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Incorporation

Setting up a company in Taiwan

When setting up a company you may want to consider these factors:

  1. Business Factors

    The Taiwanese government has implemented welcoming and encouraging foreign investment policies, including the provision of customized, one-stop solutions for domestic and foreign investors to engage in investments into Taiwan smoothly. Taiwan’s industries have been largely deregulated, with most sectors having no ownership limits for foreigners. The government has offered various tax and non-tax incentives to encourage greater corporate investments, including special tax regimes for specific industries.

    Taiwan bases its law on the civil law system, with clearly defined terms in the law codes and regulations much like Germany, Japan and South Korea. There is an impartial treatment towards most judicial matters, where commercial dispute resolution may be subject to the Taiwanese jurisdiction.

    When doing business in Taiwan, the use of distributors, agents and local representatives are a popular method of setting up a business presence due to the advantages of local knowledge and networks. Foreign investments do require a Foreign Investment Approval (FIA) issued by the Investment Commission (IC) of the Ministry of Economic Affairs (MEA) as a prerequisite for foreign investment. Foreign investors may invest into most business sectors, except for those on the Negative List. Foreign invested enterprises are protected under the Statute for Investment by Foreign Nationals, which provide the same benefits and treatments as domestic Taiwanese businesses.

    Although Taiwan has a historically stressful relationship with mainland China particularly in the recent cross-strait relationship talks, Taiwan remains an attractive location do to the ease of starting a business for foreign companies. These factors should also be considered when incorporation in Taiwan:

    • The industry and type of business that will be conducted
    • Nationality of headquarters/individuals
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Language

    Mandarin Chinese is the main language used in Taiwan. Various ethnic groups use Taiwanese Hokkien as a dialect, while some with Haka ancestry typically speak Hakka dialect. English has a smaller yet still important role in the language of Taiwan, where it is the most common foreign language taught at some large private schools and is compulsory in elementary school.

Your Options

Most foreign businesses entering Taiwan will choose to use a local agent or distributor to gain an initial foothold in the business community. The options for incorporating a branch office, representative office or a locally-incorporated company is more applicable to markets of considerable size or for foreign companies who wish to establish a persistent market presence.

Taiwanese investment policy allows foreigners to invest in most business sectors except the ones on the Negative List. Foreign businesses in particular may only incorporate once they have obtained approval from the Ministry of Economic Affairs’ Investment Commission (MOEAIC). The Taiwan Company Act allows four kinds of company to be established:

  • Subsidiary
  • Partnership
  • Foreign Branch
  • Representative Office

Subsidiary

The subsidiary is generally applicable to foreign entities who wish to establish a limited company in Taiwan. This method of incorporation is much more involved than representative offices and branches due to the length incorporation procedure and requirements. There are several forms of subsidiaries that a foreign company may choose:

  • Unlimited company
  • Unlimited company with limited liability shareholders
  • Limited company
  • Company limited by shares

Almost all subsidiaries are incorporated through a company limited by shares, while the unlimited company and company with limited liability shareholders are rarely used.

Companies incorporated this way are generally not restricted by the Company Act on the activities they may carry out, except general restrictions on investments, loans of capital and guarantees.

Liability

Each shareholder is liable for the company up to the amount of capital contributed.

Minimum Ownership

A foreign company can be the sole corporate shareholder of a limited company or a company limited by shares, except for certain restricted sectors.

Number of Founding Members

The company has at least one shareholder.

Minimum Capital Requirements

There are no minimal capital requirements for a limited company or company limited by shares, unless it operates in a sector that requires special permits or approvals.

A minimum limit of NT$5 million is required as start-up capital if the company wishes to employ foreign professionals to work in Taiwan in the first year.

Typically, the paid-in capital should be sufficient to cover set-up costs.

 

Incorporation procedure:

1. Apply for Search and Reservation of Company name

The company may submit an online application to search for and reserve a company name at the one-stop service request website, or it may be submitted via post or in person to the Department of Commerce of the Ministry of Economic Affairs (MOEA). The company name reservation is valid from the date of approval of the Reservation Application for six months.

