Corporate Information
Superior Geographic Location, The Heart of Asia-Pacific
Taiwan is located at the heart of the Asia-Pacific region, which puts it in an advantageous position to make use of global production resources and marketplace. Taiwan’s north is the world’s third-largest economy-Japan, its south is the 10 countries of the Association of Southeast Asian Nations and India. East Taiwan is the world’s largest economy, the US, and its west is mainland China, the world’s second-largest economy and the centre of the world’s economic growth. The average flying time from Taipei to the seven major cities (Hong Kong, Shanghai, Manila, Seoul, Tokyo, Singapore and Sydney) in Western Pacific is merely 2 hours and 55 minutes. The average sailing time from Kaohsiung harbour to the 5 major ports in the region, Manila, Singapore, Hong Kong, Shanghai and Tokyo, is merely 53 hours. Taiwan is the hub of Asian transportation and the logistic centre in the East-Asian region.
Global Innovation Center” and “Global Operations Headquarters
Taiwan is very active in R&D and product innovation. It provides quality products and services, which enable the development of international brands. Taiwan also has easy access to mainland China’s production resources, which makes the rapid achievement of mass production possible. It is a superior innovation and R&D base. Taiwan’s wealthy production experience, the capability to commercialize innovative products rapidly and its global deployment are factors that help Taiwan create a value-added global production chain. Taiwan has become a production base for quality products. Furthermore, the scale and maturity of Taiwan’s capital market can assist Taiwan businesses in mainland China in listing in Taiwan’s exchange market and encourage international capital funds to participate in Taiwan businesses overseas deployment. Taiwan is in a position to be the capital fund centre for the international manufacturing industry and the base for a strategic alliance between multinational companies. These advantages help attract overseas technological professionals to come to Taiwan to start their business and attract foreign companies to come to Taiwan to participate in cross-strait technological projects. Taiwan has products which are designed for global ethnic Chinese markets and is also a testing platform for ethnic Chinese markets. These are also advantages to attract foreign companies to invest in Taiwan.
Potential
Taiwan”s investment environment scores highly in numerous international rankings. In the “Global Competitiveness Report 2019” issued by the World Economic Forum, Taiwan ranks 12th out of 141 economies and fourth in the Asia-Pacific. The Economist Intelligence Unit forecasts Taiwan”s business environment to be 18th best in the world during the 2015 – 2019 period.
In the second (August) “Business Environment Risk Intelligence” report of 2021, Taiwan ranks as the world”s 4d best investment destination. In the World Bank”s “Doing Business 2020” report, Taiwan finished 15th out of 190 economies for ease of doing business.
Manufacturing and high-tech industries drive economic development in Taiwan. The output values of many Taiwanese products and industries, such as semiconductor, optoelectronic, information, and communication products account for more than 70% of the global market share. The production value of circuit wafer OEM makes up 67.4% in the world. These sectors and the assembly and testing sectors are all ranked No.1 in the world. The production values of Taiwan’s IC design, account for 21.5% in the world, and those of the TFT-LCD are in second place in the world. Its PC production value is 3rd.
In conclusion, the international ranking reports show that Taiwan’s business environment remains as excellent as it is now. Looking toward the future, Taiwan will continually create a better, friendlier environment, more conducive to business.
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Overview of Taiwan Companies
Type of Company
Limited Company, Company Limited by Shares
Type of Ordinance
Company Act
Allowed Business Activities
The company engaged in any lawful business but a specific type of business requires a particular license in Taiwan
Local Registered Office/ Agent Required
Yes
Shelf companies Available
Yes (but not common)
Language of Documents
Chinese (Traditional)
Name of Company
Chinese (Must), English (Optional)
Common Seal
Chinese (English can be added)
Overviews of Key Features
Taiwan is located at the heart of the Asia-Pacific region, which puts it in an advantageous position to make use of global production resources and marketplace.
Taiwan’s north is the world’s third-largest economy-Japan, its south is the 10 countries of the Association of Southeast Asian Nations and India. Taiwan’s east is the world’s largest economy-the US, and its west is mainland China-the world’s second-largest economy and the centre of the world’s economic growth. The average flying time from Taipei to the seven major cities (Hong Kong, Shanghai, Manila, Seoul, Tokyo, Singapore and Sydney) in Western Pacific is merely 2 hours and 55 minutes. And the average sailing time from Kaohsiung harbour to the 5 major Asia-Pacific harbours, Manila, Singapore, Hong Kong, Shanghai and Tokyo, is merely 53 hours. Taiwan is the hub of Asian transportation and the logistic centre in the East-Asian region.
Taiwan has been ranked 1st in quality of life and the 2nd best place for expatriate overall in InterNations’ Expat Insider report for 2019.
