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The Ministry of Finance on Friday approved the professional services firm KPMG's plan to form a special general partnership in China, marking the first step in the "Big Four" accounting firms' plans to establish deeper roots in the country.
In an online statement, the ministry said the new firm formed through the partnership will have 10 million yuan ($1.57 million) in registered capital and that the joint venture that KPMG had set up in 1992 should cancel its registration.
KPMG was the first among the Big Four accounting firms — the three others being Deloitte Touche Tohmatsu, Ernst & Young and PricewaterhouseCoopers — to receive such an approval after the Finance Ministry in May asked them to go from being members joint ventures to forming local partnerships.
According to the ministry's requirements, the firms should have fewer dealings with non-local partners.
According to the statement, the Chinese Institute of Certified Public Accountants has qualified 15 of KPMG's 25 partners as being local. Its percentage of non-local partners, most of which have Hong Kong qualifications, just meets the acceptable standard.
And that proportion will have to be reduced to no more than 20 percent in the next five years.
Another transitional program by Ernst & Young may also be approved within the next two to three weeks, China Business News reported, citing unnamed sources.