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Taiwan
Why Taiwan?
Located in the center of the Asia Pacific region, Taiwan connects North Asia to South East Asia. Just like other Asian Countries, Taiwan is densely populated and highly developed in terms of finance, technology and transport. Taiwan is increasingly becoming a good place to do business in the Asia Pacific region. With its tremendous infrastructure, advantageous geographical position, highly skilled workforce and sound regulations, Taiwan is a great place for companies expecting to expand themselves in Asian market. Taiwan maintains a stable industrial economy as a result of economic growth and industrialization during the late 20th century, being dubbed as one of the Four Asian Tigers along with Hong Kong, Singapore and South Korea. A semi-tropical island in East Asia, Taiwan is the world’s one of the most exciting and rapidly changing regions. With high literacy rate, Taiwanese people are known to be well educated and well behaved.
Advantages
Taiwan’s geographical location, educated workforce, excellent infrastructure, a sound legal environment, and a strong IT cluster are much advantageous for one who is interested to set up his/her business in Taiwan. Following are the various advantages of setting up a business in Taiwan:
Geographical Position
Located in the heart of the Asia-Pacific region, Taiwan has many advantages related to transportation, such as:
- average flying time from Taiwan to the seven major cities in Western Pacific is merely 2 hours and 55 minutes; and
- average sailing time from Taiwan’s largest international harbor Kaohsiung harbor to the 5 major Asia-Pacific harbors (Hong Kong, Manila, Shanghai, Tokyo, and Singapore) is merely 53 hours.
Infrastructure
The government of Taiwan places a high level of importance on the development of both digital and physical infrastructure. Taiwan has a comprehensive transportation network, which consists of 17 airports, of which 4 are international, as well as 7 international harbors. It also includes a railway system across the island, a west coast high-speed rail line, and metro systems in Taipei and Kaohsiung.
Highly Skilled Workforce
Taiwan has an extremely high literacy rate, with 98.5% of the population over the age of 15 years old being able to read and write. Taiwan’s tech-savvy engineers are capable and are cheaper than in other countries, which is a very attractive prospect to those corporations wanting to set up on the island.
Regulations and Policies
Taiwan has a developed framework that affords a great deal of protection in terms of foreign investment and offers foreign companies considerable stability if they choose to set up their businesses in Taiwan.
Strong Industrial Cluster
Being named as the 5th best in the world in terms of “State of Cluster Development” by the World Economic Forum, Taiwan offers solid industrial clusters and supply chains that cater to the ever demanding market needs.
In general, the industrial clusters in Taiwan are categorised into electronics and technology in the north, precision machinery in the central areas, and heavy industry in the south.
Simple Tax Regime
Financial Supervisory Commission (FSC) is Accounting Regulation Body in Taiwan and the Certified Public Accountants Act, 2009 is the main legislation governing the accounting system in Taiwan.
Corporate Taxes
A Taiwan resident company is liable to be taxed on its worldwide income, irrespective of source, and the predominant estimated tax rate for offshore income is 17%, whereas non-resident companies are only taxed on their Taiwanese-sourced income. A non-resident company with a fixed place of business is taxed similarly to a resident company. Companies are liable to pay the corporate tax as per the below-mentioned tax rate:
- Companies with annual turnover up to 120,000 TWD are liable to pay the tax at a rate of 0%.
- Companies with annual turnover above 120,000 TWD liable to tax at a rate of 20%.
- The surcharge is levied at a rate of 5% on undistributed profits on current earnings of a corporation that remain undistributed by the end of the following year.
Consumption Taxes
In Taiwan, Business Tax (BT) is imposed under two systems:
- Value Added Tax (VAT) applied at a flat rate of 5%; and
- Special Business Tax applies to financial institutions, SMEs, and certain restaurants, levied on the basis of nature of business.
