Taiwan is a trading capital in Asia, boasting great relationships with all neighbouring countries. Even better, Taiwan welcomes overseas investment and business while offering comparatively low corporate taxes and cost of living. This is a fine nation for any SME or entrepreneur seeking to expand their Asian interests.
Does Taiwan welcome overseas businesses?
Taiwan actively courts and welcomes investment and business opportunities from the west, especially in light of the COVID-19 pandemic that damaged the national economy. If your business strategy is sound, you are very unlikely to be blocked access to trade in Taiwan.
What industries are most popular in Taiwan?
Taiwan has long been famed for its manufacturing, with the “Made in Taiwan” stamp ubiquitous on countless consumer goods. This remains the case – Taiwan is a huge exporter of electronic goods, plastics and rubbers, chemicals, metals, and industrial machinery.
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In particular, the electronics and telecommunications markets have seen a huge surge in popularity in recent years. The financial services industry is also growing increasingly prominent.
Is it easy to set up a business in Taiwan?
Setting up a business in Taiwan is comparatively simple if you are in the country. Here are the steps.
How to set up a business in Taiwan
- Identify a trading address in Taiwan
You can rent local office space, or get help from a domestic company formation agent
- Open a local bank account
This needs to be done in person, so visiting the country is unavoidable
- Choose a business entity type
Unless you have a compelling reason not to, opening an LLC in Taiwan is best
- Submit a request to reserve your chosen company name to the MOEA
This is the Department of Commerce of the Ministry of Economic Affairs
- Prepare company bylaws
And have these notarised
- Once your name is approved, get back in touch with the MOEA
And ask them to officially register your venture. This will require quite a lot of paperwork, and you’ll need to pay NT$100,000 into your Taiwanese business bank account
- If you plan to trade with overseas territories…
…apply for an English-language company name and registration to import and export goods
- Register to pay taxes and social security
With the National Taxation Bureau
You will find this process much faster if you are in Taiwan, and even more so if you can get help from a local.
Can I run a business in Taiwan while living overseas?
You can run your business from overseas, but if you never set foot in Thailand, it may take much longer – potentially as long as six months – to have your application to set up a company approved.
You’ll also need to be in Taiwan to set up a business bank account. To this end, it’s recommended that you spend enough time in Taiwan to open your business before leaving, appoint a local representative, or provide a resident with Power of Attorney to act in your stead.
Cultural considerations when running a business in Taiwan
You’ll need to negotiate some cultural differences when looking to trade with Taiwanese business partners. Here are some insights into business etiquette in this nation to keep in mind.
- Learn to love and embrace the idea of “guanxi.” This is the concept of building and maintaining a harmonious friendship and relationship, and it’s hugely important when looking to do business in Taiwan. Arrange to be introduced to potential partners by a trusted third party, and be prepared to turn on the charm before getting down to brass tacks.
- Meetings in Taiwan are rarely rigidly organised, so do not be surprised if your carefully-prepared agenda is ignored.
- Taiwanese associates will likely be tough negotiators and will give little away. Always be prepared to back up your promises and forecasts with evidence. Big claims that cannot be proved mean nothing in Taiwan.
- Always stay calm during negotiations, and never do anything that could be considered shameful to your associates. The idea of “face” is critical in Taiwan.
- You may well be invited to discuss business over dinner in Taiwan. If this is the case, alcohol will likely be involved. It’s fine to drink but only do so if you have been toasted or are raising a toast. It is bad manners to drink without toasting first.
What business structures are supported in Taiwan?
Here are the most common business structures used in Taiwan:
| Type of Taiwanese business entity | What is it? |
|---|---|
| Limited Liability Company (LLC) | By far the most popular business structure in Taiwan, this is a standard LLC – a subsidiary business with no connection to your personal finances or legal standing. |
| Limited Partnership | A two-person business that would see you partner up with a Taiwanese resident. This resolves the need for a local presence, but at least one of the partners is liable for the business’s legal and financial affairs. |
| Branch Company | You can apply to open a branch of your established business in Taiwan, paying the standard 20% corporate tax rate |
Taxation in Taiwan
If you want to do business in Taiwan, you must understand the taxation rules and regulations that will impact your bottom line.
What is the corporate tax rate in Taiwan?
Any business that earns NT$120,000 or more in profit in Taiwan will pay a flat rate corporate tax of 20%. Taiwan and the UK have a double taxation treaty, so you will not be charged twice.
What are the employee income tax brackets in Taiwan?
