Setting up a company in Taiwan

Taiwan is located in the heart of the Asia Pacific region, in the middle of both Northern and Southeast Asia. It is a major transportation hub connecting Asian capitals thanks to its large network of international harbors and airports.

Taiwan enjoys an abundant R&D workforce constantly growing and enabling Taiwan to be a major player in the tech and, more specifically, the telecommunication industry. In addition, Taiwan’s government has settled numerous laws and regulations on intellectual property to encourage innovative inventions.

Taiwan enjoys a flexible company registration process allowing companies to only have one shareholder and one director from any nationality without any minimum capital requirement. Indeed, Taiwan has been ranked the 15th best jurisdiction in the world for “starting a business” in the 2020 Doing Business survey.

Taiwan is also an attractive area in Asia, thanks to its tax regime. Indeed, corporate tax is 20% of total taxable income; a fairly low rate compared to the rest of Asia (Korea 22%, mainland China 25%, Japan 30%). Exports are not subject to tax and companies investing in infrastructure projects or R&D activities are subject to various tax incentives or tax claims. Finally, foreign companies’ branches in Taiwan can repatriate after-tax profit free of dividend tax.

The Limited Liability Company (LLC) is the most common company structure in Taiwan. It is generally a company set up by one or more shareholders. Each shareholder is liable for the company in an amount limited to the amount contributed by them. 

For some business activities, like banking, securities, telecom and manufacturing a special license or permit might be required.

Company Requirements for a Limited Liability Company in Taiwan

Any limited company* in Taiwan is subject to the following requirements:

• Maintain a minimum of one company director, who can be a natural person or corporate
• Maintain a minimum of one shareholder, who can be a natural person or corporate body
• Maintain a local registered office address in Taiwan
• Appoint one investment agent who must be a Taiwan resident

The company’s director(s) and shareholder(s) are exempted from being a Taiwan resident or national (except that a mainland Chinese national is not allowed to act as a director or supervisor).

No minimum capital is required in Taiwan.

*Companies limited by shares are also a popular company commonly incorporated and typically used by large corporations intending to list themselves. Taiwan companies limited by shares are in addition required to appoint at least one individual as supervisor. Finally, Taiwan companies limited by share shall have at least one corporate shareholder (or two individual shareholders) and must appoint at least three company directors.

Branch office in Taiwan

A foreign company may register a branch office to carry on profit-seeking activities in Taiwan. A branch office is exempt from almost all of the corporate formality requirements of a limited company.

For the establishment of a branch office in Taiwan, the following steps should be followed:

1. Apply for search and reservation of company name
2. Apply for recognition of Foreign Company and Branch Registration
3. Apply for Examination of Investment Capital
4. Apply for the Imported/Exported English Name and Registration
5. Apply for Business Registration

Taiwan’s tax authority is the National Taxation Bureau from the Ministry. Companies incorporated in Taiwan, irrespective of their headquarter’s residence and irrespective of the nature of the income, are subject to tax on their international net income.

Taiwan companies or Taiwan subsidiaries of a foreign company are subject to income tax to income generated worldwide. A company with a head office outside of Taiwan (such as a branch office of a foreign company) is not considered a non-resident for tax. Such companies are subject to income only on Taiwan-source income at the rate applicable to a domestic company.

If a profit-seeking company’s head office is in Taiwan, it is indeed resident in Taiwan.

An alternative minimum tax applies in certain circumstances and a 5% surtax is imposed on undistributed profits.

If a foreign company renders electronic supply services (ESS) to domestic customers (both B2B and B2C), the ESS services may apply to income tax in Taiwan.

Branches are subject to the same tax as subsidiaries but are not subject to a surtax on undistributed earnings.

Dividend tax

Dividends received from Taiwan companies and business profits of limited partnerships are not taxable for income tax in the hand of resident corporate taxpayers. On the other hand, a 20% income tax applies to foreign dividends.

Capital gains tax

Domestic companies’ capital gains from the disposal of Taiwan companies or other securities are not taxable under the income tax. The AMT at a rate of 12% applies (6% when the holding period exceeds three years). Capital gains derived from foreign investors from the disposal of Taiwan companies or other securities are exempt from income tax.

Fidinam is a private consulting firm founded in Switzerland in 1960. We offer tax advisory, business consulting, real estate services, wealth and estate planning, licensing and compliance, crypto and digital consulting. Our clients include individuals, SMEs and multinational companies in a wide range of industries.

With 250 employees in 16 locations and an extensive network of business partners in 90 jurisdictions, Fidinam provides innovative, personalized service and local expertise on a global scale.

Fidinam has more than ten years of presence in Asia Pacific, with offices in Hong Kong, Ho Chi Minh City, Melbourne, Shanghai, Singapore and Sydney. We provide our clients a one-stop-shop solution to set up and grow their business in the region.

Our strength is our people: a multicultural and multidisciplinary team of professionals capable to assist clients with a tailored, dedicated and boutique-style approach to their needs. Our team is up-to-date on evolving regulations, emerging markets and new
technologies.

Fidinam provides a wide range of services for clients in Greater China including Hong Kong, Macau and Taiwan. We support international clients looking to invest and set up a business in Greater China through services such as market-entry services, incorporation of the entities, accounting, tax, HR and payroll.

Vice versa, we support clients who want to expand their business abroad by leveraging Fidinam’s solid experience, knowledge and network in different jurisdictions.