For organizations looking to increase their international presence, Taiwan offers the perfect place to make inroads in Asia. Due to their foreign-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 by around 3.12% in 2020 and is expected to continue to rise.
With its business-friendly practices and positive attitude towards foreign businesses, Taiwan can be an ideal place to set up business operations.
Steps to start a business in Taiwan
The specific steps for setting up a business in Taiwan depend on the business structure you plan to use, such as an overseas partnership, subsidiary, or representative office. However, the most common type of company is a foreign branch.
Here are some of the steps to set up a foreign branch in Taiwan:
1. Request company name search and reservation
This step requires the business to submit a reservation request for their business name. Organizations can either submit a reservation request on the government website, mail it to their offices, or return it in person to the Commerce Department of the Ministry of Economic Affairs (MOEA).
2. Apply for a foreign investment authorization
After obtaining business name approval, your business must then submit documents to be officially recognized and registered as a foreign business by the MOEA Department of Commerce.
This step requires the following documents:
- A letter of application
- The name reservation application approved with the MOEA seal
- Two copies of your reconnaissance registration card
- Two copies of your branch registration card
- A power of attorney appointing the agent, the branch manager and a CPA or lawyer
- A copy of your organization’s statutes and regulations
- Any copies you have of special government approval
- Copies of minutes of a board meeting
- Copy of incoming installment and exchange note allowing transfer of working capital to Taiwan
3. Apply for the investment capital exam
Taiwanese law requires the Investment Commission to review all foreign companies for their investment capital components. Organizations can obtain this review once they have received approval for foreign investment and investment capital remitted to Taiwan.
Documents required for this step include:
- Application form C
- A letter of approval from the MOEA Investment Commission for foreign investment
- Three documents from the organisation’s bank: remittance advice, exchange memorandum and account statement or passbook
4. Apply for partnership registration
This step is only required if you plan to invest in Taiwan as a sole proprietorship or as a general partnership with one or more persons. You will need this registration within 15 days of the approval of the articles of association by the shareholders.
The documents you will need include:
- A completed application form
- Any required approval letter from the authorities
- Approved statutes
- A copy of the minutes of the meeting of founders and the meeting of partners, as well as the attendance register
- The power of attorney to designate specific persons as representatives of the partners
- Report from the CPA confirming the paid-up capital, as well as any other supporting document or authorized letter from the CPA
- Identity documents of all directors, supervisors and founders
- A completed incorporation registration form
5. Apply for the English name and registration of the importer/exporter
When your organization has done all of the above and is officially registered in Taiwan, then you need to reserve an English business name to import and export goods from overseas. You can complete this step through the Foreign Trade Office of the MOEA. Your company must then also be registered under your English name.
The documents you will need for this step are two application forms: English Company Name Reservation and Importer/Exporter Registration.
6. Apply for business registration
Often a local National Revenue Authority agency will automatically complete this step for you once they see that your business is officially registered, has all the approvals and has received the registration details from your company. However, your organization may need to provide additional supporting documentation if the agency requires it.
Can foreigners start a business in Taiwan?
The Taiwanese government has a policy of encouraging foreign companies. In fact, many organizations (especially tech companies) choose to establish their Asian offices in Taiwan because of their foreigner- and business-friendly practices.
For example, Microsoft recently launched a new initiative to dramatically expand its presence in the country with a campaign they named “Reimagine Taiwan”. Also, Fortinet has a sales office in Taiwanand Cisco too.
Typically, organizations wishing 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 aliens. For many companies, this is the best option because it has fewer administrative requirements 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, one of whom is a Taiwanese resident. The resident is held personally liable for taxes and debts incurred by the company. 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 business (usually at least $200,000). This is usually the best step for customers who are already anticipating a significant investment and plan to export more than 75% of their product.
How much does it cost to start a business in Taiwan?
As with any business venture, there is an initial investment when starting a business in Taiwan. Paying for paperwork, using a CPA and various attorneys, and other miscellaneous expenses are all part of starting a business in Taiwan.
During the first year of incorporation, the average cost is around $8,545 (US dollars). Usually there are no annual costs for the company in the following years. The average fee for an engagement in Taiwan is $15,040, but the exact cost depends on the type of entity your organization chooses, as well as the specifics of your business and how quickly you want to expand to Taiwan.
Some of the average total costs based on entity type include:
- LLC: $15,040
- Vinyl record: $18,390
- Free area: $18,390
- Foreign branch: $16,040
- Holding company: $13,040
Prepare to grow 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 the documentation is fully completed on time, starting a business can be a fairly simple and seamless process. In fact, the entire process can be completed in just 11 weeks, depending on which entity you choose.
Be sure to hire professionals to get everything done right and have all the paperwork completed. With the right help, you can be well on your way to creating an international presence.