Are you thinking of starting a business in Taiwan? Hailed as a gateway to China, Taiwan serves as a perfect stepping stone if you would like to do business in China. Whether you are an aspiring entrepreneur or an experienced business owner, it is necessary to register a company in Taiwan. We will provide you with a complete guide to setting up a company in Taiwan and how to go about your Taiwan business registration.
According to the latest annual ratings issued by the World Bank, Taiwan is ranked 15th worldwide in terms of the jurisdiction’s ease of doing business. This showcases the conducive regulatory environment of Taiwan for foreign investors. Therefore, as Taiwan is welcoming to foreign direct investments, starting a business in Taiwan as a foreigner is hassle-free.
Steps to start a business in Taiwan:
Before starting a business in Taiwan as a foreigner, you may be required to apply for a Taiwan Visa. For a foreign investor who is a citizen of any of the countries listed under the Taiwan Travel Agreements, visa-free entry into Taiwan is permitted.
On the other hand, it is necessary to apply for visas if you are:
- Staying in Taiwan for more than 90 days
- Not a national of countries listed under the Taiwan Travel Agreements
There are two types of visas applicable to foreigners planning for long-term stay in Taiwan – Taiwan Resident Visa and Taiwan Entrepreneur Visa.
For Resident Visa, it is applicable for foreigners who have the intention of working, studying, or joining a family member in Taiwan. Some examples of Resident Visas include the Taiwan Student Visa, Work Visa, and Join Family Visa. Moreover, individuals who wish to set up a business may apply for the Taiwan Entrepreneur Visa, which grants individuals an initial 1-year residency in Taiwan with multiple entries.
Taiwan offers different types of business entities for you to choose from, where each business entity caters to different types of business activities. Foreign companies that wish to operate a business in Taiwan can choose between these 5 business entities. This includes Limited Liability Company (LLC), Limited Partnership, Free Trade Zone company, representative offices, and branch offices.
Prior to Taiwan business registration, it is crucial to fully understand your business model before choosing the most suitable business entity. Some considerations you should take into account include the type of business activity, tax obligations as well as potential personal liability.
Before registering your company in Taiwan, you will need to reserve a name for your company. As you cannot choose a company name that is taken, you will need to check the availability of a name by searching on the Ministry of Economic Affairs, R.O.C. As the official language in Taiwan is Chinese, it is mandatory to have an official Chinese name according to Taiwan laws. Your company can also apply to have an English name.
Once your company is successfully incorporated in Taiwan, company information such as company name and date of registration can be searched using the Taiwan Company Information Inquiry Platform.
For foreign companies, it is necessary to seek approval for your foreign investment from the Ministry of Economic Affairs Investment Commission (MOECIC). The responsibility of the MOECIC is to screen and approve investment applications submitted by foreign investors, while ensuring that the proposed investments abide by the government regulations.
The following documents are required for the incorporation of your Taiwan company:
- A copy of shareholders-approved Articles of Incorporation.
- Shareholders’ incorporation legalised meeting minutes.
- Attendance record for Board of Directors.
- Personal identification of each respective authorized shareholder and Director.
- Methods of distribution of losses and profits between business partners.
- Accreditation of paid-up capital (if applicable)
- An original copy of Power of Attorney documentation.
- Office usage and lease agreement.
Your company can apply for import and export registration upon Taiwan company incorporation. If required, your company will need to reserve a trading name with the Ministry of Economic Affairs Bureau of Foreign Trade if you would like to partake in the importation and exportation of products from abroad.
After the above steps are completed, you can proceed to open a corporate bank account for your business. Depending on your business goals and needs, your company can choose to set up a Taiwan business account or an international offshore account. While there are no paid-up capital requirements when starting a business in Taiwan, it is recommended to set aside at least US$5,000 as your paid-up capital to fund your overhead expenditures and the initial deposit required to open a bank account.
As Taiwan banks are guided by anti-money laundering regulations and banks must inspect the customers’ background, you can be assured that your business funds are well guarded. Some of the reputable banks in Taiwan that you can consider setting up a bank account are Bank of Taiwan, Hua Nan Bank, and CTC Bank.
After your company is successfully incorporated, your company is required to meet its tax obligations. Your company can secure your Taiwan company Tax Code from the State’s Taxation Administration, Ministry of Finance after the company is incorporated. As per the Taiwan Taxation Administration of the Ministry of Finance, it is compulsory for business owners operating within the jurisdiction to file annual tax returns by the end of 31st May following the end of the fiscal year. The tax payments made on corporate tax liabilities should also be included in the filing of annual tax returns.
Corporate Income Tax
- The government levies a low Corporate Income Tax of 20% of resident companies in Taiwan with an income greater than TWD500,000. On the other hand, companies with an income lower than TWD120,000 are exempted from taxation under the Taiwan Tax regulations.
- Corporations are subjected to a 5% surtax should the current year’s earnings remain undistributed by the end of the following year.
- Business entities under Taiwan’s Free Trade Zones are exempted from Corporate Income Tax duties, subjected to approval.
Value-added Tax (VAT)
For VAT registration, businesses automatically become registered and tracked by Taiwan’s Administration when registering a company with Taiwan’s Company Registrar. Businesses in Taiwan must register for VAT and file bi-monthly or monthly VAT returns.
- The Value Added Tax charged in Taiwan is 5%. Businesses are required to pay VAT on goods imported to Taiwan when goods are cleared through customs.
- The supply of goods and services in connection with exports is zero-rated. Sales of certain essential and unprocessed foods, land, post office stamps, hospital care, and educational services are exempted from Taiwan’s Business Tax.
- Taiwan’s business tax comprises two different systems, namely, the Value Added Tax (VAT) system and the Gross Business Receipt Tax (GBRT).
- With the exception of financial institutions, food and beverage vendors, and small businesses which fall under the GRBT system, the VAT system applies to the majority of taxpayers. The payments made under the GRBT system is considered to be an additional cost to the buyer because it is non-recoverable.
Looking to start a business in Taiwan?
The Taiwan business registration process is hassle-free if you are familiar with the incorporation process. Tetra Consultants strives to provide our clients with a seamless experience when setting up a company in Taiwan. Our team of experts will ensure that your Taiwan company can be operationally ready as soon as possible.
Contact us now to find out more about the comprehensive range of services we offer to incorporate a business in Taiwan, and our team will revert within the next 24 hours.