Jurisdictions
Taiwan
The foreign investors usually establish the following forms of business entity for doing business in Taiwan:
A company limited by shares
A branch
Company Limited by Shares/Limited Liabilities Company
In order to the establish a company in Taiwan, the foreign investor should obtain approval under the Statute for Investment by Foreign Nationals ("SIFN"). A
company established under SIFN is usually referred to as a Foreign–Investment-Approved ("FIA") company. Certain industries are prohibited or restricted from
foreign investment under SIFN. The prohibited industries are those which (1) may negatively affect national security, public order, good custom, or national
health；and (2) are prohibited by laws and regulations. The application for investment in a restricted industry is subjected to the special approval of the
competent authority in charge of such industry.
1. Minimum Capital
A company limited by shares must have a minimum capital of NT$1,000,000.
A limited company must have a minimum capital of NT$500,000.
2. Shareholders, Directors and Supervisors
A company limited by shares must have at least two shareholders, three directors and one supervisor. A company limited by shares must have at least one
shareholder and one director. Under SIFN, the nationality and domicile requirements do not apply to an FIA company.
The directors are elected from the individual shareholders or the representative(s) of the corporate shareholder(s). One of the directors should then be elected as Chairman of the board of directors and has the power to represent the company externally. The change of director does not require amendment of the Articles of Incorporation, but a shareholders' meeting is required to elect the new director for replacement. A director may appoint another director to act as his/her proxy for each directors' meeting, but a director may only act as proxy for one other director.
The supervisor represents the shareholders to supervise the performance of directors and management. The supervisor may also audit the books of accounts of the company. The supervisor is elected from the individual shareholders or the representative(s) of the corporate shareholder(s). No supervisor may serve concurrently as a director, managerial officer or other employee of the company. At least one of the supervisors have residence in Taiwan.
The directors are elected from the individual shareholders or the representative(s) of the corporate shareholder(s). One of the directors should then be elected as Chairman of the board of directors and has the power to represent the company externally. The change of director does not require amendment of the Articles of Incorporation, but a shareholders' meeting is required to elect the new director for replacement. A director may appoint another director to act as his/her proxy for each directors' meeting, but a director may only act as proxy for one other director.
The supervisor represents the shareholders to supervise the performance of directors and management. The supervisor may also audit the books of accounts of the company. The supervisor is elected from the individual shareholders or the representative(s) of the corporate shareholder(s). No supervisor may serve concurrently as a director, managerial officer or other employee of the company. At least one of the supervisors have residence in Taiwan.
3. Increase in Capital
When a company limited by shares increases its capital by cash, it is required to provide 10% to 15% of the new shares to employees for subscription. If the
employees reject such offer, then those shares may be issued to any other person or entity (including the parent company). However, this requirement for
offering shares to employees does not apply to an FIA Company if the foreign investor(s) owns 45% or more of the capital.
4. Management
A company limited by shares shall be managed by the directors. The company is required to convene at least an annual directors' meeting and shareholders'
meeting.
5. Specific Benefits
The current laws and regulations require a foreign investor to obtain FIA for investment in an ROC company. FIA does, however, provide certain benefits both
to the foreign investor and to the investee company.
1. Reduced withholding tax rate – The withholding tax rate on dividends paid by an FIA company to its foreign non-resident shareholders is reduced to 20% from 30%.
2. Repatriation of capital and dividends – An FIA company may repatriate its capital and dividends to foreign shareholders regardless of the US$5,000,000 ceiling.
3. Other tax incentives – An FIA company may be eligible for certain tax incentives under the Statute for Upgrading Industries.
Normally, registering an FIA company takes about ten to fourteen weeks provided that all required documents are complete and submitted on a timely basis. If the FIA company will be engaged in certain prescribed industries and the special approval or permit is required, additional four to ten weeks may be needed to obtain the special license.
1. Reduced withholding tax rate – The withholding tax rate on dividends paid by an FIA company to its foreign non-resident shareholders is reduced to 20% from 30%.
2. Repatriation of capital and dividends – An FIA company may repatriate its capital and dividends to foreign shareholders regardless of the US$5,000,000 ceiling.
3. Other tax incentives – An FIA company may be eligible for certain tax incentives under the Statute for Upgrading Industries.
Normally, registering an FIA company takes about ten to fourteen weeks provided that all required documents are complete and submitted on a timely basis. If the FIA company will be engaged in certain prescribed industries and the special approval or permit is required, additional four to ten weeks may be needed to obtain the special license.
A Branch
A foreign company may establish a Taiwan branch office to conduct general business activities, such as trading, sales, agency, marketing and consulting
services. In the event that the foreign entity is not a corporation, for example a proprietorship or a partnership, the foreign entity may not establish a
Taiwan branch office.
In general, a Taiwan branch office of a foreign company does not have an independent legal personality. Thus, establishing a branch in Taiwan theoretically subjects the foreign head office to the jurisdiction of the Taiwan courts.
Abrach office does not have shareholders, directors or supervisor(s). The foreign head office shall appoint an individual as its agent for litigious and non-litigious matters and a branch manager. The same person may be designated as both the litigious and non- litigious agent and branch manager, or two different individuals may be designated. In either case, the designated agent and the branch manager receive all instructions from the foreign head office.
Corporate income tax is calculated at a progressive rate with a maximum of 25%. Net profit after payment of income tax may be retained or repatriated to the foreign head office without additional income tax or dividend tax.
Registering a Taiwan branch typically takes about seven to nine weeks provided that all required documents are complete and submitted on a timely basis. If the branch office will be engaged in certain prescribed industries and the special approval or permit is required, additional four to ten weeks may be needed to obtain the special license.
In general, a Taiwan branch office of a foreign company does not have an independent legal personality. Thus, establishing a branch in Taiwan theoretically subjects the foreign head office to the jurisdiction of the Taiwan courts.
Abrach office does not have shareholders, directors or supervisor(s). The foreign head office shall appoint an individual as its agent for litigious and non-litigious matters and a branch manager. The same person may be designated as both the litigious and non- litigious agent and branch manager, or two different individuals may be designated. In either case, the designated agent and the branch manager receive all instructions from the foreign head office.
Corporate income tax is calculated at a progressive rate with a maximum of 25%. Net profit after payment of income tax may be retained or repatriated to the foreign head office without additional income tax or dividend tax.
Registering a Taiwan branch typically takes about seven to nine weeks provided that all required documents are complete and submitted on a timely basis. If the branch office will be engaged in certain prescribed industries and the special approval or permit is required, additional four to ten weeks may be needed to obtain the special license.
How Manivest Can Help You
The directors and management of Manivest are professionals in the offshore industry having served the Asia markets for nearly 20 years. Through our offices
in Hong Kong, Shanghai and Macau as well as our associates in other Asia cities, we offer a full range of comprehensive value-added services to professional
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Manivest offers the following services:Incorporation of Taiwan Limited Company and other types of structures (e.g. Share company and branch)
Incorporation of onshore/offshore companies and structures in other jurisdictions
Full corporate management services
Registered office, business office, mail redirection and business centre (available in selected locations only)
Accounting services
Re-invoicing services
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Market exploration services
Manivest offers the following services: