Business Opportunities in Taiwan
After completing ten major construction projects since the 1970s, Taiwan is considered one of the Newly Industrialized Economies. Taiwan’s economy has embraced economic liberalization through several reform measures since the 1990s.
The largest metal stock exchange in the world, the London Metal Exchange, has endorsed Kaohsiung, Taiwan, as a reliable supply location for primary aluminum, aluminum alloy, copper, lead, nickel, tin, and zinc. Companies can set up a business in Taiwan in the metal industry to take advantage of its growth.
Taiwan also has a strong economy that is more than capable of producing high-tech goods. Therefore, one industry in which you might be interested in investing in this nation is the auto parts industry.
The country has one of the biggest markets in trading machinery. Truck machines, power sets, and other types of machinery are examples. You can also choose to establish your company in Taiwan with the sole purpose of exporting to other nations. Read this guide to understand how to start a business in Taiwan.
Benefits of Starting a Business in Taiwan
Starting a business in Taiwan offers several benefits, which are as follows:
- Taiwan is geographically situated between North and Southeast Asia in the Asia Pacific. Additionally, the country serves as a crucial hub for transshipments and shipments in the East Asian and Asia-Pacific areas. This facilitates corporate operations regarding transportation and supply chain management, ultimately lowering costs.
- Taiwan’s dominant high-tech manufacturing industry has led the island to have a very high literacy rate and a large population of engineers well-versed in technology. For businesses looking to establish themselves on the island, the fact that these engineers are competent and possibly more affordable than those in other nations is highly alluring. This helps computer organizations obtain talented staff without spending much money hiring people from other foreign nations.
- Taiwan‘s well-developed legal and policy framework offers substantial protection for foreign direct investment. International rules and conventions are frequently incorporated into commercial rules, giving foreign investors significant protection and redress. Taiwan’s framework offers significant stability to international businesses looking to establish themselves there. To protect business R&D and innovations, the administration has also given intellectual property rights a disproportionate amount of importance.
Requirements for Starting a Business in Taiwan
To start a business in Taiwan, you need to fulfill certain conditions, which include:
You should apply for a Taiwan Visa before beginning a business in Taiwan as a foreigner. A foreign investor may enter Taiwan without a visa if they are a national of one of the nations mentioned in the Taiwan Travel Agreements.
However, you must submit a visa application if you are:
- Having a longer-than-90-day stay in Taiwan
- Not a citizen of one of the nations covered by the Taiwan Travel Agreements
Business name registration in Taiwan
You must reserve a name for your business before establishing it in Taiwan. You must search for the Ministry of Economic Affairs, R.O.C., to see whether a name is available since you cannot choose a company name already in use.
Laws in Taiwan require that you have an official Chinese name, as Chinese is the primary language there. You can also request an English name for your business.
When your business is officially established in Taiwan, you can use the Taiwan Company Information Inquiry Platform to search for firm details, including business name and commencement date.
Foreign investment application
For foreign businesses, getting the Ministry of Economic Affairs Investment Commission Clearance (MOECIC) for your foreign investment is essential. The MOECIC reviews and approves investment proposals submitted by international investors to ensure that the submitted proposals comply with government regulations.
Corporate bank account
Your organization can open a Taiwan business account or an offshore global account based on your requirements and business objectives. While there aren’t any requirements for paid-up capital, it’s advised to set aside at least US$5,000 to cover overhead costs.
Directors and shareholders
Only a corporation’s initial directors and shareholders should participate in the launch of a business. The stockholders own the company. Depending on their ownership percentage, they will receive a portion of the company’s profits. The company’s operations and accountability will be under the directors’ control.
Types of Business Structures in Taiwan
The following are the primary business structures global companies frequently employ to set up business in Taiwan:
Company limited by shares
- A minimum of three directors are required for a company limited by shares.
- It is regarded as a legal body that can generate invoices.
- Executives and technical personnel may be awarded work permits.
- The ideal candidates for this structure are medium-sized to big businesses dedicated to turning a profit in Taiwan over the long term. The suggested minimum capital to be sent from outside is NT$ 50,000.
- In Taiwan, creating a Limited Company is comparable to creating a Company Limited by Shares. The primary distinction is that a Limited Company only needs one director instead of three and is not required to have a supervisor.
- This structure is suitable for small to medium-sized businesses that can tolerate total taxation of up to 33.6%.
- A NT$ 50,000 capital contribution from outside is also advised.
- Branch offices have the same legal rights as domestic firms, even if they are not distinct legal entities.
- The central office takes on all obligations owed by the branch office.
- A foreign business will be the branch’s owner. Unless the branch office plans to engage foreign specialists in the first year, which would require NT$ 5 million, it will not have a baseline required capital.
