Business Type

Company Establishment

Investment Laws and Regulations: Statute for Investment by Foreign Nationals, Statute for Investment by Overseas Chinese

  1. These two statutes are virtually identical, apart from a few items in which investment is permitted for overseas Chinese but forbidden or restricted for other foreigners

Definition of Investment

  1. Holding shares issued by a Taiwanese company or contributing to the capital of a Taiwanese company.
  2. Establishing a branch office, proprietary business, or partnership in Taiwan.
  3. Providing loan(s) to an invested business as referred to in the preceding two items for a period of at least one year.

Kinds of Investment

  1. Cash.
  2. Machinery and equipment or raw materials for own use.
  3. Patent rights, trademark rights, copyrights, technical knowledge, or other intellectual property rights.
  4. Other property which may be invested under the competent authority’s approval (such as credit through reorganizations, mergers and acquisitions, procurement or stock splits).

Prohibited or Restricted Areas of Investment

  1. Investment is forbidden in enterprises that may negatively affect national security, public order, good customs and practices, or national health, and those that are prohibited by law.
  2. Investors who apply to invest in an industry in which investment is restricted by law or by an order given under the applicable law shall obtain approval thereof or consent thereto from the competent authority in charge of the industry in question.
  3. In line with the previous two paragraphs, the Executive Yuan has adopted the “Negative List for Investment by Foreign Nationals.”

Guarantee of Exchange Settlement

  1. An investor may apply for exchange settlement against the interest accrued on his/her annual income, or against the profit surplus distributed to him/her from his/her investment.
  2. An investor transferring his/her shares or withdrawing or decreasing his/her investment may apply for exchange settlement, in a lump sum, of the total amount of his/her investment as approved. The foregoing clause is also applicable to the capital gains realized from the investor’s investment.
  3. An investor’s application for exchange settlement against the payment of principal and interest on his/ her loan investment shall be governed by the agreed terms and conditions.

Protection Against Expropriation

  1. When foreign investment accounts for 45% or more of the total capital amount of an enterprise, the invested enterprise shall not be subject to requisition or expropriation for a period of 20 years after the commencement of business of the invested enterprise as long as the said capital contribution rate of the investor remains unchanged.
  2. In case the government expropriates or acquires an invested enterprise for national defense reasons, a foreign investor whose investment is less than 45% of the total capital amount of the invested enterprise shall be entitled to a reasonable compensation.

Investment Incentives

  1. Provisions of the Company Law requiring that cash capitalization increases retain a certain proportion of shares for purchase by company employees do not apply to investments which account for more than 45% of the total capital.
  2. Where an invested enterprise is organized as a company under the Company Law, an investor thereof who serves as a supervisor may be exempt from the restrictions on his/her domicile in Taiwan.

Protection of Rights

  1. Except as otherwise provided for in other laws, an enterprise in which the investor has invested shall be accorded the same rights and obligations to which an enterprise operated by local nationals is entitled.

A Company and a Business Enterprise

Business Type Items

Minimum capital requirement

Company

No minimum requirement, but the capital still needs to be examined and certified by a local CPA and covers at least the incorporation cost (Note 1).

Business Enterprise

Not required.
Extent of shareholders/responsible person/partners’ liability
Business expansion
Shareholders are liable to the extent of their capital contribution to the company.
A registered company name is approved by the Ministry of Economic Affairs. This name is legally protected and its usage is nationwide. It is advantageous for business expansion.
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A registered business name is approved by a local (county or city) government. The name protection and usage are limited.
Qualification of being a juristic person
A company is qualified as a juristic person.
Not qualified as a juristic person.
Requirement for accounting books and vouchers.
Must keep complete set of accounting books and accounting records to document its operating results.
Not compulsorily required. The profit and loss is reflected directly in income individually reported by the responsible person or partners.

Note 1: If the business entity engages in activities that require a special permit or approval, the authorities may set a higher capital requirement.

Comparison of a Subsidiary, a Branch Office and a Representative Office

Business Type Items

Company

Business Enterprise

Permitted activities
General trading, sales and manufacturing
General trading, domestic sales and manufacturing
Legal acts and liaison activities
Profit-Seeking Enterprise Income Tax(T)
Starting from 2018, if the total taxable income of a profit-seeking enterprise is NT$120,000 or less, the profit-seeking enterprise is exempt from tax. If the total taxable income of a profit-seeking enterprise is more than NT$120,000, the income tax rate shall be 20%, but the income tax payable shall not exceed one half of the portion of taxable income more than NT$120,000. Where the total taxable income of a profit-seeking enterprise is more than NT$120,000 but not more than NT$500,000, the income tax rate for taxable year 2018 and taxable year 2019 shall be 18% and 19% respectively. However, the income tax payable shall not exceed one half of the portion of taxable income more than NT$120,000.
Same as a company
Not applicable
Profit remittance tax
Withholding tax of 21%; however, the 10% surtax paid by the company on its undistributed profits may be credited against the withholding tax.
None
Not applicable
Tax incentives under the Statute for Industrial Innovation
Applicable
Not applicable
Not applicable
Extent of the liability of a shareholder/head office
Shareholders are liable to the extent of their capital contribution to the company.
Foreign head office is liable for any liabilities unsettled by the branch.
Not applicable
Requirement for shareholder(s)/responsible person
Must have at least 1 corporate shareholder or 2 individual shareholders ( 1 or more individual or corporate shareholders in the case of a limited company ). All shareholders may be foreign nationals residing outside of Taiwan
Not required to have shareholders but required to register a responsible person
Not required
Requirement for director(s)
Must have at least 3 directors ( between 1 and 3 in the case of a limited company ). All directors can be foreign nationals residing outside of Taiwan.
Not required
Not required
Requirement for supervisor(s)
Must have at least 1 supervisor ( no requirement in the case of limited company ) who can be a foreign national residing outside of Taiwan.
Not required
Not required
Minimum capital requirement or minimum operating capital requirement
No minimum requirement, but the capital still needs to be examined and certified by a local CPA and covers at least the incorporation cost (Note 1)
No minimum requirement, but the capital still needs to be examined and certified by a local CPA and covers at least the incorporation cost (Note 1)
Not required
Sources of capital contribution
Capital contribution can be made in cash or thru capitalization of retained earnings or capital surplus.
Initial operating capital must be remitted in Taiwan from the offshore head office. Subsequent contribution of additional operating capital can be made through remittance from offshore head office or thru capitalization of the branch retained earnings.
Not applicable
Filing of annual income tax return
Required
Required
Not required
Withholding tax on salaries, rental income, professional fees, and other income payments.
Required
Required
Required
Allocation of administrative expenses by parent / head office
Subject to a 20% withholding tax. The deductibility of this allocation for tax reporting purposes will depend on the adequacy of the supporting documents thereon.
Normally not subject to 20% withholding tax and can be treated as a tax deductible item if certain criteria are met.
Not applicable
Keeping of accounting books and records
Required
Required
Required
Liquidation of the entity following completion of dissolution
Required
Required
Not Required
Purchase of real property and automobiles in the name of subsidiary / branch / representative
Permitted
Permitted
Not Permitted
Note 1. If the business entity engages in activities that require a special permit or approval, the authorities may set a higher capital requirement

