There are numerous forms of business entities that foreign investors can register with the Taiwanese government. Considering that company structures are mostly different, requirements for directors and shareholders are to also be carefully analyzed with respect to their functions and duties.
FastLane offers company incorporation service in Taiwan. We provide expert advice to make sure your journey runs smoothly and easily takes you through the complexity.
Can foreigners register a company in Taiwan?
There are several forms of business entities that foreign investors can opt for while registering a company in Taiwan. Business consultancy can also specify the requisites and procedures to follow when operating a business in Taiwan.
For example, a Taiwan LLC can be registered by foreign shareholders and foreign directors. In many cases, an LLC in Taiwan acts as a wholly foreign-owned enterprise, regardless of what industry it operates in.
The statutory corporate income tax rate in Taiwan is 20%, lower than the world average rate of about 24%.Companies can open up a representative office or a company in Taiwan’s free trade zones without having to pay the corporate tax.
Taiwan FSC requires every entity to conduct a statutory audit upon reaching NT$30 million as the paid-up capital. Also, companies with more than one hundred employees or annual net operating revenues above NT$1 billion are to be statutorily audited, which is mostly undertaken at the close of every financial year. The periodic and timely reviewing of these activities help to sustain integrity and lower corruption rates.
In general, the start up phase in a Taiwanese company there’s no required minimum paid-up capital, but there are exceptions in some industries. Read Doing Business in Taiwan: Why It’s Attractive
Types of Companies in Taiwan
When registering a company in Taiwan, the government offers various types of companies for foreign businesspeople to choose from. Specialized business consulting can provide advice on the steps required to register a company in Taiwan.
Limited Liability Company
In Taiwan, LLC is the most common type that foreigners opt for. A Taiwan government recognizes an LLC in Taiwan as a distinct legal entity that has its own rights and liabilities. The shareholders do not hold personal liability towards the company’s debts or liabilities.
- Minimum of one shareholder can be of a different nationality and the licensed company’s all-owned capital. Such a person can act for individual as well as corporate shareholders.
- Any nationality must have at least 1 director.
- Specialized Business Consulting advises that an entrepreneur should not start with less than $5,000 in available cash to support future operations and transactions.
- Firstly, the company must have a local registered address in Taiwan.
- It has access to Taiwan’s double taxation conventions.
Alternatively, foreigners engaging in business in Taiwan can opt for a Taiwan Limited Partnership.
A Taiwan Limited Partnership consists of two or more individuals, where one general partner manages daily operations and bears unlimited liability for the company’s debts and obligations. On the contrary, limited partners cannot participate in management. Foreign investors with a local partner in Taiwan can register a legitimate Limited Partnership.
- It is considered a tax-transparent entity. The annual income and profits generated by a Taiwan Limited Partnership are not considered taxable income.
- Though there is no minimum paid-up capital requirement, specialized business consulting strongly advises having at least $5,000 in available funds before company establishment to fund future operations.
- It requires at least 2 shareholders and 1 local resident shareholder.
Free Trade Zone Company
Taiwan’s Free Trade Zones are established to foster and promote regional and oceanic territories that fall under that jurisdiction. These zones will be used by the ministry of economic affairs to stimulate FDI into the country’s economy, enhance the country’s trade value and volume.
- Specialized business consultants who advise to establish trade, warehousing, or manufacturing companies under Taiwan Free Trade Zone Company can release themselves from corporate income tax. The Taiwanese government also gives tax breaks to relieve the fiscal burden for the traders.
- The minimum requirement is a 1 shareholder/any race with 100 percent foreign owned company capital.
- At bare minimum, a foreign national is expected to get at one director of any nationality.
- Application and proposal with set out operational objectives and proposed business activities for the Free Trade Zone management entity’s review and approval.
- However, the Free Trade Zone company must have a physical registered office in Taiwan.
For Taiwan, it opens up new opportunities by expanding their reach further. It also allows foreign companies to develop their enterprises in Taiwan by creating branch offices. The overseas parent company acts as the legal shareholder.
With a branch office in Taiwan, international investors can also extend their parent organization. A branch office in Taipei is set up to represent the parent company and allow for smooth operations as well as generation of revenues into Taiwan.
- It requires a resident manager. In case it is important to appoint a reliable local manager, the service of specialized business consulting can be useful.
- A registered office address that is located in Taiwan is compulsory for the Taiwan branch office.
- The branch office in Taiwan is considered as a legal entity and therefore has no minimum number of directors required.
- The name of the business in the branch office should indicate the parent’s name and country of origin.
Representative Office (RO)
Interested foreign investors may further explore the opportunities presented by setting up a Representative Office (RO) in Taiwan. Like the branch office, the law shareholder is the foreign-based parent company.
Perform a thorough analysis of Taiwan’s business feasibility and eventually decide whether or not to extend operations.
ROs can however undertake some limited activities on behalf of their parent company in terms of research on the new market and marketing activities. Foreign investors who have interest in promoting their company in Taiwan are encouraged to set up a specialized business consulting firm.
A resident local manager is necessary for the registration of Taiwan’s representative office. Specialized business consulting may also help in identifying a suitable and trustworthy local legal representative if need be.
Some of the documents required to register a Taiwan RO include:
- Documents proving the identity and residence of the agent.
- Documents proving the establishment of the foreign company in its country of residence.
- Lease agreement.
- Copy of the registration card.
Advantages of a Nominee Director
In various company setups, nominee directors are utilized. Nominee directors are those who are appointed to represent interests of others (usually the real shareholders) without active engagement in the business affairs of a company.
The purpose and function of a nominee director is to offer anonymity and act as fronts or agents of the owner. They are part of the company’s formal representation that doesn’t participate in the operations and decision-making of the organization.
Nominee directors in Taiwan adhere to the same legal requirements as other directors and they comply with all regulations and legislations even though they are only nominally involved.
Knowing the subtle features of director’s and shareholder’s needs among various companies’ structures in Taiwan is important. Legal or professional advice seeking would be useful in dealing with the intricacies and adhering to the laws and regulations of Taiwan.
Engaging a nominee director can offer certain strategic benefits:
Confidentiality: They may therefore use nominee directors to protect the identity of beneficial owners.
Compliance: They maintain compliance at local level and therefore act as the local representatives that are conversant with the legal and corporate governance issues.
Foreign Representation: Nominee directors can be especially beneficial in facilitating easy communication and understanding of local corporate and business practices, especially for foreign entities.
Ease of Operation: Local nominee directors, who speak the local language fluently and understand the local legal system, simplify administrative work and facilitate decision making for international stakeholders.
If an organisation considers a nominee directorship, it has always to be with a reputable and trustworthy nominee or advisory body like FastLane for legal compliance and the interest of the company. They are very important in managing office duties, ensuring compliance, as well as enforcing morals within firms especially in places such as Taiwan.