Published by ChinaMNC · taiwan

Taiwan Company Registration: Common Questions Answered

Essential guidance for foreign founders on Taiwan company registration, covering entity types, capital requirements, procedures, tax, and compliance. Includes a general-information disclaimer.

Introduction

For foreign founders considering business expansion in East Asia, Taiwan often emerges as a compelling option due to its strategic location, skilled workforce, and business-friendly environment. However, navigating the company registration process can be complex. This article addresses common questions about Taiwan company registration to help foreign founders make informed decisions.

1. What are the common business entity types in Taiwan?

Foreign investors typically choose from the following entity types:

• Limited Company (有限公司): The most common form for small and medium enterprises. It requires at least one shareholder and one director, and liability is limited to the shareholder's capital contribution.
• Company Limited by Shares (股份有限公司): Suitable for larger businesses or those planning to raise capital. It requires at least two shareholders (or a single corporate shareholder) and a board of directors.
• Branch Office (分公司): An extension of a foreign parent company, not a separate legal entity. The parent company bears unlimited liability.
• Representative Office (代表人辦事處): Limited to non-profit activities such as market research and liaison. It cannot engage in commercial transactions.

Each type has distinct capital, compliance, and tax implications. Consulting with a local advisor can help determine the best fit.

2. Is there a minimum capital requirement?

Taiwan does not impose a universal minimum capital requirement for most company types, but the capital must be sufficient to cover initial operating expenses. For foreign-invested companies, the Investment Commission (IC) under the Ministry of Economic Affairs (MOEA) reviews capital adequacy on a case-by-case basis. A common benchmark is NT$500,000 for a limited company, but this is not a legal minimum. It's advisable to prepare a realistic business plan to justify the capital amount.

3. What is the registration procedure?

The process generally involves the following steps:

• Company Name Pre-check: Reserve a unique company name with the MOEA.
• Foreign Investment Approval: Apply to the IC for foreign investment approval (unless exempt).
• Capital Deposit and Verification: Deposit the capital in a local bank and obtain a capital verification report.
• Company Registration: File the application with the MOEA to obtain the company registration certificate.
• Business Registration: Register with the local tax authority and apply for a business registration certificate.
• Tax Registration and Invoicing: Apply for a tax ID and purchase uniform invoices if required.

The timeline varies depending on the completeness of documents and the need for additional permits. Typically, it takes several weeks to a few months.

4. What are the requirements for foreign shareholders and directors?

Foreign individuals or corporate entities can be shareholders. For a limited company, at least one director must be appointed; this director can be a foreign national. However, if the director resides outside Taiwan, a local representative may be required for administrative purposes. For a company limited by shares, a board of directors with at least three directors is required, and at least one director must be a Taiwan resident (or a foreigner with a valid resident permit). Shareholders' identity documents must be notarized and authenticated by Taiwan's overseas representative office.

5. How is foreign investment approved?

Foreign investment in Taiwan is regulated by the Foreign Investment Act and requires approval from the IC unless the investment falls under negative-list industries or qualifies for exemptions. The application includes details of the investor, business plan, and capital source. The IC reviews the application for compliance with investment regulations. Approval is typically granted if the investment does not involve restricted industries or national security concerns.

6. What are the tax obligations?

Companies in Taiwan are subject to:

• Corporate Income Tax: 20% on taxable income (with possible preferential rates for SMEs).
• Business Tax (VAT): 5% on most goods and services.
• Withholding Tax: On dividends, interest, and royalties paid to foreign entities, typically 20% unless reduced by tax treaty.

Tax filings are required annually, and businesses must maintain proper accounting records. Hiring a local accountant is recommended to ensure compliance.

7. What are the ongoing compliance requirements?

After registration, companies must:

• File annual corporate income tax returns.
• File monthly or bimonthly business tax returns.
• Maintain a registered office address.
• Hold annual shareholders' meetings and file necessary resolutions.
• Comply with labor and health insurance regulations if hiring employees.

Failure to comply can result in penalties or revocation of registration.

8. Can foreign founders open a bank account?

Yes, but the process can be challenging. Banks require thorough documentation, including company registration documents, director's ID, and business plan. Some banks may require the director to be physically present in Taiwan. It's advisable to compare banks and seek assistance from a local advisor.

9. What about work permits and visas?

Foreign directors or employees who need to reside in Taiwan must obtain a work permit and resident visa. The employer applies for the work permit with the Ministry of Labor. Requirements include educational qualifications and relevant experience. Once approved, the individual can apply for a resident visa and Alien Resident Certificate (ARC).

10. Is Taiwan a good base for regional operations?

Taiwan offers several advantages: a strategic location, robust infrastructure, a well-educated workforce, and a legal system that protects intellectual property. However, foreign founders should consider market size, competition, and regulatory nuances. Conducting thorough due diligence and consulting with local experts is essential.

Disclaimer

This article provides general information only and does not constitute legal, tax, or professional advice. Regulations and procedures may change. Foreign founders should consult qualified professionals in Taiwan for advice tailored to their specific circumstances.