Benefits and problems of registering a company in Taiwan in 2024

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• Benefits and problems

  Benefits of Taiwan company registration

  

  1. It will be relatively easy for our Clients to setup a business in Taiwan because:
     • Our Clients may setup a new company with only 1 shareholder and 1 director, who can be of any nationality or residency. Furthermore, if our Clients decide to register a branch or representative office of their existing company, they will not be required to appoint local representatives;
     • While, there is no minimum paid up share capital requirement by law, Healy Consultants recommends its Clients to deposit at least US$17,000 into the capital account, prior to registering the company. Once the capital is deposited, Healy Consultants can register the company within 3 weeks;
     • As a result of the above, Taiwan is positively ranked as the 15^th best jurisdiction in the world for “starting a business” in the 2020 Doing Business Survey.
  2. A Taiwan company is likely to enjoy certain tax advantages including:
     • Taiwan’s corporate tax is 17% of total taxable income. This compares favourably against rates in Korea (22%), mainland China (25%), and Japan (30%);
     • A company registered in Taiwanese free trade zones will VAT is low in Taiwan, with a standard rate of 5%. Furthermore, exports from Taiwan enjoy a 0% VAT rate;
     • Companies investing in infrastructure projects are eligible for various incentives including i) corporate tax exemptions ii) customs duties exemption/deferment and iii) tax credits;
     • Companies setting up operations in the free trade zone will be allowed to import goods and machinery into the zone without being required to pay certain duties including VAT, customs duty, commodity tax and trade promotion service fee. Similar incentives may also be claimed by companies setting up in economic processing zones, science parks, bonded factories and warehouses;
     • Companies investing in R&D activities are eligible to claim up to 15% of their expenditure against its income tax liability, although the amount claimed must be less than 30% of its liability for the year;
     • It is possible for foreign companies to apply for withholding tax exemption on royalty payments being made to a foreign company for usage for their technology in Taiwan. In such a case, a foreign company will require approval from the Industrial Development Bureau (IDB).
  3. The country is situated in a strategic location of the Asia-Pacific region. Thereby, enabling all the companies incorporated in Taiwan to serve to the emerging and dynamic consumer markets of i) Japan; ii) ASEAN; iii) India and China as well as iv) the US.

  Problems with Taiwan company registration

  1. Our Clients may face certain bureaucratic hurdles when operating in Taiwan because:
     • 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;
     • 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;
     • Prior to starting the business registration process, our Clients should be mindful of the Negative Investment List issued by the Taiwanese Government;
     • 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;
     • Taiwanese government plays a big role in daily business, creating many barriers for new businesses in Taiwan. as a result, professional help is valuable when navigating company formation and administration requirements. Healy Consultants is experienced with incorporating and licensing Taiwanese companies and will be happy to help.
  2. Our Clients may also need to mindful of the following miscellaneous issues including:
     • 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$20 per sq. ft.;
     • Taiwan ranks 9^th among Asian countries with regards to “fluency in English”, limiting foreign entrepreneurs’ ability to communicate with local customers and employees;
     • The relationship between Taiwan and China means the political landscape may not be entirely stable. Taiwan’s uncertain international status and the growth in China’s regional influence 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.

• Best uses for a Taiwan company

  1. Taiwan provides an excellent gateway to the leading Asian markets because:
     • 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).
  2. Taiwan is an excellent jurisdiction to setup an industrial company because:
     • Taiwan is a high income country, with a average GNI per capita of over US$22,000 and potential consumer base of over 23 million people. Furthermore, our Clients should use their local company to reach wealthy Taiwanese market;
     • 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;
     • Companies engaging in projects intending to upgrade their industrial facilities will be eligible to apply for loans from the National Development Fund (NDF) in order to finance such undertakings;
     • The Taiwanese government is also offering low interest loans for companies engaging in i) Research and Development (R&D) activities, specifically agricultural technology and ii) distribution activities;
     • The World Bank ranks Taiwan as the 9^th best, 6^th best and 11^th best jurisdiction in the world with regards to “getting electricity”, “dealing with construction permits” and “enforcing contracts” respectively;
     • Consequently, Taiwan was ranked as the 12^th most competitive jurisdiction in the world by the World Economic Forum for 2019.