GENERAL
| Location of Jurisdiction | Taiwan – South East Asia |
| Official Language | Chinese Mandarin and Min Nan |
| Political Stability | Excellent |
| CRS joined country | Yes |
| Tax on Offshore Profits | Yes |
| Disclosure of Beneficial Owner | No |
| Submit Audited Accounts | Financial and tax audit will be required if the company meet certain criteria, e.g. sales, capital, number of employees, specified industries |
| Time to Incorporate | 2~3 months |
CORPORATE
| Type of Offshore Company | Limited Company |
| Type of Law | Company Act |
| Allowed Business Activities | An entity-level certificate/license may be required for certain regulated business (e.g. financial institutions, construction) |
| Local Registered Office/ Agent Required | Yes |
| Change of Domicile | Yes |
| Shelf companies Available | Yes |
| Language of Documents | Chinese |
| Name of Company | Chinese |
| Corporate Seal | A metal corporate seal is mandatory |
DIRECTOR
| Eligibility | Any person or company of any nationality |
| Minimum Number of Directors | 1 individual |
| Disclosure to Authorities & Public | Yes |
| Residence Required | May reside anywhere in the world |
| Local Director Required | No |
| Location of Meetings | Anywhere |
COMPANY SECRETARY
| Secretary Required | No |
SHAREHOLDERS
| Minimum number of shareholders | 1 |
| Maximum number of Shareholders | Unlimited |
| Eligibility | Any person of any nationality or body corporate |
| Disclosure to Authorities & Public | Yes |
| Annual General Meetings | Required |
| Location of Meetings | Anywhere |
GENERAL SHARES
| Minimum Number of shares | 1 |
| Maximum Number of shares | Unlimited |
| Bearer Shares Permitted | No |
| Classes of shares permitted | Ordinary shares, preference shares, redeemable shares and shares with or without voting rights. |
SHARE CAPITAL
| Permitted currencies | NTD |
| Minimum paid-up share capital | NTD$1 (if the business entity engages in activities that require a special permit or approval, the authorities may set a higher capital requirement) |
| Maximum share capital | Unlimited, but government charge of NTD$1 for every NTD$4,000 in share capital over NTD$4,000,000 |
| Recommended share capital | Sufficient to pay for initial operating expenses |
| The requirement to be paid up | Yes (capital needs to be examined and certified by a local CPA) |
Restrictions on Name and Activity
Investors should first select a Chinese name for the company that they will be setting up in Taiwan. The company that they set up must then file an application for pre-review of the company name and business scope as well as to retain the company name during the pre-review period with the Central Region Office. Certain words which suggest specialist activity can only be used when the appropriate licenses have been obtained (e.g. asset management, construction, bank).
Financial Statement Requirements
In these cases, an appointed auditor is required, who must be a member of the Taiwan Society of Accountants and hold a practising certificate. Taiwan companies must keep accounting records, which may be kept at the registered office address or elsewhere at the discretion of the directors.
Annual Filings/ Requirements
Filing of Income Tax Return (annually)
Filing of Value-added Tax Return (bi-monthly)
Filing of Withholding Tax Return (monthly and annually)
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Taiwan Type of Companies
Representative Office
Some foreign companies would like to set up a representative office in Taiwan in order to do the business activities, such as market research, signing contract. To set up a representative is easy and fast, however, a representative office cannot perform sales activities and generate sales.
Advantages
- The most efficient form of entity to set up in Taiwan
- There are neither VAT nor corporate income tax filing requirements for representative offices.
Disadvantages
- Cannot issue invoices to customers or apply for a permit to import items to Taiwan.
- Except for the person registered as the chief representative, it is generally difficult to apply for a work permit for other expatriates.
Procedure for setting up a Representative Office
Only businesses recognized as legally established companies in a foreign country are allowed to establish a representative office in Taiwan.
- The foreign investor should first file an Application for Reporting Designated Representative for Handling
- Legal Matters in the ROC with the Central Region Office, MOEA, and obtain its letter of approval.
The investor should then apply to the local tax collection authority for a taxpayer code number.
Limited Company
- The liability of each shareholder limited to capital contribution.
- A limited company is usually chosen by small-to-medium-sized foreign investors. The advantage and disadvantage are summarized below.
Advantages
- The required capital is much lower, and only 1 natural or juristic person is required.
- The liability of the shareholders for the company’s debts is limited to the amount of their respective capital contribution.
- May invest in the stock and real estate markets in Taiwan.
Disadvantages
- Subject to higher tax in comparison to branch operations.
- The managing director cannot be removed from office without the approval of all members.
- Capital gains tax is charged to interest sales of limited companies.
- Prior approval must be obtained from all shareholders before a shareholder can sell shares.
- A holding company cannot charge management overhead to Taiwan.
Branch Office
A “branch office” is a profit-seeking business entity established for the purpose of doing business in Taiwan, with a head office located in a foreign country.
Foreign business entities registered as companies under foreign laws shall first apply for recognition as a foreign company and its establishment of a branch office in Taiwan with the Department of Commerce under the MOEA. The foreign company establishing a branch office shall appoint a representative for litigious and non-litigious matters in Taiwan and a branch manager for managing day-to-day business operations. If the branch manager is a foreign national, he or she shall obtain a work permit from the Council of Labor Affairs. Branch offices shall pay income tax on income generated within Taiwan but are exempt from income tax when they remit their after-tax surplus earnings back to their parent companies because such remittances are not considered distribution of dividends.
