How to Open a Company in Taiwan as a Foreigner

The pros of opening a company in Taiwan

• In order to solve the employment problem and attract foreigners with expertise, the Taiwan government provided with Regulations on the Permission and Administration of the Employment of Foreign Workers and tax incentives. Foreigners can get a work permit easier than in many other Asian countries and enjoy the favorable income tax rate;
• Taiwan’s corporate income tax rate is 20%, comparatively lower than Japan, Korea, China. The VAT rate is 5%, which is also lower than Japan, Korea, China, and Singapore;
• It is relatively easy, when compared to other Asian countries, to open a business bank account and transfer funds, if you can provide the required documents;
• The Taiwan government established the special-purpose zones that can meet changing business needs. At present, there are 174 industrial parks, 10 export processing zones, 3 science parks, 2 agricultural technology parks, 4 environmental science, and technology parks, and 7 free trade zones;
• Taiwan is located at the heart of the Asia-Pacific region, which puts it in an advantageous position to make use of global production resources and marketplace. The average flying time from Taipei to the seven major cities (Hong Kong, Shanghai, Manila, Seoul, Tokyo, Singapore, and Sydney) in Western Pacific is merely three hours;
• Taiwan offers an industrial supply chain that can meet client needs, offer fast responses, and quickly provide customized components. In terms of quality and quantity, the competitive nature of Taiwanese products is a major reason why foreign investors choose the island as an investment destination.
• Taiwan’s intellectual property laws are open and transparent. Not only they meet the basic guidelines established under international treaties, but also undergo revisions in response to business and international intellectual property law developments.

The cons of opening a company in Taiwan

• Taiwan’s corporate income tax is global-wide based, which means both offshore and onshore income of a business entity registered in Taiwan will be subject to Taiwan corporate income tax.

How to open a company in Taiwan

Do you need to come to Taiwan?

In the past, the legal representative had to come to Taiwan to set up the Taiwan entity and open the bank account during the incorporation process.

Recently, the government and many banks changed their procedure to accept a Power of Attorney (POA) instead of visiting Taiwan in person.

However, not all banks would accept the POA, here is an overview:

• Government-owned local banks such as Changhwa Bank, or First Bank still do not accept the POA and request the representative personally go to the bank to open the bank account in person;
• Private-owned local banks provide more flexibility to clients as they are more aggressive to attract customers. However, each bank has its own policy and the relationship is also important. We suggest that you check with the relationship manager of banks to see who is willing to accept you as his/her client;

• Foreign-based banks such as CitiBank, or HSBC, provide the most flexibility to clients, e.g. POA or web meeting. However, they usually set high requirements to open the account so they can provide the service to clients they preferred.

  Here some examples of requirements from different international banks: There are banks that only accept clients with an initial capital higher than 34,000 USD, others only accept clients who have a minimum sales amount per year, and other banks only accept clients that do business on certain industries (e.g. digital business).

Selecting a proper bank to open the bank account during the incorporation process is important. Sometimes, the time frame of incorporation might be significantly delayed by misleading communication with the banker.

Usually, it’s a good idea to listen to your agency’s suggestions, when it comes down to selecting a bank for the purpose of opening your business bank account.

The procedure and required documents to register a company in Taiwan

First of all, you’ll need to pay the agency’s fee and choose a name for your brand new company. Your licensed agency will then check whether the name is available in Taiwan or is already taken.

Next, you’ll have to send a copy of your passport, a copy of an official document as proof of residence (for instance, a driver’s license, a bill, or a bank statement that shows your residential address), and a questionnaire with standard questions such as an address, capital amount, business scope, director and shareholders list (if you plan to open the company alone, you can be both director and single shareholder).

Few documents will be subject to legalization by the Taipei Embassy in your home country, such as the POA, certificate of incorporation.

After getting the investment approval and opening a preparatory bank account, you can inject the capital from your foreign bank account.

Your agency will submit the company registration after the capital audit is completed. You will receive the approval letter with the general uniform invoice number of your Taiwan business entity. At this stage, your Taiwan entity is formally established.

Your agency will then submit the tax registration and you shall receive the approval letter with tax ID within 2 weeks. The last step is to transfer the preparatory bank account to the official account and go to the tax office for an interview. It also can be done by your agency with a POA.

The whole process to register the company should take around 2-3 months.

The total cost of registering and maintaining a company in Taiwan

Company formation costs

Assuming that you decide to hire an agency with an office address for registration, during the first year you’ll need to pay the following fees:

• Bank account opening: 9,000 NTD;
• Company registration (government fee): 1,000 NTD;
• Provision for the registered office address: 48,000 NTD;
• Incorporation submission fee: 70,000 NTD;
• Company kit and miscellaneous fee (i.e. seal, stamp): about 2,000 NTD.

So, the total is 130,000 NTD, that is around 4,400 USD, at the moment we write this article.

Yearly fee to maintain the company

Starting from the second year, you’ll need to pay for the registered office address, which is 48,000 NTD.

This means that starting from the second year, you’ll pay 48,000 NTD per year to maintain the company.

Note: This quotation was provided by the agency we recommend at the moment; other agencies might quote you a completely different fee.