Required documents:

  • Application form for Reservation of Company Name and Business Scope

Cost: NT$300 per in-person or post application, or NT$150 through online application

Time: 2 days

2. Apply for Foreign Investment approval

If the company is a foreign investor, the approval for foreign investments must be obtained from the Investment Commission of the MOEA. This is usually submitted by a local agent who is a resident of Taiwan who must be elected by the foreign company to submit the application. Documents must be authenticated by the government agency or notarized by a court at the location of the foreign company. A Chinese translation should be attached.

Required documents:

  • Application Form A
  • Original approved application form for Reservation of Company Name
  • Confirmed roster of shareholders and capital amount
  • Power of Attorney authorizing a representative of a corporate investor
  • Certificate of Incorporation and register of shareholders if needed
  • Power of Attorney from a corporate investor appointing a local agent for the foreign investment application process
  • Copy of the passport from corporate representative

Time: 4 days

3. Apply for Examination of Investment Capital

For foreign companies, the components of the investment capital must be examined by the Investment Commission. Once the investors have obtained approval for foreign investment and have remitted the investment capital in Taiwan, this step is taken.

Required documents:

  • Application Form C
  • Letter of Approval of foreign investment issued by Investment Commission of MOEA
  • Copy of bank’s Inward Remittance Advice
  • Copy of bank’s Foreign Exchange Memorandum
  • Copy of bank’s account passbook or statement

Time: 2 days

4. Apply for Company Registration

Once the articles of incorporation have been approved by shareholders, the company registration should be within 15 days from the approval date if it is a limited company, and 15 days from when the chairman of the board of directors is elected for a company limited by shares.

Required documents:

  • Application Form
  • Other approval letters issued from different authorities if required
  • Articles of Incorporation
  • Minutes of the incorporators’ meeting
  • Minutes of the Board of Directors’ meeting and attendance record
  • Name, address and number of shares subscribed and paid by each shareholder
  • Consent letter from chairman of the board of directors
  • Power of attorney to appoint individuals as corporate shareholders’ representatives
  • CPA report for verifying paid-in capital and other supporting documents and the authorization letter of the CPA
  • ID documents required from incorporators, directors and supervisors
  • Incorporation Registration Form

Cost:

  • 1/4000 of the company’s authorized capital, minimum of NT$1,000
  • CPA report ranges from NT$5,000 – $20,000

Time: 2 days

5. Apply for Importer/Exporter English name and registration

Once the company has been properly registered in Taiwan, the company must reserve a trading name if the subsidiary is to import and export from abroad, which requires an English business name. This is done through the Bureau of Foreign Trade of the MOEA. The company must then be registered under this English name.

Required documents:

  • Application Form for reservation of English Name of the Company
  • Application Form for Importer/Exporter Registration

6. Apply for Business Registration

This step is usually completed automatically by a local agency of the national tax authority once the company has been registered and has received approval and details of the company’s registration. The company may need to submit additional supporting documents if requested by the agency of the national tax authority.

7. Apply for Factory Registration in Industrial Parks

If required, a longer, more comprehensive registration procedure is required if the incorporated company is to conduct large scale manufacturing processes.

Partnership

Foreign investors are allowed to invest into Taiwan through setting up a sole proprietorship or a general partnership with one or more individuals. There are no set minimum capital requirements for partnerships, although foreign investment approval is required, much like the subsidiary incorporation procedure.

Partners of a partnership in Taiwan may only be a natural person and not a business entity. All partners are jointly and severally liable for the obligations of the partnership. Each partner’s contribution and profit sharing percentage is provided for in the partnership agreement.

Under the Limited Partnership Act, entrepreneurs may explore other business structures for partnerships which are still under revision of implementation rules as of June 2015. This includes the limited liability partnership structure, which has previously not been available in Taiwan.

Liability

All partners are jointly and severally liable for obligations of the partnership.

Minimum Ownership

There are no restrictions on the nationality of the partners.

No. Founding Members

At least two general partners.

