For organizations looking to grow their international presence, Taiwan offers the perfect location for making inroads into Asia. As a result of their foreigner-friendly practices, business is booming in Taiwan. Even with the hit of the pandemic, the country has managed to maintain its economic growth. In fact, business in Taiwan grew approximately 3.12% in 2020 and is expected to keep increasing.
With its business-friendly practices and positive attitude towards foreign companies, Taiwan can be an ideal place to set up business operations.
Steps to Setting Up a Company in Taiwan
The specific steps involved in setting up a company in Taiwan depend on what business structure you plan to use, such as a foreign partnership, subsidiary, or representative office. However, the most common kind of company is a foreign branch.
Here are some of the steps to creating a foreign branch in Taiwan:
1. Apply for Search and Reservation of Company Name
This step requires the company to submit an application to reserve its company name. Organizations can either submit a reservation application on the government website, mail it to their offices, or return it in-person to the Department of Commerce of the Ministry of Economic Affairs (MOEA).
2. Apply for Foreign Investment Approval
After getting approval for the company name, your company must then submit documentation to be officially recognized and registered as a foreign company by the Department of Commerce of the MOEA.
This step requires the following documents:
- An application letter
- The approved name reservation application with MOEA seal
- Two copies of your recognition registration card
- Two copies of your branch registration card
- A power of attorney appointing the agent, branch manager, and either a CPA or lawyer
- A copy of your organization’s articles and bylaws
- Any copies you have of government special approval
- Copies of the minutes of a meeting for the board of directors
- Copy of inward remittance and exchange memo that enables operating capital remitted into Taiwan
3. Apply for the Examination of Investment Capital
Taiwan law requires that the Investment Commission examines all foreign companies for their components of investment capital. Organizations can get this examination once they receive approval for foreign investment and remitted investment capital in Taiwan.
The documents required for this step include:
- Application Form C
- An approval letter from the Investment Commission of MOEA for foreign investment
- Three documents from the organization’s bank: remittance advice, foreign exchange memorandum, and either a statement or account passbook
4. Apply for Partnership Registration
This step is only required if you plan to make investments in Taiwan as either a sole proprietorship or a general partnership with one or more people. You will need this registration within 15 days of the approved articles of incorporation by any shareholders.
Documents you will need include:
- A completed application form
- Any required approval letter from authorities
- The approved articles of incorporations
- A copy of the minutes from the incorporators’ meeting and partners’ meeting, along with the attendance record
- The power of attorney to appoint specific people as partners’ representatives
- CPA report that confirms paid-in capital, along with any other support documents or authorized letters from the CPA
- ID documents from all directors, supervisors, and incorporators
- A completed incorporation registration form
5. Apply for Importer/Exporter English Name and Registration
When your organization has done all of the above and is officially registered in Taiwan, you then need to reserve an English trading name to import and export goods from abroad. You can complete this step through the Bureau of Foreign Trade of the MOEA. Your company then needs to also be registered under your English name.
The documents you will need for this step are two application forms: reservation of English name of the company, and importer/exporter registration.
6. Apply for Business Registration
Often, a local agency of the national tax authority will automatically complete this step for you once they see that your company is officially registered, has all the approvals, and has received the details of your company’s registration. However, your organization may need to turn in additional supporting documents if required by the agency.
Can Foreigners Start a Business in Taiwan?
The Taiwanese government has a policy of encouraging foreign businesses. In fact, many organizations (especially tech companies) choose to base their Asian offices in Taiwan because of their foreign- and business-friendly practices.
For example, Microsoft recently launched a new initiative to significantly expand its presence in the country with a campaign they named “Reimagine Taiwan.” Likewise, Fortinet has a business office in Taiwan, and so does Cisco.
Typically, organizations that want to do business in Taiwan register as a local limited liability company, or LLC. A Taiwan LLC only allows one shareholder and one director to be non-resident foreigners. For many companies, this is the best option because it has fewer administrative prerequisites and is more flexible than other options.
Companies can also choose to have a limited partnership (LP) or register as a free zone company. An LP requires a minimum of two partners with one of them being a Taiwanese resident. The resident is held personally liable for the taxes and debts incurred by the partnership. An LP cannot hire foreigners, so it is best used by a foreigner with a local partner and a significant presence in the country.
In the case of a free zone company, foreigners can register an export-oriented business in a special economic zone, or SEZ. However, this requires the organization to submit a business plan and invest significant capital in their company (usually at least $200,000). This is typically the best step for clients who already anticipate a significant investment and plan to export more than 75% of their product.
How Much Does It Cost to Start a Company in Taiwan?
As with any business venture, there is an upfront investment when starting a company in Taiwan. Paying for paperwork, using a CPA and various lawyers, as well as other miscellaneous costs are all part of starting a business in Taiwan.
In the first year of incorporation, the average cost is about $8,545 (US dollars). Usually, there aren’t any annual company costs in the subsequent years. The average fee for a Taiwan engagement is $15,040, but the exact cost depends on the entity type your organization chooses, as well as the specifics of your company and how quickly you want to set up business in Taiwan.
Some of the average total costs based on entity type include:
- LLC: $15,040
- LP: $18,390
- Free zone: $18,390
- Foreign branch: $16,040
- Holding company: $13,040
Get Ready to Expand in Taiwan
Taiwan is an attractive option for companies looking to expand their presence and take advantage of the benefits it has to offer. By taking the right steps and ensuring that documentation is thoroughly completed on time, setting up a business can be a fairly straightforward and seamless process. In fact, the entire process can be completed in as fast as 11 weeks depending on which entity you choose.
Be sure to enlist professionals so everything is done properly and all paperwork is completed. With the right help, you can be on your way to creating an international presence.