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How to set up a company in Taiwan




 
Having a successful and developed economy, Taiwan is a country that attracts investors from around the world, interested in investing in certain business activities. The country represents one of the largest economies in its area, as well as a pathway to Mainland China, and this opportunity has attracted foreign businessmen interested in starting a business here, as it can provide access to expanding a business in this country, but also in the Asian region

Thus, if you are interested in opening a company here, you can always reach out to our team of specialists in company registration in Taiwan, who have the necessary legal expertise in helping you register a legal entity, as well as in helping you grow your newly founded business. 
 

Why set up a company in Taiwan?


Regardless of the company type that you are interested in, you can easily register and develop a business in this country, as local and foreign investors can benefit from a developed economy, with numerous advantages for those interested in the business environment. Foreign investors can find here industrial parks and free economic zones, which can provide numerous advantages in terms of taxation or infrastructure. Moreover, the government supports company formation in Taiwan through favorable terms, tax incentives, and exemptions for various sectors and types of businesses.  
 
The taxation system in Taiwan applies an equal policy for local and foreign companies. Apart from the income tax, other taxes can be deducted by enterprises based on specific provisions or tax agreements. If you need information on the Company Law regulations that are currently applicable here, you can always rely on the services of our Taiwan company formation specialists.
 

The process of company formation in Taiwan


When opening a company in Taiwan, the first aspect that you should complete is selecting a legal entity that is suitable for your business needs. This will depend based on the capital you want to invest, the size of the company, the business sector you want to start your activity in, and numerous others. Here, you should also take into consideration the number of founders that will own the Taiwanese company. The most common types of legal forms are:
 
sole proprietorship  a company type with only one owner, who is a natural person
unlimited company  a company type which requires at least two shareholders
limited company  a business form which is the most popular structure in Taiwan
company limited by shares  it is founded based on a capital that is divided into shares
 
 

Why invest in Taiwan? 
 

There are numerous reasons for opening a company in Taiwan, and they also point out to economic advantages. Relevant information concerning the country’s main characteristics is gathered by the Statistical Bureau. When we refer to the main highlights of the Taiwanese economy, foreign investors should take into consideration the following aspects presented below:
 
  • the economic growth in Taiwan was estimated for 2020 at 2,58%;
  • at the level of September 2019, the unemployment rate in Taiwan stood at 3,80%;
  • the value of exports from Taiwan, at the level of September 2019, stood at $45,526 million;
  • at the level of September 2019, the country population accounted for 23,593,783 persons;
  • the Taiwanese gross domestic product (GDP) stood at $5,822 billion in November 2019. 

 
How to Open a Company in Taiwan



How can one register a limited company in Taiwan? 
 

The limited company in Taiwan represents one of the most common ways to start a business in this country. In order to open a company in Taiwan as a limited company, a set of legal aspects have to be verified and completed as needed. For example, in the case of this business form, it is required to appoint a director, who must be a natural person. 
 
It is allowed to appoint a director who is not a resident of Taiwan and the director can also be represented by the company’s shareholder (this company type can be set up by a single shareholder). Although the directors of the company can’t be corporate entities, in the case of the company’s shareholders, this regulation no longer applies, which means that the company can be set up by another legal entity. Amongst other aspects that have to be fulfilled during the procedure of company formation in Taiwan, we mention the following: 
 
  • the company must have a registered address in Taiwan, which has to be a physical address;
  • drafting and signing the company’s articles of association, which represent the founding document of the company;
  • the articles of association provide information on the company type, its shareholders, capital, the liability and the rights the company’s owners have and others;
  • the documents in which the company’s documents have to be prepared in Chinese, which is the country’s national language;
  • as a foreign investor, it is necessary to appoint a local agent to handle the procedure of company registration in Taiwan.

The above mentioned represent some of the basic requirements that investors have to complete during the process of company formation; if you need extensive details on any of the steps and the documents we presented in the list above, we invite to address to our consultants in Taiwan company formation

When you will register a limited liability company, you must have evidence on the fact that the legal entity has a registered business address. For this, investors must present a lease agreement or any other document that states where the company has its headquarters. 

Selecting a limited liability company for company registration in Taiwan can provide numerous advantages, as this company type is suitable for small and medium-sized companies, and small and medium-sized companies represent the largest share of companies operating in Taiwan, as well as in other countries. 

