Recently, Luckin Coffee and Kweichow Moutai jointly launched the "sauce latte" product, detonating the buying boom. According to Luckin Coffee's official Weibo account, the first day of sales of the sauce latte exceeded 5.42 million cups, and the first day sales of a single product exceeded 100 million yuan. China, as the world's largest food consumption market, has attracted numerous foreign investors to invest and start food and beverage businesses here. Beijing, as the capital of China and a super first-tier city, with a permanent population of more than 20 million and strong purchasing and consumption power, is undoubtedly one of the first choice for investors. For entrepreneurs interested in setting up a Café in Beijing, Kaizen has compiled the following start-up guidelines for our clients' reference.

Lease of Operation Premises

First, investors need to lease café operating premises before starting the registration process. According to experience, the site selection should avoid the residential building area, and choose a place with water supply, power supply, ventilation, and smoke exhaust as sufficient as possible. In order to avoid being rejected when applying for business license or other special license, it is recommended to consult with the market regulation department in advance to verify the detailed requirements.

It is often safer to rent a space that is currently in use as a Café. If investors instead choose a site that was not previously used as coffee shop, they will need to renovation to make sure it pass inspections, which may involve construction, fire protection, environmental protection and other permits or certifications, although such procedures can be assisted by the construction unit, but such choice is usually more costly and takes longer time.

Legalization of Shareholder’s Identity Documents

Investors can arrange the notarization and legalization of identity documents to meet the needs of company registration during the process of operation premises leasing. Under normal circumstances, if the shareholder is a foreign natural person, the identity documents to be notarized and legalized is the passport (Hong Kong, Macao and Taiwan residents can provide home return permits or Taiwan compatriots' permit, no notarization certification is required); If the shareholder is a company, the identity documents to be notarized and legalized usually include registration documents such as the company incorporation certificate, business registration certificate, director's appointment letter, change documents, annual return and the company's legal representative certificate, it is recommended to consult a professional agency in advance to verify the detailed requirements.

Company Registration

After the operation premises are rented and the legalization of shareholders’ identity documents are completed, the investors could initiate the company registration procedures, including company name declaration, application of Business License, carving of company seals, opening corporate bank accounts, etc.

Application of Special Permit

After the company is officially registered, investors could apply for Food Operation Permit. Only after Food Operation Permit is granted, can the investors operate the coffee business.

Preferential Tax Policy

Value-added Tax

[Café Being VAT Small-scale Taxpayer] The preferential levy rate is 1%. In the meantime, taxpayers with monthly sales of no more than 100,000 yuan will be exempted from VAT.
[Café Being VAT General Taxpayer] The VAT rate applicable is 6%.

Corporate Income Tax

[Café Being Small and Low-profit Enterprise] The taxable amount shall be reduced by 25%, and the enterprise income tax shall be paid at the tax rate of 20%. The effective rate is 5%.

KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advice and services in respect of the formation and registration of company, application for various business licenses and permits, any compliance, tax planning, audit, and accounting in China. Please call and talk to our professional consultants for details.