- Companies who want to establish a small market share before committing to Taiwan should use a representative office.
- It is one of the simplest and quickest ways to form a company, but it has a limited range of operations.
Company Registration Process
Refer to this section to understand how to start a company in Taiwan
Step 1: Request a company name search and reservation
- The business can apply online at the one-stop service order website to look for and secure a company name, or it can send a letter or visit the Department of Commerce of the Ministry of Economic Affairs in person (MOEA).
Step 2: Apply for a foreign company and branch registration recognition
- The parent firm must submit an application to the MOEA’s Department of Commerce for the foreign company’s recognition and register the Taiwan branch.
- A duplicate of the name reservation application form bearing the MOEA approval seal.
- The registration card with two copies for recognition
- Two copies of the branch’s registration card
- Application letter
- Agent designation in a power of attorney
- Authority designating branch manager
- A duplicate of the bylaws and the articles of incorporation
- A replica of any government-issued special authorization approval document
- Board of Directors meeting details
- Duplicate of the exchange memo and notice of inward remittance for funds transferred into Taiwan for operating purposes
Step 3: Request a capital investment examination
- The Investment Commission must assess the elements of the investment capital for international enterprises. This phase is carried out once the investors have received foreign direct investment authorization and sent the investment funds to Taiwan. Required documents:
- Original Inward Remittance Advice from the bank
- Foreign Exchange Memorandum copy from the bank
- A duplicate of the bank account statement or passbook
- Application Form C
- Foreign investment authorization letter from the MOEA Investment Commission
Step 4: Registration and importer/exporter English name application
- Suppose the subsidiary will import and export from outside Taiwan once the business has been lawfully registered there. In that case, the subsidiary must reserve a trading name, which calls for an English business name.
- The MOEA’s Bureau of Foreign Trade is used for this. After that, the business must be registered using this English name.
Step 5: Registration of business application
- Once the company is incorporated and approved, and the registration specifics are received, a local firm of the national tax authority automatically conducts this phase.
- If the national tax authority’s office requests more evidence, the corporation may need to provide it.
How Much Does it Cost to Incorporate a Company in Taiwan?
Taiwan business formation charges a total of $5,640 in Year 1 and $0 in Year 2 and all subsequent Years. The typical charge for a Taiwan engagement is $15,390. These costs cover opening a corporate bank account and incorporating a Taiwanese company.
Are Foreigners in Taiwan on Certain Passes Allowed to Start a Business in Taiwan?
Since most of the work may be done in your home country, you don’t need to reside in Taiwan to launch a business. However, if you want to relocate to Taiwan and launch your business there, you will also need to obtain an Alien Resident Certificate (ARC) and your work visa. You would need to travel to Taiwan once more to open a corporate bank account (without a POA) and submit an application for tax registration.
Government Assistance for Foreign-owned Businesses
- Taiwan has pursued several initiatives to draw FDI from international and Taiwanese businesses that operate abroad. By offering tax breaks, tariff exemptions, low-interest financing, and other advantageous conditions, a network of technological and scientific parks, industrial technology sites, and free trade zones aims to increase opportunities for investment and trade. For investments in the manufacturing sector, incentives are increasingly common.
- Information and Communication Technology (ICT) manufacturers have responded favorably to Taiwan’s reshoring incentive scheme, established in January 2019, to lure Taiwanese companies with operations in the PRC back to Taiwan.
- As Taiwan’s office for promoting foreign investment, the Ministry of Economic Affairs (MOEA) Department of Investment Services (DOIS) Invest in Taiwan Center offers single-window operations and employee hiring to international investors.
- Authorities would designate a professional project manager to the investment strategy for projects above New Taiwan Dollar (NTD) 500 million (USD 17.6 million). The DOIS offers its services to all overseas investors.
- The Taiwanese government has strongly supported the “5+2 Innovative Industries” and six essential industry development programs to speed up industrial transformation and increase both domestic consumption and the growth of international markets.
- Among other essential sectors, target sectors include advanced farming, biomedicine, IoT, renewable technology, semiconductors, innovative equipment, and national defense. Taiwanese authorities also provide subsidies for research and development costs for initiatives involving Taiwan and other countries.
How Multiplier Can Help
Starting a business entails adhering to all applicable rules and ordinances in a foreign country like Taiwan. Each country where you plan to base your business has its incorporation processes and tax rules. All applicable tax laws and rules must be followed to launch a business in Taiwan. In this sense, Multiplier and other international PEO service providers can be helpful.
Without creating a local subsidiary, Multiplier maintains the infrastructure needed to staff your business. You can emphasize developing teams in new nations and investigating new markets. This enables you to employ more qualified individuals at more affordable rates.