Advantages
- The most tax-efficient form of entity to set up in Taiwan.
- Headquarters can allocate management overhead to the Taiwan branch, but such allocation of charges must be done based on group turnover. A CPA certificate is required.
Disadvantages
- Branches cannot enjoy tax incentives available to hi-tech companies and claim tax benefits under double taxation agreements signed between Taiwan and other countries.
- Branches do not enjoy limited liability protection in Taiwan. Their liabilities may be enforced against all the assets of the foreign head office, whether the assets are in Taiwan.
- Branches often experience difficulty borrowing funds from local banks. All investments made in Taiwan by the Branch will be registered in the name of its Head Office.
Procedure for setting up a Branch Office
- The foreign investor should first apply to the Central Region Office, MOEA, for an advance check of the Chinese name of his/her company and its field of business, and for retention of that company name.
- He/she should then apply to the Central Region Office, MOEA, for “Recognition of Foreign Company,” evaluation of investment amount, and registration as a “Branch of Foreign Company.”
- An investor must apply to the tax collection authority of the company’s locality to register his/her business.
- The operator of an export/import business must apply first to the Bureau of Foreign Trade, MOEA, for an advance check of its English name, and then apply to that Bureau for registration as an export/import business.
- A company that is engaged in the manufacturing or processing of goods must apply for a factory registration with the local county or city government where the factory is situated. If the factory is located in an export processing zone, science park, or agricultural biotechnology park, the company should apply for registration with the administrative agency in charge of that zone or park.
Company Limited by Shares
There are two most common types of company in Taiwan, limited company and company limited by shares. Each type of company has the following natures,
- Possess legal person status.
- The liability of each shareholder limited to capital contribution.
Advantages
- Generally have a better image than limited companies, and all listed and public companies are companies limited by shares.
- The liability of the shareholders for the company’s debts is limited to the amount of their respective share holding.
- May invest in the stock and real estate markets in Taiwan.
No capital gains tax arising from selling shares.
Disadvantages
- Subject to higher tax in comparison to branch operations.
- Sellers are required to pay security transaction tax at 0.3% of share transaction price when shares are sold.
- A holding company cannot charge management overhead to Taiwan.
Procedures for Setting up a Company Limited by Shares
- Investors should first select a Chinese name for the company that they will be setting up in Taiwan. The company that they set up must then file an application for pre-review of the company name and business scope as well as to retain the company name during the pre-review period with the Central Region Office, MOEA.
- An investor is required to submit the Investment Application Form and relevant documents to the Investment Commission, MOEA. If the invested company is located in an export processing zone or a science park, then the investor should apply directly to the administrative agency in charge of that zone or park.
- For investors making inward remittances of foreign currencies, investment funds may be remitted from abroad after the investment is approved. When the remittance is settled in NT dollars, the original approval documents should be submitted to the domestic bank handling the transaction, and approval of the investment amount must be authorized by the authority which approved the investment according to the paragraph above.
- If the company being established involves an investment of NTD$500 million or more, the investor should apply to the Department of Commerce, MOEA, for the registration of his/her company. If the investment is less than NTD$500 million, the investor should apply to the local municipality government or the Central Region Office, MOEA (for Taiwan Province, Kinmen, and Matsu), depending on location. If the company being set up is located in an export processing zone, science park or free trade zone, the investor should apply directly to the administrative agency in charge of that zone or park.
- An investor must apply to the tax collection authority of the company’s locality to register his/her business.
- The operator of an export/import business must apply first to the Bureau of Foreign Trade, MOEA, for an advance check of its English name, and then apply to that Bureau for registration as an export/import business.
- A company that is engaged in the manufacturing or processing of goods must apply for a factory registration with the local county or city government where it is situated. If the factory is located in an export processing zone, science park, or agricultural biotechnology park, the company should apply for registration with the administrative agency in charge of that zone or park.
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Frequently Asked Questions
WHAT ARE THE MOST COMMON TYPES OF BUSINESS ENTITIES IN TAIWAN?
The most common types of business entities in Taiwan are limited companies and branches. They are easy to set up and can do most types of business activities.
WHAT IS THE DIFFERENCE BETWEEN A LIMITED COMPANY AND A BRANCH IN THE LEGAL PERSPECTIVE?
A limited company is a legal entity separate from its shareholder. The shareholder is responsible for the capital amount invested and can enjoy limited liability protection.
However, a branch is not a legal entity and is an extension of its headquarter. The headquarter and the branch representative bear the unlimited liability of the branch.
WHAT IS THE DIFFERENCE BETWEEN A LIMITED COMPANY AND A BRANCH IN THE TAXATION PERSPECTIVE?
The dividend distributed by a limited company to its shareholder with foreign nationality will be subject to 21% withholding tax.
However, the profit earned by a branch is owned by its foreign headquarter, thus, there is no withholding tax if the branch transfer the profit to its headquarter.