As of June 2015, a limited partnership is allowed, comprised of at least one general partner and one limited partner.

Minimum Capital Requirements

There is no minimum requirement for partnerships.

 

Incorporation procedure:

1.  Apply for Search and Reservation of Company name

The partnership may submit an online application to search for and reserve a partnership name at the one-stop service request website, or it may be submitted via post or in person to the Department of Commerce of the Ministry of Economic Affairs (MOEA). The partnership name reservation is valid from the date of approval of the Reservation Application for six months.

Required documents:

  • Application form for Reservation of Company Name and Business Scope

Cost: NT$300 per in-person or post application, or NT$150 through online application

Time: 2 days

2. Apply for Foreign Investment approval

If a partner is a foreign investor, the approval for foreign investments must be obtained from the Investment Commission of the MOEA. This is usually submitted by a local agent who is a resident of Taiwan who must be elected by the foreign partner to submit the application. Documents must be authenticated by the government agency or notarized by a court at the location of the foreign company. A Chinese translation should be attached.

Required documents:

  • Application Form A
  • Original approved application form for Reservation of Company Name
  • Confirmed roster of shareholders and capital amount
  • Power of Attorney authorizing a representative of a partnership investor
  • Certificate of Incorporation and register of shareholders if needed
  • Power of Attorney from a corporate investor appointing a local agent for the foreign investment application process
  • Copy of the passport from partner representative

Time: 4 days

3. Apply for Examination of Investment Capital

For foreign partners, the components of the investment capital must be examined by the Investment Commission. Once the investors have obtained approval for foreign investment and have remitted the investment capital in Taiwan, this step is taken.

Required documents:

  • Application Form C
  • Letter of Approval of foreign investment issued by Investment Commission of MOEA
  • Copy of bank’s Inward Remittance Advice
  • Copy of bank’s Foreign Exchange Memorandum
  • Copy of bank’s account passbook or statement

Time: 2 days

4. Apply for Partnership Registration

Once the articles of incorporation have been approved by shareholders, the registration should be within 15 days from the approval date.

Required documents:

  • Application Form
  • Other approval letters issued from different authorities if required
  • Articles of Incorporation
  • Minutes of the incorporators’ meeting
  • Minutes of the partners’ meeting and attendance record
  • Power of attorney to appoint individuals as partners’ representatives
  • CPA report for verifying paid-in capital and other supporting documents and the authorization letter of the CPA
  • ID documents required from incorporators, directors and supervisors
  • Incorporation Registration Form

Cost:

  • 1/4000 of the company’s authorized capital, minimum of NT$1,000
  • CPA report ranges from NT$5,000 – $20,000

Time: 2 days

5. Apply for Importer/Exporter English name and registration

Once the partnership has been properly registered in Taiwan, the company must reserve a trading name if the subsidiary is to import and export from abroad, which requires an English business name. This is done through the Bureau of Foreign Trade of the MOEA. The partnership must then be registered under this English name.

Required documents:

  • Application Form for reservation of English Name of the Company
  • Application Form for Importer/Exporter Registration

6. Apply for Business Registration

This step is usually completed automatically by a local agency of the national tax authority once the partnership has been registered and has received approval and details of the partnership’s registration. The partners may need to submit additional supporting documents if requested by the agency of the national tax authority.

Foreign Branch

A company that is incorporated outside of Taiwan may choose to establish a branch office to conduct business in Taiwan. Foreign branches in Taiwan are not allowed to transact business without obtaining a certificate of recognition and completing the procedures for branch office registration.

Branch offices have the same rights and obligations as a domestic company, although is not considered a separate legal entity from the parent company. All liabilities are assumed by the head office. The foreign company must designate a representative for the Taiwanese branch who may be a foreign national. The parent should appropriate funds exclusively for its Taiwan operations.

Branch offices have tax advantages over a wholly-owned subsidiary company, in that it is exempt from tax on repatriation on after-tax profits to the parent company.

Liability

The parent company assumes all liability of the branch office.

Minimum Ownership

The branch is owned by a foreign company.

