Setting up a branch office in Taiwan can be an attractive option for foreign companies looking to expand their business presence in Asia. Taiwan has a vibrant economy and a strategic location, making it an ideal destination for businesses looking to access the Asian market.
If you are planning to set up a branch in Taiwan, you should be careful about complying with local regulations, understanding the market competition and customer demand, choosing the right location and staffing, and having a clear marketing and sales strategy to establish your brand in the market.
In this article, we will discuss how to set up a branch office in Taiwan including the legal requirements and the registration process.
Considerations of Setting up a Branch Office
Setting up a branch office in Taiwan can have many benefits for foreign companies, including ease of setup, access to a wide range of markets, and a presence in a strategic location in Asia. Additionally, the income tax is assessed only on the branch’s profits, which can be beneficial for foreign companies looking to minimize their tax liability.
However, it is also important to understand that a branch office is just an extension of foreign company in Taiwan, not an independent legal entity. This means that the foreign company is liable for the actions of the branch office in Taiwan. The branch office is not required to appoint a director or supervisor.
What are the Requirements of Setting up a Branch Office?
- Chinese company name
Your foreign company will need a Chinese company name. The Taiwan branch will follow the headquarter’s name with the wording of “Taiwan branch” at the end of the name to be registered.
- Capital requirement
You need to decide a capital amount to be registered for your Taiwan branch office. The capital needs to be transferred from the headquarter’s bank account in foreign currency and exchanged to new Taiwan dollars for business registration.
If your Taiwan branch needs to hire foreigners, there will be additional capital requirements to be met
- Business scope
Foreign and Taiwanese companies are applying the same company laws in Taiwan. Thus, your Taiwan branch basically can conduct business in Taiwan just as a local company. But if you want to do some regulated business such as construction, logistics etc., then you will need to apply for a special license.
- Legal representative
You need to assign a legal representative for the Taiwan branch. The representative can be a foreigner with any nationality and residing in Taiwan is not required.
- Registered address
An address will be a must for your Taiwan branch office. You can rent an office location or find a business center for registration purposes only.
Taiwan Branch Registration Process
The branch registration process is similar to the limited company set up. You need to prepare the documents and submit them to the Department of Commerce, Ministry of Economic Affairs. The total time frame of government/bank processing time will be around 3 months and the process and time for each step is described as below:
- Reserve a Chinese name for your company (3 working days)
- Apply for the investment approval (2 to 4 weeks)
- Open a preparatory bank account (1 day to 1 month depends on which bank you select)
- Inject the capital and perform the capital audit (1 week)
- File the branch registration (2 weeks, the branch is officially set up)
- File the tax registration (3 weeks)
- Open the official bank account (1 day to 1 month depends on which bank you select)
As the official language is Chinese, we would suggest you engage with an experienced agent to do the submissions on behalf of you. Bank account is also very important during the incorporation process and a proper agent should be able to suggest a suitable bank to you.
Regulatory Filings after a Taiwan Branch Office is Incorporated
A Taiwan branch needs to comply with most of the regulatory filings as a limited company in Taiwan.
Firstly, a branch office needs to submit the value-added tax(VAT) filings every 2 months. It is mandatory even if there is no transaction happening in the reporting period.
Secondly, the annual corporate income tax return is also the mandatory filing for a branch office in Taiwan. The deadline of the tax return is at the end of May of the following year.
Lastly, withholding tax filing may be also required if you have local payments for employee salary or professional fees.
How Can PREMIA TNC Help you?
PREMIA TNC provides the free consultation service to assist you in the planning stage. Once you engage with our branch incorporation service, our professional and experienced consultants will proceed the document preparation and submission process with due care in details. We will ensure the whole incorporation process is performed successfully and smoothly .
Frequently Asked Questions
Is the representative required to visit Taiwan during the incorporation process?
Yes, the representative needs to visit Taiwan for the bank account opening. However, few banks provide the solution so the representative can assign a local agent to open the bank account.
Is there any minimum capital amount for the branch set up in Taiwan?
There is no requirement of minimum capital amount in the local regulations. However, there is a local ruling that mentions that the capital should be able to cover the initial operation costs.
What is the tax benefit to set up a branch in Taiwan?
There is no withholding tax on the earnings distributed to the headquarter.
(For a limited company, any dividend distributed to its foreign shareholder will be subject to 21% of withholding tax)
What is the corporate income tax and VAT rate if I set up a branch office in Taiwan?
The corporate income tax rate is fixed at 20% and the VAT is 5% in Taiwan.
If my Taiwan branch has offshore revenue, will it be subject to corporate income tax?
Yes, the offshore revenue will be subject to income tax but the foreign tax credit may be applied if the offshore revenue has already been subject to income tax in foreign country.
