products.

Two more points for sellers:

• Sales tax. Marketplaces such as Amazon collect US sales tax on marketplace sales. A US company selling through its own website must handle sales tax itself in states where it has nexus (see state taxes for a foreign-owned LLC).
• Seller verification. Amazon and other marketplaces verify the beneficial owners behind a US company. A US entity is not a way to hide a Chinese owner, and accounts are suspended when documents do not match.

For online sellers more generally, see LLC for e-commerce sellers.

Banking and payments

For mainland residents, banking is the hardest part. Many US fintechs and some banks do not open accounts for companies whose owners live in mainland China. Others do, with more documents and longer reviews. Stripe does not support businesses based in mainland China, which is one reason founders form a US company at all. But Stripe also looks at where the owners and the operations are, and a US company that is plainly run from China may still not qualify.

UCB tells you at the start which banking options are realistic for your profile, before you pay for a bank application. What helps:

• A specific business description and a working English website.
• A US business address with your own suite number.
• Company documents that match exactly.
• For a subsidiary, the parent's business licence and ODI certificate.

See US business bank accounts for non-residents and why banks reject non-resident applications.

Which state

• Wyoming or New Mexico for a small company with no US premises.
• Delaware for a corporation raising money or planning a red-chip structure.
• The state of your warehouse or office for an operating subsidiary. California, Texas, New Jersey and Georgia are common for Chinese importers, because of the ports and logistics hubs.

See best state for non-residents and the state selector.

What it costs

State fees and the first-year registered agent are included. A US business address with your own suite number is $60 a year. Chinese ODI filings, customs brokerage and Chinese tax returns are separate. See what a US LLC costs every year.

Visas

China is not an E-1 or E-2 treaty country, so Chinese nationals cannot get the E-2 investor visa through a US company. The L-1 visa, for a manager or executive transferring from a Chinese company to its US subsidiary, is the usual route for a company expanding into the USA. EB-5 is a separate, much larger investment route. Both need an immigration lawyer.

Common mistakes

• Funding a US company outside the ODI framework, then finding the profits cannot come home through formal channels.
• Assuming a US LLC's profits are untaxed in China because they are untaxed in the USA.
• Running the US company entirely from China without considering the resident enterprise rule.
• Assuming a US importer avoids China tariffs. Duty follows origin.
• Holding inventory in the USA through a disregarded LLC without considering US tax on effectively connected income.
• Skipping Form 5472 because the LLC owed no US tax.

Frequently asked questions

Can a Chinese citizen own a US company? Yes, 100%, living in China or abroad, without visiting the USA.

Can I send money from China to fund my US company? A Chinese company can, after its ODI filings. A mainland individual has no routine direct channel, and the US$50,000 personal quota cannot be used for overseas investment. Take advice from a Chinese lawyer.

How are dividends from my US company taxed in China? At 20% for a resident individual, with a credit for US withholding. A Chinese company gets an indirect credit for the US corporate tax as well, if it holds at least 20%.

How much US tax is withheld on payments to China? 10% on dividends, interest and royalties under the US–China treaty, with Form W-8BEN or W-8BEN-E.

Will a US LLC pay US tax if I run it from China? Not if it has no US office, staff, agents or inventory. With US inventory or staff, it usually will. It files Form 5472 and a pro forma 1120 every year in any case.

Does a US company avoid tariffs on Chinese goods? No. Duties depend on the goods' country of origin.

Do I need an ITIN? Not to form the company or obtain its EIN. See what is an ITIN and who needs one.

How UCB can help

We handle US company formation for owners in China: the state filing, EIN, registered agent, US business address and bank application where realistic, and then the yearly federal returns through our US tax filing service. Your Chinese adviser handles ODI filings and Chinese tax, and we provide the US documents they ask for. See our formation, EIN and bank account package and the country guide.

Setting up a US company from China? Email enquiries@ucbsolutions.com (WhatsApp is not available in mainland China; from elsewhere, WhatsApp +1 315 961 2956).