Taiwan Company Incorporation
A foreigner wishes to establish an enterprise in Taiwan or to participate in the management of a existing Taiwan corporation, the first thing is to get the approval from the Taiwan investment Commission, MOEA (Ministry of Economic Affairs). Once it is approved by MOEA, it would be possible to enter into the process of the company registration or formation.
At present, most of industries in Taiwan are allowed to be invested by the foreigners, but there are few business or industries that are prohibited from holding or investing by the foreigners. The basic principals for the prohibited industries are stated as below:
- 1.Which may negatively affect national security, social safety, good customs and practices, or national health; and
- 2.which are prohibited by the law.
If the investor or the capital source comes from China, the allowed invested industries and application procedures are different with the general foreigners due to the special relationships between Taiwan and China. You can contact us for further information.
(1) Legal forms for foreign investors
The foreign investors could incorporate a propritor business, partnership or company in Taiwan. The regulations and responsibilities between the One-man business or Partnership and the Company are different, we summarize the simple comparison for your reference as below:
|
Business Type Item
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Taiwan Company
|
Sole Propritor or
Partnerships
|
|
Capital Requirement
|
Not Required
|
Not Required
|
|
Liability
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Liable to the extent of their contribution to the company.
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Liable for any liabilities arising from the business operation.
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|
Company Name
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Approved by the Ministry of Economic Affairs.
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Approved by the local city or county government.
|
|
Being a juristic person
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Qualified
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disqualified
|
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Bookkeeping
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Must
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Must
|
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Income Tax Rate
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20% Corporate Income Tax
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5％－40％ Personal Income Tax
|
(2) Company types in Taiwan for the foreigners
Regarding to the company entity form, there are three types for operating business in Taiwan. It's the incorporation of a Taiwan company, Taiwan branch or Taiwan office.
The comparision of the right and liability for the different business types are stated as following:
| Business Type Item |
Taiwan Company | Taiwan Branch | Taiwan Office |
| Business Activity | Trading, sales or manufacturing | Trading, sales or manufacturing |
Sales function are not allowed
|
| Income Tax Rate | 20% | Same as a Company | Not applicable |
| Profit Remittance Tax | Withholding tax of 21% | Not applicable | Not applicable |
| Tax Incentives | Applicable | Not applicable | Not applicable |
| Shareholders' Liability | Liable for the extent of capital contribution | Foreign head office is liable for any liabilities unsettled by the branch. | Not applicable |
| Minimum Shareholder Number |
Must have at least 1 corporate shareholder or 2 individual shareholders.
|
Not Required | Not Required |
| Minimum Director Number |
Must have at least 2 directors (between 1 and 3 in the case of a public share company)
|
Not Required | Not Required |
| Minimum Supervisor Number |
Must have at least 1 supervisor (no requirement in the case of a private limited liability company)
|
Not Required | Not Required |
| Minimum Capital Requirement |
No minimum requirement
|
No minimum requirement
|
Not Required |
| Sources of Capital Contribution |
Cash or in kind with the property, patent or goodwill.
|
Cash
|
Not applicable |
| Tax rate impose to the undistributed profit | 5% | Not applicable | Not applicable |
| Annual Tax Return | Required | Required | Not applicable （It's required if you withheld the Income tax ) |
| Withholding Tax impose for some services or expenses | Required | Required | Required |
| Allocation of Administration Expense by the Parent Company |
Subject to a 20% withholding tax rate.
|
Normally not subject to 20% withholding tax rate and can be treated as a tax-deductible item if certain criteria are met.
|
Not applicable |
| Accounting Records | Required | Required | Required |
| Liquidation/dissolution | Required | Required | Not applicable |
| Purchase of Real Estates or Automobiles in the name of the company/ branch/office | Permitted | Permitted | Not permitted |
(3) Flowchart of procedure for Invest in Taiwan