Individual Taxes
A foreigner who stays in Taiwan for 183 days or more in a calendar year is assumed to be a resident whereas, an individual domiciled in Taiwan is considered a resident unless he/she has resided in Taiwan for less than 31 days as per the “31-days rule” of Taiwan. Individual’s income tax rate is progressive from 5% to 40%. Individual with an income of:
- income from NTD 0 to 540,000 is liable to tax at the rate of 5%;
- income from NTD 540,001 to 1,210,000 is liable to tax at rate of 12%;
- income from NTD 1,210,001 to 2,420,000 is liable to tax at rate of 20%;
- income from NTD 2,420,001 to 4,530,000 is liable to tax at rate of 30%; and
- income above NTD 4,530,000 is liable to tax at the rate of 40%.
Taiwan Companies
It is well known that Taiwan has established itself as a stable, business-friendly environment, which offers businesses considerable protection while maintaining relative ease of doing business. Foreign investors can form the below-mentioned companies in Taiwan:
Company limited by shares
A company limited by shares carries on a profit-seeking business whereby its capital is divided into shares. A foreign investor may incorporate a Company limited by shares upon the approval of the Investment Commission (IC).
Limited Company
A limited company places restrictions on share transfers, thereby permitting certain shareholders to control the company. A shareholder will not transfer his contribution to the capital of the company to another person without the consent of a majority of all other shareholders. A foreign investor may incorporate a limited company upon the approval of the IC.
Branch Office
A foreign company may register its Branch Office (BO) to carry on profit-seeking activities in Taiwan. A BO is exempted from almost all of the corporate formality requirements of a company limited by shares.
Representative Office
A Representative Office (RO) is one of the easiest ways to establish a legal business presence in Taiwan. RO is most efficient form of entity to set up in Taiwan. In Taiwan, RO is neither liable to pay VAT nor liable to file corporate income tax.
With its tremendous infrastructure, advantageous geographical position, highly skilled workforce and sound regulations Taiwan is a great place for companies expecting to expand themselves in Asian market. A semi-tropical island in East Asia, Taiwan is one of the world’s most exciting and rapidly changing regions. With high literacy rate, Taiwanese people are known to be well educated and well behaved.
Author: Chandrawat & Partners
Topic: Doing Business in Taiwan
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Taiwan
We have a team of professionals to help you with all your business needs. So, that you can focus on business expansion in Taiwan.
WHY TAIWAN?
Located in the center of the Asia Pacific region, Taiwan connects North Asia to South East Asia. Just like other Asian Countries, Taiwan is densely populated and highly developed in terms of finance, technology and transport. Taiwan is increasingly becoming a good place to do business in the Asia Pacific region. With its tremendous infrastructure, advantageous geographical position, highly skilled workforce and sound regulations, Taiwan is a great place for companies expecting to expand themselves in Asian market. Taiwan maintains a stable industrial economy as a result of economic growth and industrialization during the late 20th century, being dubbed as one of the Four Asian Tigers along with Hong Kong, Singapore and South Korea. A semi-tropical island in East Asia, Taiwan is the world’s one of the most exciting and rapidly changing regions. With high literacy rate, Taiwanese people are known to be well educated and well behaved.
ADVANTAGES
Taiwan’s geographical location, educated workforce, excellent infrastructure, a sound legal environment, and a strong IT cluster are much advantageous for one who is interested to set up his/her business in Taiwan. Following are the various advantages of setting up a business in Taiwan:
Geographical Position
Located in the heart of the Asia-Pacific region, Taiwan has many advantages related to transportation, such as:
- average flying time from Taiwan to the seven major cities in Western Pacific is merely 2 hours and 55 minutes; and
- average sailing time from Taiwan’s largest international harbor Kaohsiung harbor to the 5 major Asia-Pacific harbors (Hong Kong, Manila, Shanghai, Tokyo, and Singapore) is merely 53 hours.
Infrastructure
The government of Taiwan places a high level of importance on the development of both digital and physical infrastructure. Taiwan has a comprehensive transportation network, which consists of 17 airports, of which 4 are international, as well as 7 international harbors. It also includes a railway system across the island, a west coast high-speed rail line, and metro systems in Taipei and Kaohsiung.
