Company Incorporation
Taiwan Company Incorporation
The pros of opening a company in Taiwan
- Taiwan is located in the center of Asia-Pacific, which puts it in an advantageous position to make use of global production resources and marketplace. The average flying time from Taipei to the 6 major cities, Hong Kong, Shanghai, Seoul, Tokyo, Singapore, and Sydney, in Western Pacific is merely within 3 hours;
- Competitive tax rate. Taiwan’s corporate income tax rate is 20%, comparatively lower than Japan, Korea, China. The VAT rate is 5%, which is lower than Japan, Korea, China, and Singapore;
- It is relatively easy, when compared to other Asian countries, to open a business bank account and transfer funds internationally, if you provide the required documents to the bank;
- In order to attract foreign professionals, foreigners with expertise can get a work permit easier than many other Asian countries and enjoy the favorable income tax incentives;
- Taiwan government established the specific-purpose zones that can suit the changing business demands. There are 10 export processing zones, 174 industrial parks, 3 science parks, 2 agricultural technology parks, 4 environmental science, technology parks, and 7 free trade zones;
- The distribution of industrial clusters in Taiwan can generally be broken down into electronics and technology in the north, precision machinery in central regions, and petrochemicals and heavy industry in the south. It offers an industrial supply chain that can meet client needs, fast responses and quickly provide customized components and products.
- Taiwan’s intellectual property laws are open and transparent. Not only they meet the basic guidelines established under international treaties, but also undergo revisions in response to business and international intellectual property law developments.
- Taiwan’s excellent labor force is boosted by its universal education system, which each year adds more than 300,000 new graduates at the junior college and university level or above. According to a recent survey, 51% of the labor force had at least a bachelor degree.
The cons of opening a company in Taiwan
- Taiwan’s corporate income tax system is global-wide based, which means both offshore and onshore income of a business entity registered in Taiwan will be subject to Taiwan corporate income tax. However, Taiwan business entities can get the foreign tax credit to offset its income tax liability for the income tax paid in foreign countries.
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How to open a company in Taiwan
Selection of business entity
First of all, you’ll need to select a business entity to be incorporated in Taiwan and the summary table is as below for your reference.
| Limited Company / Limited company by Shares | Branch | Representative Office | |
| Minimum Capital | NTD$1 (Note 1) | NTD$1 (Note 1) | NA |
| Business Scope | Listed in Article of Association Special license may required (e.g. travel, logistics) | Listed in Article of Association Special license may required (e.g. travel, logistics) | Market research, negotiation and sign contract, etc. (Cannot have sales) |
| Minimum Management Requirement | Investor : 1 individual or entity Director : 1 individual (Note 2) | Representative : 1 individual | Representative : 1 individual |
| Limited Liability | Yes, limited to capital amount | NA | NA |
| Audit Requirement | Depends on sales / capital / number of employees / industry | Depends on sales / capital / number of employees / industry | No |
| Corporate Income Tax | 20% | 20% | NA |
| Business Tax | 5% | 5% | No |
| Withholding tax on Dividend / Earning Distribution | 21% | NA | NA |
Note 1: There is a local rule request that the capital should be able to cover the initial operating costs and expenses.
Note 2: 1 individual supervisor will be required for a limited company by shares.
The procedure and required documents to register a company in Taiwan
Limited company / limited company by shares / branch
Name reservation
Foreign investors should firstly select the Chinese name for the company/branch to be incorporated in Taiwan. When filing the application of name reservation, the basic information of the Taiwan entity should also be included, e.g. business activities, representative’s name, phone number and address.
Investment application
A foreign investor is required to submit the Investment Application Form and relevant documents to the relevant unit of MOEA
Open preparatory bank account
A preparatory bank account is needed to be opened in this stage for the capital to be injected. As the Taiwan entity has not yet been incorporated in this stage, the nature of the preparatory bank is an individual account and under the proposed Taiwan entity’s name.
