Taiwan is a welcoming place for international investors, and government-instituted global investment policies make it easier than before to establish a Taiwan subsidiary.
How to establish a Taiwan subsidiary
Establishing a Taiwan subsidiary is not an easy task. You’ll need to consider various factors before you grow internationally. Start by examining Taiwan’s business practices to ensure the country is the right place for your industry. The Taiwan government offers different tax and non-tax incentives to encourage more corporate investments.
Your company should also consider any relationships or trade agreements that could impact where you want to establish your Taiwan subsidiary. Separate regions or cities can sometimes have different incorporation rules and expenses that could determine the best choice for your headquarters’ location.
Finally, you should consider any language requirements you will need to address. The primary language used in Taiwan is Mandarin Chinese, but other ethnic groups use Taiwanese Hokkien or Haka. Many people speak English in Taiwan, but it’s a good idea to hire employees who speak Mandarin Chinese or find a translator to help during business transactions.
The Taiwanese Company Act allows companies to incorporate as a subsidiary, partnership, international branch, or representative office. The steps to establish a Taiwan subsidiary include:
- Search and reservation of your company name
- Foreign investment approval (FIA)
- Examination of investment capital
- Company registration
- Importer/exporter English name and registration
- Business registration (by submitting all the essential incorporation documents to the country’s tax authority)
- A commercial bank account
- Factory registration in industrial parks
Taiwan subsidiary laws
Taiwan’s subsidiary laws are based on the civil law system. International investments require an FIA from the Investment Commission (IC) of the Ministry of Economic Affairs. Taiwan subsidiary laws have additional requirements based on the form you choose for your company — a limited company, unlimited company, company limited by shares, or an unlimited company with limited liability shareholders. Most companies incorporate as a company limited by shares, while unlimited companies and companies with limited liability shareholders are not used as often.
Subsidiaries that incorporate as a company limited by shares have restrictions on investments, loans of capital, and guarantees. With this type of structure, shareholders are only liable up to the amount of capital they contribute. Companies will need at least 1 shareholder to incorporate, and there are no minimum capital requirements unless you are in a sector that requires special permits or approvals.
Benefits of establishing a Taiwan subsidiary
Once you establish your Taiwan subsidiary, you’ll be able to conduct business in the country. A company limited by shares offers additional benefits for both the subsidiary and the parent company. The subsidiary can operate independently and tailor its operations to the overall culture in Taiwan. The parent company is also protected from any of the subsidiary’s losses.
There are no restrictions on the nationality of shareholders. A subsidiary in Taiwan can operate independently without the interference of the government. Consequently, you can control the structure and the type of company you would like to incorporate. The subsidiary may be eligible for tax incentives if specific requirements are met.
Other important considerations
Companies should plan to spend a good deal of time and money establishing a Taiwan subsidiary. You may possibly have to travel back and forth to Taiwan throughout the process. If no one in the company has the time to learn Taiwan’s subsidiary laws, you’ll also need to hire an expert who has extensive knowledge of these laws or work with an advisor.
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