Investing Procedures

Establishing a Company

Checking the Company Name

  • 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.

  • For online application, please refer to the Company, Business and Limited Partnership One-stop Service Request website

Permission for Investment

  • An investor is required to submit the Investment Application Form and relevant documents to the Investment Commission, MOEA (address: 8F, No. 7, Sec. 1, Roosevelt Rd., Taipei; telephone: 023343-5700). 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.

Approval of Investment Amount

  • 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.

Registration of a Company

  • 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.Taiwan has cancelled the minimum investment limit for company registration. Apart from some select industries, a company can be established as long as the investment is sufficient to cover reasonable expected costs.
  • For Online application, please refer to the Company, Business and Limited Partnership One-stop Service Request website

Taxation Registration

  • An investor must apply to the tax collection authority of the company’s locality to register his/her business.

Export/Import Business Registration

Factory Registration

  • 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.

Application for Businesses Requiring Special Permission

  • Before operating a business requiring special permission, and before the company is set up and registered, the investor is first required to obtain permission from the competent authorities to set up and equip the intended business.
  • After completing the establishment and registration of the company, the investor should obtain a permit from the competent authority for the intended business. Only then may the business go into operation as a specially permitted business.

Establishing a Business Enterprise

 

Checking the Business Enterprise Name

  • Investors should first select a Chinese name for the business enterprise that they will be setting up in Taiwan. The business enterprise that they set up must then file an application for pre-review of the business enterprise name and business scope as well as to retain the business enterprise name during the prereview period with the local county or city government to which the business enterprise being set up belongs.
  • For online application, please refer to the Company, Business and Limited Partnership One-stop Service Request website

Permission for Investment

  • An investor is required to submit the Investment Application Form and relevant documents to the Investment Commission, MOEA (address: 8F, No. 7, Sec. 1, Roosevelt Rd., Taipei; telephone: 023343-5700). 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.

Approval of Investment Amount

  • 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.

Registration of a Business Enterprise

Taxation Registration

  • An investor must apply to the tax collection authority of the company’s locality to register his/her business.

Export/Import Business Registration

Application for Businesses Requiring Special Permission

  • Before operating a business requiring special permission, and before the company (business enterprise) is set up and registered, the investor is first required to obtain permission from the competent authorities to set up and equip the intended business.
  • After completing the establishment and registration of the business enterprise, the investor should obtain a permit from the competent authority for the intended business. Only then may the business go into operation as a specially permitted business.

 

Establishing a Branch Company

 

Checking the Company Name

Apply for Investment Approval and Recognition of Foreign Company and Registration of Branch

  • 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.” If the site of investment is in an export processing zone, science park, agricultural biotechnology park or free trade zone, after receiving notice of recognition of foreign company from the Central Region Office, MOEA, the investor should apply for registration as a branch company with the administrative agency in charge of that zone or park.
  • For online application, please refer to the Company, Business and Limited Partnership One-stop Service Request website

Taxation Registration

  • An investor must apply to the tax collection authority of the company’s locality to register his/her business.

Export/Import Business Registration

Factory Registration

  • 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.

Application for Businesses Requiring Special Permission

  • Before operating a business requiring special permission, and before the company is set up and registered, the investor is first required to obtain permission from the competent authorities to set up and equip the intended business.
  • After completing the establishment and registration of the company, the investor should obtain a permit from the competent authority for the intended business. Only then may the business go into operation as a specially permitted business.

Establishing a Representative Office

 

Apply for reporting designated representative of a foreign company to handle legal matters in the Republic Of China (“R.O.C”)

  • 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.

Apply for Tax Code

  • The investor should then apply to the local tax collection authority for a taxpayer code number.

One Stop Online Application

 

In keeping with the global trend and enhancing the competitiveness of business environment, the government has streamlined the cross-agency processes to provide convenient services to the public enable them to apply for incorporation and tax registration, Labor Insurance and National Health Insurance coverage, and register work rules via the “Company, Business and Partnership One-Stop Service Request” website.

The members of the public can use this one stop online application website to submit all the applications and check the status of their applications further throughout the data connection and processes integration between this website and relevant agencies without walk-in services. This facilitates the process of setting up companies and improves commerce industrial services efficiency.

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