The time frame for bank account opening will be significantly differed by what kind of bank to be chosen (e.g. 1~7 days are required for local banks; 2~4 weeks are required for foreign banks).
Capital injection and audit
The capital should be injected from the investor’s overseas bank account and in foreign currency. The foreign investor need to seek for a local CPA to issue the capital audit report.
If the investor wants to inject the capital from its Taiwan bank account, the source of fund should be well explained with supporting documents to the government unit of MOEA.
Company/branch registration
The foreign investor need to file the application with required documents (e.g. application form, office rental agreement, articles of associations) to the relevant government unit of MOEA. After receiving the approval letter, the Taiwan entity is officially set up and will receive its Taiwan tax ID.
Tax registration
The investor must apply to the tax collection authority of the company’s locality to register the business entity in Taiwan. An tax interview will be arranged and the Taiwan entity’s representative will need to visit the tax office in order to understand the Taiwan business.
Open official bank account
Lastly, the investor needs to transfer the preparatory bank account to the official bank account.
The time frame for bank account opening will be significantly differed by what kind of bank to be chosen (e.g. 1~7 days are required for local banks; 2~4 weeks are required for foreign banks).
Time frame
The total time frame of set up a Taiwan business entity may be around 3~4 months (in which the government processing time will be around 2 months).
Document required – for proposed representative
- Copy of passport of representative
- Power of attorney
Document required – for headquarter
- Certificate of incorporation
- Articles of association
- Power of attorney
- Organization structure
- Shareholder and director lists of each business entity directly or indirectly holds the Taiwan company (until the ultimate beneficial owner)
- Copy of passport for individual ultimate beneficial owners who directly or indirectly hold 25% ownership
- Investment plan (including Taiwan company’s business model and financial plan)
Representative office
Representative office registration
The foreign investor should first file an application to Central Region Office, MOEA, and obtain its letter of approval.
Tax registration
The investor should then apply to the local tax collection authority for a taxpayer code number.
Document required – for proposed representative
- Copy of passport of representative
- Power of attorney
Document required – for headquarter
- Certificate of incorporation
- Articles of association
- Power of attorney
- Investment plan (including Taiwan company’s business model and financial plan)
Do you need to come to Taiwan?
The only reason to come to Taiwan during the incorporation process is that most local banks request the representative to visit the bank in person for bank account opening. Thus, if you want to assign a foreigner as the representative for your Taiwan business entity, the representative will need to come to Taiwan 2 times for the preparatory and official bank account opening.
The Taiwan banks can be categorized into 3 main types, government-owned banks, private-owned banks and foreign-based banks. In order to facilitate the incorporation process, some banks can accept a Power of Attorney (POA) instead of visiting Taiwan in person.
Government-owned local banks
It is very easy to open a bank account in government-owned banks. However, they do not accept the POA for bank account opening and request the representative personally to visit the bank in person;
Private-owned local banks
They provide more flexibility to clients as they are more aggressive to attract customers. However, each bank has its own policy and the relationship is also important;
Foreign-based banks
Foreign-based banks provide the most flexibility for bank account opening to clients. For example, some banks accept POA and some banks will arrange web meetings. However, they usually set certain requirements, e.g. annual sales, capital amount, certain industries. Their target clients are usually large-sized and multinational companies.
Selecting a proper bank to open the bank account during the incorporation process is important. Sometimes, the incorporation might be significantly delayed by miscommunication with the banker. Thus, you should assign a Taiwanese agent or a person who can speak Chinese to support on the bank account opening.
Frequently Asked Questions
DO I NEED TO COME TO TAIWAN DURING THE INCORPORATION PROCESS?
The only reason to come to Taiwan during the incorporation process is that most local banks request the representative to visit the bank in person for bank account opening. Thus, if you want to assign a foreigner as the representative for your Taiwan business entity, the representative will need to come to Taiwan 2 times for the preparatory and official bank account opening.