Minimum Capital Requirements

There are no minimum capital requirements for establishing a branch office, although the parent company should remit sufficient operating funds before establishment.

A minimum limit of NT$5 million is required as start-up capital if the company wishes to employ foreign professionals to work in Taiwan in the first year.

 

Incorporation procedure:

1.  Apply for Search and Reservation of Company name

The company may submit an online application to search for and reserve a company name at the one-stop service request website, or it may be submitted via post or in person to the Department of Commerce of the Ministry of Economic Affairs (MOEA). The company name reservation is valid from the date of approval of the Reservation Application for six months.

Required documents:

  • Application form for Reservation of Company Name and Business Scope

Cost: NT$300 per in-person or post application, or NT$150 through online application

Time: 2 days

2. Apply for Recognition of Foreign Company and Branch Registration

The parent company must apply to the Department of Commerce of the MOEA for the recognition of the foreign company and to also register the branch in Taiwan.

Required documents:

  • Copy of application form for name reservation with MOEA approval seal
  • Two copies of the registration card for recognition
  • Two copies of the registration card for the branch
  • Application letter
  • Power of attorney appointing agent
  • Power of attorney appointing branch manager
  • Copy of the articles of incorporation and bylaws
  • Copy of any government authorized approval for special approval
  • Minutes of the board of directors’ meeting
  • Copy of the notice of inward remittance and exchange memo for operating capital remitted into Taiwan
  • Power of attorney appointing CPA or lawyer to apply for recognition and registration

Cost:

  • 1/4000 of the company’s authorized capital, minimum of NT$1,000
  • CPA report ranges from NT$5,000 – $20,000

Time: 4 days

3. Apply for Examination of Investment Capital

For foreign companies, the components of the investment capital must be examined by the Investment Commission. Once the investors have obtained approval for foreign investment and have remitted the investment capital in Taiwan, this step is taken.

Required documents:

  • Application Form C
  • Letter of Approval of foreign investment issued by Investment Commission of MOEA
  • Copy of bank’s Inward Remittance Advice
  • Copy of bank’s Foreign Exchange Memorandum
  • Copy of bank’s account passbook or statement

Time: 2 days

4. Apply for Importer/Exporter English name and registration

Once the company has been properly registered in Taiwan, the company must reserve a trading name if the subsidiary is to import and export from abroad, which requires an English business name. This is done through the Bureau of Foreign Trade of the MOEA. The company must then be registered under this English name.

Required documents:

  • Application Form for reservation of English Name of the Company
  • Application Form for Importer/Exporter Registration

5. Apply for Business Registration

This step is usually completed automatically by a local agency of the national tax authority once the company has been registered and has received approval and details of the company’s registration. The company may need to submit additional supporting documents if requested by the agency of the national tax authority.

Representative Office

A foreign company may choose to use a representative if they do not intend to transact business but wish to conduct limited acts related to their business. The company may require a resident in Taiwan as a representative for the application process. The representative acts as the legal agent for the company regarding matters like contracts, procurement and quotations.

The representative office is ideal for companies who wish to establish a limited presence prior to making a more permanent commitment in Taiwan. It is one of the easiest methods of incorporation, although the level of activities is restricted.

Incorporation procedure:

The only step required for the setup of a representative office is the application procedure. The application and designation of a representative should be filed according to Article 386 of the Company Act, with any translations to Chinese provided.

Required documents:

  • Document certifying the identity and residence of the representative
  • Power of attorney if application is to be filed by a lawyer or CPA
  • Copy of any documents certifying establishment of the foreign company in its country
  • Power of attorney appointing the representative in Taiwan
  • Copy of original house lease contract for the representative office
  • Copies of the registration card
  • Application form

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Taiwan, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Taiwan they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

– the company is looking to setup an office quickly;

– the company wants to work within a defined budget;

– the company wants to limit its initial commitment in Taiwan;

– the company needs help with tax, employment, immigration and payroll compliance in Taiwan.

The complexity of employment regulations in Taiwan makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Taiwan allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Taiwan.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Taiwan. Read more about outsourced employment through Shield GEO.

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