Unlike setting up a company in Singapore or Hong Kong, you don’t need to assign a local company secretary; however, a renewal fee is also required for Taiwan business entities.

VAT, accounting and auditing

Further, you’ll need to file a bi-monthly VAT filing and annual income tax return. According to Taiwan regulations, the VAT should be filed by the 15th of each odd month for the preceding two months.

The corporate income tax return should be filed by the end of the 5th month of the following year after the fiscal year is ended.

A good agency will also offer you accounting, tax filing, and auditing services. This doesn’t come for free, and prices may vary as they are based on the number of invoices you produce.

There are two types of audit, financial, and tax audit. Both the financial and tax audits are not mandatory unless certain criteria are met. Below you find some examples.

A financial statement audit shall be required when the capital of the company is higher than 30 million NTD, the annual sales are higher than 100 million NTD, the company employs more than 100 people, or the company is a public traded company.

A tax audit shall be required for financial institutions (e.g. banks, insurance companies), public companies, companies applying tax incentives whose annual sales are 50 million NTD or above, companies applying the group-consolidating tax filing, or companies with annual sales that are higher than 100 million NTD.

Excluding the cases above-mentioned, a newly set up company shall not be required to go through any auditing process. However, you need to be aware that the tax audit is a must if you want to enjoy the loss carryforward for your Taiwan business entity.

Here an estimation of the accounting and tax filing fee provided by the agency we recommend at the moment:

• Around 150,000 NTD per year, if you have no more than 240 transactions:
• Around 250,000 NTD per year, if you have between 240 and 600 transactions;
• Around 330,000 NTD per year, if you have between 600 and 1200 transactions).

In short, the final quotation will depend on the complexity of the company’s operations.

How to open a multi-currency business bank account in Taiwan

Taiwan banks follow the anti-money laundering regulations and inspect the customers’ background before opening the bank account. Therefore, before accepting you as a customer, every bank has the obligation to collect certain documents and ask questions.

Documentation

The documentation will be as below:

• Company registration letter;
• Company registration form;
• Representative’s copy of passport;
• Representative’s copy of Alien Resident Certificate (some banks accept the Taiwan ID);
• Company and representative chops.

Additional documentation will be required if any shareholder is corporate:

• Organization structure until the ultimate beneficial owner (individuals);
• Shareholder list of each layer of company;
• Director list of each layer of company;
• Copy of passport for any ultimate beneficial owner who directly or indirectly holds the Taiwan business entity 25% or more of ownership.

The above documents are the basic requirements of all banks in Taiwan. As we mentioned above, there are three major types of banks in Taiwan. Each of them will have different requirements. Here are some more details:

Government-owned local banks

They have a standardized internal policy and opening a bank account with them is not too complex f all the requested documents are provided.

However, they will usually not assign a relationship manager for your company, thus, you will receive limited customer service.

Although it is easy to open a bank account, they might still reject you if your Taiwan business entity is geographically away from their branch.

Private-owned local banks

It’s not difficult to open a bank account with them and will provide a better service, generally speaking. Also, they might assign a relationship manager to you, according to your business plan, capital, and so on.

However, you need to check whether they provide the English version of e-banking, as some banks only provide e-banking in the Chinese language.

Foreign-based banks

They usually provide the best customer service and have strong international connections. However, they usually set higher requirements, which we already discussed in a different section of this article, so it is very difficult to open the bank account for small to medium-sized companies.

If you already have a bank account with an international bank such as HSBC in another place, say in Hong Kong, then you may seek your relationship manager’s support to open the bank account in Taiwan, with the same bank.

Opening the bank account

There are two ways to open a bank account, that is visiting the bank in person or letting your agency do it for you with a POA.

Visit the bank in person

Your agency shall provide you with an advising service, pre-screening service, and set up an appointment on your behalf with the bank you wish to use, for a reasonable fee.

An employee of the agency will also accompany you to the bank and follow up with the account opening status.

You will need to visit the bank twice, the first is to open the preparatory bank account and the second to complete the transfer to the official bank account.

Before visiting the bank, you need to go to the Immigration Office to apply for a Taiwan ID first (it’s usually possible to obtain it on the same day of application). Then, just remember to bring your passport, your Taiwan ID, and 1,000 NTD in cash for the preparatory bank account opening.

When you visit the bank for the second time, to open the official bank account, you should also bring your pc so that the banker can help you to install the e-banking software.

Also, don’t forget to ask the banker to open a multi-currency bank account for your Taiwan business entity.

Your agency open the account on your behalf

If you can find a bank to allow you to open a bank account using a POA, you just need to legalize the POA in your country and deliver it to your agency in Taiwan.

In this case, all the opening process is performed by your agency and the bank, for an additional fee.

Frequently asked questions

Are you looking for an agency that can help you to set up your Taiwan company?

If you want to have the contact information of an honest agency that can help you to register and manage your company, just send us a message using the following form:

p.s. Note that we receive hundreds of emails every day and, sometimes, we can’t reply fast. At the same time, we assume that you want to get this info ASAP, so we’ll also forward your message to the agency we recommend. In this way, they can get in touch with you much faster!

Photo Credits: Photo by Ethan Lin on Unsplash