The Taiwan banks can be categorized into 3 main types, government-owned banks, private-owned banks, and foreign-based banks. In order to facilitate the incorporation process, some banks can accept a Power of Attorney (POA) instead of visiting Taiwan in person.
Government-owned local banks
It is very easy to open a bank account in government-owned banks. However, they do not accept the POA for bank account opening and request the representative personally to visit the bank in person;
Private-owned local banks
They provide more flexibility to clients as they are more aggressive to attract customers. However, each bank has its own policy and the relationship is also important;
Foreign-based banks
Foreign-based banks provide the most flexibility for the bank account opening to clients. For example, some banks accept POA and some banks will arrange web meetings. However, they usually set certain requirements, e.g. annual sales, capital amount, certain industries. Their target clients are usually large-sized and multinational companies.
Selecting a proper bank to open the bank account during the incorporation process is important. Sometimes, the incorporation might be significantly delayed by miscommunication with the banker. Thus, you should assign a Taiwanese agent or a person who can speak Chinese to support the bank account opening.
IS THE DIRECTOR REQUIRED TO STAY AND LIVE IN TAIWAN ?
No, the director can be a foreigner, and no need to stay in Taiwan.
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 BRAND IN THE LEGAL PERSPECTIVE?
A limited company is a legal entity separated from its shareholder. The shareholder is responsible for the capital amount invested and can enjoy the 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 transfers the profit to its headquarter.
IS THERE ANY CAPITAL REQUIREMENT FOR A FOREIGNER TO SET UP A COMPANY IN TAIWAN?
There is no regulation requesting the minimum capital amount for a foreigner who wants to set up a company in Taiwan.
However, there is a local rule that mentions that the capital of a newly set up company should be able to cover the initial operating cost of your Taiwan business.
Thus, we would suggest you to set up at least NTD$200,000 as your Taiwan company’s initial capital amount.
CAN REGISTER THE CAPITAL IN FOREIGN CURRENCY?
No, the capital must be registered in New Taiwan Dollar.
IS THERE ANY LIMITATION ON THE USE OF CAPITAL?
Basically, the capital fund can be freely used if it is for the business operating purpose, not personal use.
It is not recommended to transfer the fund from the bank immediately after the company is incorporated. It will be subject to penalty if you cannot provide the supporting documents when an investigation is proceeded.
CAN A FOREIGN SHAREHOLDER HOLD 100% OF A TAIWAN COMPANY?
Yes, a foreign individual or corporate can hold 100% of a Taiwan company. An approval from Investment Commission will be required before you submit the company registration.
CAN A FOREIGNER DO THE JOINT VENTURE WITH A TAIWANESE OR OTHER FOREIGNER?
Yes, a foreigner can do the joint venture with 1 or more persons of any nationality. If the representative with foreign nationality need to apply for the work permit, the foreign ownership must be above 1/3 of the Taiwan company.
CAN ALL THE TYPES OF TAIWAN BUSINESS ENTITIES DO THE SALES ACTIVITIES IN TAIWAN?
No, if you set up a representative office in Taiwan, the representative office cannot do the sales activities or generate revenue in Taiwan.
IF I SET UP A LIMITED COMPANY AND WANT TO DO SOME BUSINESS ACTIVITIES IN TAIWAN, HOW SHOULD I DECIDE THE BUSINESS SCOPE?
Taiwan categorizes all the business activities into different business codes. You can check the list of business codes and decide which one you will do in Taiwan.
HOW MANY BUSINESS CODES I CAN SELECT FOR MY TAIWAN COMPANY?
There is no limitation on the number of business code. However, we would suggest you to choose the most likely you will do in Taiwan.
WILL MY TAIWAN BUSINESS ENTITY'S BUSINESS CODE BE SHOWN IN THE PUBLIC GOVERNMENT WEBSITE?
Yes, the business code can be found in the public government website.