Highly Skilled Workforce
Taiwan has an extremely high literacy rate, with 98.5% of the population over the age of 15 years old being able to read and write. Taiwan’s tech-savvy engineers are capable and are cheaper than in other countries, which is a very attractive prospect to those corporations wanting to set up on the island.
Regulations and Policies
Taiwan has a developed framework that affords a great deal of protection in terms of foreign investment and offers foreign companies considerable stability if they choose to set up their businesses in Taiwan.
Strong Industrial Cluster
Being named as the 5th best in the world in terms of “State of Cluster Development” by the World Economic Forum, Taiwan offers solid industrial clusters and supply chains that cater to the ever demanding market needs.
In general, the industrial clusters in Taiwan are categorised into electronics and technology in the north, precision machinery in the central areas, and heavy industry in the south.
SIMPLE TAX REGIME
Financial Supervisory Commission (FSC) is Accounting Regulation Body in Taiwan and the Certified Public Accountants Act, 2009 is the main legislation governing the accounting system in Taiwan.
Corporate Taxes
A Taiwan resident company is liable to be taxed on its worldwide income, irrespective of source, and the predominant estimated tax rate for offshore income is 17%, whereas non-resident companies are only taxed on their Taiwanese-sourced income. A non-resident company with a fixed place of business is taxed similarly to a resident company. Companies are liable to pay the corporate tax as per the below-mentioned tax rate:
- Companies with annual turnover up to 120,000 TWD are liable to pay the tax at a rate of 0%.
- Companies with annual turnover above 120,000 TWD liable to tax at a rate of 20%.
- The surcharge is levied at a rate of 5% on undistributed profits on current earnings of a corporation that remain undistributed by the end of the following year.
Consumption Taxes
In Taiwan, Business Tax (BT) is imposed under two systems:
- Value Added Tax (VAT) applied at a flat rate of 5%; and
- Special Business Tax applies to financial institutions, SMEs, and certain restaurants, levied on the basis of nature of business.
Individual Taxes
A foreigner who stays in Taiwan for 183 days or more in a calendar year is assumed to be a resident whereas, an individual domiciled in Taiwan is considered a resident unless he/she has resided in Taiwan for less than 31 days as per the “31-days rule” of Taiwan. Individual’s income tax rate is progressive from 5% to 40%. Individual with an income of:
- income from NTD 0 to 540,000 is liable to tax at the rate of 5%;
- income from NTD 540,001 to 1,210,000 is liable to tax at rate of 12%;
- income from NTD 1,210,001 to 2,420,000 is liable to tax at rate of 20%;
- income from NTD 2,420,001 to 4,530,000 is liable to tax at rate of 30%; and
- income above NTD 4,530,000 is liable to tax at the rate of 40%.
TAIWAN COMPANIES
It is well known that Taiwan has established itself as a stable, business-friendly environment, which offers businesses considerable protection while maintaining relative ease of doing business. Foreign investors can form the below-mentioned companies in Taiwan:
Company limited by shares
A company limited by shares carries on a profit-seeking business whereby its capital is divided into shares. A foreign investor may incorporate a Company limited by shares upon the approval of the Investment Commission (IC).
Limited Company
A limited company places restrictions on share transfers, thereby permitting certain shareholders to control the company. A shareholder will not transfer his contribution to the capital of the company to another person without the consent of a majority of all other shareholders. A foreign investor may incorporate a limited company upon the approval of the IC.
Branch Office
A foreign company may register its Branch Office (BO) to carry on profit-seeking activities in Taiwan. A BO is exempted from almost all of the corporate formality requirements of a company limited by shares.
Representative Office
A Representative Office (RO) is one of the easiest ways to establish a legal business presence in Taiwan. RO is most efficient form of entity to set up in Taiwan. In Taiwan, RO is neither liable to pay VAT nor liable to file corporate income tax.
With its tremendous infrastructure, advantageous geographical position, highly skilled workforce and sound regulations Taiwan is a great place for companies expecting to expand themselves in Asian market. A semi-tropical island in East Asia, Taiwan is one of the world’s most exciting and rapidly changing regions. With high literacy rate, Taiwanese people are known to be well educated and well behaved.