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Company Formation
회사 설립 서비스 – 대만 [회사의 종류 및 설립절차]2020-04-27T15:30:29+09:00

Representative Office

A representative office is one of the easiest ways to establish a legal business presence in Taiwan.

It is a form that many foreign companies take during the early development stages of investing in Taiwan. A representative office is basically a legal agent of the foreign company that is permitted to engage in price negotiations, provide quotations, participate in tenders, and sign procurement agreements. However, a representative office is not permitted to engage in income-generating business activities such as signing sales contracts, providing services, or receiving funds from clients.

Advantages of Representative Office
  • The most efficient form of entity to set up in Taiwan
  • There are neither VAT nor corporate income tax filing requirements for representative offices.
Disadvantages of Representative Office
  • Cannot issue invoices to customers or apply for a permit to import items to Taiwan.
  • Except for the person registered as the chief representative, it is generally difficult to apply for a work permit for other expatriates.
Procedure for setting up a Representative Office

Only businesses recognized as legally established companies in a foreign country are allowed to establish a representative office in Taiwan.

  • The foreign investor should first file an Application for Reporting Designated Representative for Handling Legal Matters in the ROC with the Central Region Office, MOEA, and obtain its letter of approval.
  • The investor should then apply to the local tax collection authority for a taxpayer code number.

Limited Company

There are two most common types of company in Taiwan, limited company and company limited by shares. Each type of company has the following natures,

  • The liability of each shareholder limited to capital contribution.
  • A limited company is usually chosen by small-to-medium-sized foreign investors. The advantage and disadvantage are summarized below.
Advantages of a Limited Company
  • The required capital is much lower, and only 1 natural or juristic person is required.
  • The liability of the shareholders for the company’s debts is limited to the amount of their respective capital contribution.
  • May invest in the stock and real estate markets in Taiwan.
Disadvantages of Limited Company
  • Subject to higher tax in comparison to branch operations.
  • The managing director cannot be removed from office without the approval of all members.
  • Capital gains tax is charged to interest sales of limited companies.
  • Prior approval must be obtained from all shareholders before a shareholder can sell shares.
  • A holding company cannot charge management overhead to Taiwan.

Branch Office

A “branch office” is a profit-seeking business entity established for the purpose of doing business in Taiwan, with a head office located in a foreign country.

Foreign business entities registered as companies under foreign laws shall first apply for recognition as a foreign company and its establishment of a branch office in Taiwan with the Department of Commerce under the MOEA. The foreign company establishing a branch office shall appoint a representative for litigious and non-litigious matters in Taiwan and a branch manager for managing day-to-day business operations. If the branch manager is a foreign national, he or she shall obtain a work permit from the Council of Labor Affairs. Branch offices shall pay income tax on income generated within Taiwan but are exempt from income tax when they remit their after-tax surplus earnings back to their parent companies because such remittances are not considered distribution of dividends.

Advantage of Branch Office
  • The most tax-efficient form of entity to set up in Taiwan.
  • Headquarters can allocate management overhead to the Taiwan branch, but such allocation of charges must be done based on group turnover. A CPA certificate is required.
Disadvantage of Branch Office
  • Branches cannot enjoy tax incentives available to hi-tech companies and claim tax benefits under double taxation agreements signed between Taiwan and other countries.
  • Branches do not enjoy limited liability protection in Taiwan. Their liabilities may be enforced against all the assets of the foreign head office, whether the assets are in Taiwan.
  • Branches often experience difficulty borrowing funds from local banks. All investments made in Taiwan by the Branch will be registered in the name of its Head Office.
Procedure for setting up a Branch Office
  • The foreign investor should first apply to the Central Region Office, MOEA, for an advance check of the Chinese name of his/her company and its field of business, and for retention of that company name.
  • He/she should then apply to the Central Region Office, MOEA, for “Recognition of Foreign Company,” evaluation of investment amount, and registration as a “Branch of Foreign Company.”
  • An investor must apply to the tax collection authority of the company’s locality to register his/her business.
  • The operator of an export/import business must apply first to the Bureau of Foreign Trade, MOEA, for an advance check of its English name, and then apply to that Bureau for registration as an export/import business.
  • A company that is engaged in the manufacturing or processing of goods must apply for a factory registration with the local county or city government where the factory is situated. If the factory is located in an export processing zone, science park, or agricultural biotechnology park, the company should apply for registration with the administrative agency in charge of that zone or park.

Company Limited by Shares

There are two most common types of company in Taiwan, limited company and company limited by shares. Each type of company has the following natures,

  • Possess legal person status.
  • The liability of each shareholder limited to capital contribution.
Advantages of Company Limited by Shares
  • Generally have a better image than limited companies, and all listed and public companies are companies limited by shares.
  • The liability of the shareholders for the company’s debts is limited to the amount of their respective shareholding.
  • May invest in the stock and real estate markets in Taiwan.
  • No capital gains tax arising from selling shares.
Disadvantages of Company Limited by Shares
  • Subject to higher tax in comparison to branch operations.
  • Sellers are required to pay security transaction tax at 0.3% of share transaction price when shares are sold.
  • A holding company cannot charge management overhead to Taiwan.
Procedures for Setting up a Company Limited by Shares
  • Investors should first select a Chinese name for the company that they will be setting up in Taiwan. The company that they set up must then file an application for pre-review of the company name and business scope as well as to retain the company name during the pre-review period with the Central Region Office, MOEA.
  • An investor is required to submit the Investment Application Form and relevant documents to the Investment Commission, MOEA. If the invested company is located in an export processing zone or a science park, then the investor should apply directly to the administrative agency in charge of that zone or park.
  • For investors making inward remittances of foreign currencies, investment funds may be remitted from abroad after the investment is approved. When the remittance is settled in NT dollars, the original approval documents should be submitted to the domestic bank handling the transaction, and approval of the investment amount must be authorized by the authority which approved the investment according to the paragraph above.
  • If the company being established involves an investment of NTD$500 million or more, the investor should apply to the Department of Commerce, MOEA, for the registration of his/her company. If the investment is less than NTD$500 million, the investor should apply to the local municipality government or the Central Region Office, MOEA (for Taiwan Province, Kinmen, and Matsu), depending on location. If the company being set up is located in an export processing zone, science park or free trade zone, the investor should apply directly to the administrative agency in charge of that zone or park.
  • An investor must apply to the tax collection authority of the company’s locality to register his/her business.
  • The operator of an export/import business must apply first to the Bureau of Foreign Trade, MOEA, for an advance check of its English name, and then apply to that Bureau for registration as an export/import business.
  • A company that is engaged in the manufacturing or processing of goods must apply for a factory registration with the local county or city government where it is situated. If the factory is located in an export processing zone, science park, or agricultural biotechnology park, the company should apply for registration with the administrative agency in charge of that zone or park.