Benefits and problems of registering a company in Taiwan
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Benefits and problems
Benefits of Taiwan company registration
- A limited liability company can be incorporated within 3 weeks, with a minimum of one shareholder and one director of any nationality.
- There is no minimum share capital requirement for Taiwanese companies, although it is useful for practical reasons to invest a larger amount if possible;
- Businesses registered in Taiwan have access to a market of 23 million people with a GDP per capita of US$31,900;
- The World Bank’s Doing Business report ranks Taiwan as the 15th easiest place in the world to start a business in 2015;
- Taiwan’s corporate tax is 17% of total taxable income, but income tax liability may not exceed 50% of the portion of taxable income over $120,000. This compares favourably against rates in Korea (22%), mainland China (25%), and Japan (30%). Taiwan’s 17% corporate tax rate matches that in Singapore;
- Taiwan free zone companies enjoy 100% tax exemption. These free trade zones include the Port of Keelung, Port of Taipei, Port of Taichung, Port of Kaohsiung, and the Taoyuan Air Cargo Park;
- VAT is low in Taiwan, with a standard rate of 5%. Consequently, there is more room for entrepreneurs to increase margins, as taxes do not constitute as much of the purchase price as elsewhere. Exports from Taiwan enjoy a 0% rate of VAT;
- The electronic sector is massive, dynamic and growing at an average of 4% per annum. Therefore there is a need for foreign knowledge and expertise;
- A foreign-owned company can invest in every business sector without restriction;
- Taiwan is a relatively inexpensive country in which to operate, as skilled labour costs are around US$550 per month. Wage inflation in the country is currently low, meaning that businesses are able to grow their profits more quickly than their overheads.
Problems with Taiwan company registration
- Taiwan ranks 9th among Asian countries for fluency in English, limiting foreign entrepreneurs’ ability to communicate there;
- Taiwan business documents are written in Chinese, meaning that foreign investors coming from non-Chinese-speaking countries face translation costs and waiting times when registering a business in Taiwan;
- The relationship between Taiwan and and the People’s Republic of China means that the political landscape may not be entirely stable. Taiwan’s uncertain international status and the potential growth in mainland China’s influence there should therefore be taken into account;
- Just like Japan, Taiwan is in a seismically active zone, making the country prone to regular tremors and earthquakes. This may disrupt business operations, so our Clients who set up a company in Taiwan should make sure to have business continuity plans in case of such events;
- In order to employ a foreign national, it is necessary to register a Taiwanese business with a minimum share capital of US$10,000;
- Renting an office for a newly-formed Taiwanese company is expensive. The average annual rent for an office in Taiwan’s main cities is around US$76 per sq. ft.;
- Taiwan’s government plays a big role in daily business, creating many bureaucratic and legal barriers for new businesses in Taiwan. Professional help is therefore valuable when navigating Taiwanese company formation and administration requirements; Healy Consultants is experienced with helping to incorporate and license Taiwanese companies and will be happy to help;
- Bureaucratic and banking procedures make it necessary for our Clients to travel to Taiwan in order to complete the company incorporation process and open a bank account;
- Foreign investors will need to register and patent all their products upon completing Taiwan company formation, as copying of foreign intellectual property occurs frequently in greater China.
Best uses for a Taiwan company
- Taiwan is a gateway to other large markets in Asia. With a huge number of international trading companies, port facilities, and supporting banks, Taiwan is an excellent source of trade finance. The strength and dependability of its shipping, infrastructure, and transportation sector attracts the world’s leading shipping companies to its ports;
- Taiwan has 7 international ports, and is located a mere 53 hours away from the five major Asia-Pacific harbours (Hong Kong, Manila, Shanghai, Tokyo, and Singapore);
Gateway to leading Asian markets