Another advantage of this structure is that is founders can use it to operate in almost all business sectors provided by the Taiwanese market. It can also be used when developing import-export activities, including for the import of raw materials. Since this company type is considered a corporate entity (meaning, it has its own legal personality, and it can own assets and have debts), it will be taxed following the national corporate tax system. 

Here, one will be required to pay the value added tax, the corporate tax rate, as well as employment taxes. Our consultants in company formation in Taiwan can present a full list of the taxes companies have to pay here; you can also request information on the tax minimization procedures that can be available for local businesses. 

From an accounting point of view, the company must maintain documents on its transactions and it is required to submit tax returns in accordance with the provisions of the law. However, the Taiwanese limited liability company is not required to conclude an audit, which can be a compulsory step for other entities. 

Please mind that those who will open a company in Taiwan as a limited liability company will also be entitled to benefit from the provisions of the double tax treaties that were signed by the country’s representatives. When registering this entity, investors will also be allowed to hire foreign workforce. 

Investors interested in hiring foreign employees in their newly-founded company should know that foreign employees will need a work permit, and the issuance of the document will generally last approximately 3 months and in this case, the company’s founders should make the necessary arrangements in order to be able to hire their employees when the company will start its operations. 

If you need information regarding employment of foreign workforce, you can rely on our team of specialists in company formation in Taiwan, who can help you with in-depth advice on the applicable law and the requirements companies and employees have to abide by.  


How can an investor register a subsidiary in Taiwan? 


One of the ways to open a company in Taiwan as a foreign investor is by setting up a subsidiary. The subsidiary represents a separate legal entity than the one of the parent company abroad. Since the subsidiary is a separate legal entity, it is necessary to know that its registration process can take longer compared to the registration of a branch office or a representative office; our team of consultants in company formation in Taiwan can provide more information concerning the characteristics of these structures. 

With regards to the registration of a subsidiary in Taiwan, it is necessary to know that this business structure can be formed as an unlimited company, unlimited company with limited liability shareholders, limited company or company limited by shares. However, in practice, most of the subsidiaries are registered as companies limited by shares. 

In Taiwan, there are no minimum capital requirements when starting a company limited by shares, but such requirements will appear if the company will hire foreign employees; in this case, the company must be founded with a capital of NT$5 million. The registration procedure will start at the Department of Commerce of the Ministry of Economic Affairs

Foreign businessmen who want to expand their business activities in Taiwan can also do so through a branch office. Although similar with the subsidiary, this entity has specific differences that are very important – for instance, the branch office is fully subordinated to the parent company abroad and it must also follow its business model.  

The decision to open a company in Taiwan as a branch office or a subsidiary should be based on the management model the parent company wants to follow and the business outcome it is interested in. The subsidiary will allow the company situated in Taiwan to be more independent and to make its own decisions based on the current situation of the Taiwanese market, competitors, etc., while the branch office will follow a standard model that is used by the parent company, and it will be replicated on the Taiwanese market

Also, the decision between the two can also be influenced by the capital requirements and the registration costs  - for instance, the branch office does not need a capital to start its business activities, as it does not represent a separate legal entity (its liabilities are extended to the parent company). 

 

Can one register a partnership in Taiwan? 


Yes, foreign and local investors also have the possibility of starting a business in Taiwan through a partnership. A partnership in Taiwan can only be incorporated by natural persons, just like in the case of sole traders. The regulations referring to partnerships in Taiwan are prescribed by the Limited Partnership Act (in the case of limited partnership); since 2015, businessmen also have the possibility of opening a limited liability partnership. 

It is important to know that the partnership must be set up by at least two partners, who can have any nationality; the advantage of this structure is that it is not necessary to deposit any share capital upon its incorporation, but the partners will be personally liable for the debts of the company; our team of specialists in company registration in Taiwan can provide more details on how to register a partnership in this country. 
 
The investment capital as well as the documentation may vary between a limited liability company and a sole proprietorship. One of our consultants can help you prepare the documentation so that you can speed up the company registration procedure with the Ministry of Foreign Affairs.

They can as well provide information concerning the procedure of opening of a bank account for your new enterprise. Feel free to contact our specialists in company registration in Taiwan in order to receive personalized assistance during the set-up of a company in your particular trade domain.