Taiwan’s robust economy, skilled workforce, and strategic location in Asia make it an attractive destination for foreign businesses. Here’s a comprehensive guide to setting up a company in Taiwan.
1. Choosing the Right Business Structure
The primary business structures in Taiwan for foreign investors are:
- Limited Company: This is the most popular structure for small to medium-sized businesses, offering limited liability protection for shareholders.
- Company Limited by Shares: Suitable for larger businesses, allowing the issuance of shares to multiple shareholders and better access to capital.
- Branch Office: Allows foreign companies to conduct business directly in Taiwan while remaining legally part of the parent company.
- Representative Office: Primarily used for non-commercial activities such as market research or liaison activities, as it cannot engage in revenue-generating business.
The Limited Company is often ideal for small to medium-sized businesses, while larger companies looking to raise capital may prefer a Company Limited by Shares.
2. Company Registration Process
The registration process in Taiwan includes the following steps:
- Reserve a Company Name: Apply for name reservation with the Department of Commerce, Ministry of Economic Affairs (MOEA) to ensure the chosen name is unique.
- Submit Incorporation Documents: Required documents include the Articles of Incorporation, director and shareholder details, and proof of registered office address.
- Apply for Investment Approval: Foreign companies need approval from the Investment Commission of MOEA if the company involves foreign capital.
- Business License and Tax Registration: Register with the local tax authority for a business license and tax registration. Companies must also apply for a company chop (official stamp), commonly used to authenticate documents.
3. Minimum Capital Requirements
Taiwan does not have a set minimum capital requirement for most sectors, but the starting capital should be sufficient to cover operational needs. In certain industries, a higher capital requirement may be enforced.
4. Tax Compliance and Accounting
Taiwan’s corporate income tax rate is 20%, and companies must register for tax with the National Tax Administration. Additionaltax obligations include:
- Value-Added Tax (VAT): Standard VAT rate is 5%, applicable to most goods and services.
- Annual Financial Statements: Companies must maintain proper accounting records and submit annual financial statements. Larger companies may also be required to conduct an annual audit.
5. Hiring Employees and Social Security Contributions
Employers must contribute to Taiwan’s social security programs, which cover health insurance, labor insurance, and pension contributions. Taiwan has robust social benefits, and registration with the NationalHealth Insurance (NHI) and the Labor Insurance programs is mandatoryfor all employees.
6. Government Incentives
Taiwan provides various incentives for foreign businesses, particularly in high-tech, renewable energy, and R&D sectors. Key incentives include:
- Tax Incentives: Reduced tax rates and exemptions for companies involved in innovation or technological development.
- Grants for Research and Development: Financial support is available for companies engaging in R&D activities.
7. Conclusion
Setting up a company in Taiwan involves straightforward procedures, but foreign investors need to comply with local regulations, particularly in sectors requiring investment approval. With the
right planning and compliance, businesses can access Taiwan’s skilled workforce and strong market.