All resident employees in Taiwan need to pay income tax. Contributions break down as follows at the time of writing.
| Annual salary | Income tax rate |
|---|---|
| NT$560,000 or lower | 5% of salary |
| NT$560,001 – NT$1,260,000 | Flat fee of NT$39,200, plus 12% of salary |
| NT$1,260,001 – NT$2,520,000 | Flat fee of NT$140,000, plus 20% of salary |
| NT$2,520,001 – NT$4,720,000 | Flat fee of NT$392,000, plus 30% of salary |
| NT$4,720,001 or higher | Flat fee of NT$864,000, plus 40% of salary |
It is the responsibility of the employer to withhold income tax from an employee’s wages upon running a monthly payroll, alongside contributions to Labor Insurance, Employment Insurance, and Health Insurance.
Also, note that payroll is usually released on the 15th of the month in Taiwan, not the end of the month as is standard in most countries.
How are taxes paid in Taiwan?
The Taiwanese tax year runs from January 1st to December 31st. Reports must be filed and payments made to the National Taxation Bureau by May 31st of the following year.
Payroll and hiring employees in Taiwan
Hiring the right talent can make or break a company. Ensure your Taiwanese business interests are staffed by the best possible talent.
Does Taiwan welcome overseas talent?
Taiwan will always welcome talented and qualified people to work in the country or to start a business that will create employment for the local workforce.
Who needs a visa or work permit to work in Taiwan?
Anybody that does not hold a passport issued by Taiwan will need the appropriate documents to work in the country.
A non-Taiwanese resident needs an Alien Residence Card (ARC) and Taiwan Work Permit, alongside a visa – either an Entrepreneur visa for business owners or a Single Entry Resident visa if you’re importing talent with a job offer.
Skilled employees should aim for the Employment Gold Card, which rolls all of these documents into one.
All these documents are comparatively simple to obtain if applicants meet the necessary criteria.
What employee benefits are compulsory in Taiwan?
Employees of a Taiwanese business are entitled to comparatively few benefits by law.
Holiday allowance in Taiwan rises with length of service, breaking down as follows:
| Length of service | Holiday allowance |
|---|---|
| Up to one year | 3 days |
| 2 years | 7 days |
| 3 years | 10 days |
| 5 years | 14 days |
| 10 years | 15 days |
After a decade of service, employees gain an extra day of holiday for every year of service, capped at 30 days.
Employers will need to make the following social security contributions.
- 6% of an employee’s salary to the national pension fund
- 0.7% of an employee’s salary to the national Employment Insurance fund
- 8.05% of an employee’s salary to the national Labor Insurance fund
- Contributions to the National Health Insurance fund. How much is payable depends on how many dependents the employee has
Finally, most Taiwanese businesses offer their employees a 13th month of salary, payable during the Lunar New Year (usually in January or February.)
Employment law considerations in Taiwan
The minimum wage in Taiwan is NT$168 per hour at the time of writing.
The Taiwanese authorities take working hours very seriously. If you ask your employees to work longer than 40 hours a week, prepare to pay overtime at the following rates:
| Amount of overtime | Additional pay required |
|---|---|
| Under 2 hours of overtime | 1.34 times regular salary |
| 2 – 8 hours of overtime | 1.67 times regular salary |
| 8 – 12 hours of overtime | 2.67 times regular salary |
Employees are well protected by the Labour Standards Act in Taiwan, and terminating employees is hard without a very compelling reason.
Cultural considerations when hiring employees in Taiwan
If you wish to run a business in Taiwan that relies upon the local labour force, ensure you understand some of the nuances you will encounter. These include:
- Taiwanese employees will do anything to avoid conflict, with each other or with you. Keep this in mind when managing your b business, ensuring that no complications are brewing below the surface that you should be aware of.
- With the above in mind, never publicly criticise or question an employee. Put your grievances in an email or letter and allow the employee to process them in private.
- Hierarchy is significant in Taiwan, and if you ask your employee to do something, they will likely follow your instructions to a T. Choose your words carefully!
- Taiwanese employees will likely make every effort to stay on your good side, as they consider this important to keeping their jobs. Do not be alarmed if your employees regularly check in with you, or even invite you to dinner at their home.
FAQs about setting up a business in Taiwan
Still have questions or are seeking a swift answer to a basic query? Here are some of the most frequently asked questions about establishing a business in Taiwan.
The most common business structures available to overseas investors in Taiwan are a limited liability company, a limited company, or opening a branch of an international company. Taiwan does not recognise the public company structure. If opening a subsidiary company, a limited liability company will be more tax-efficient and offer more financial and legal protection than a partnership.
Once you have taken care of the appropriate administration, such as sourcing an address and bank account in Taiwan and securing the necessary work permits and visas, you can get your business up and running within a couple of weeks.
Social security responsibilities and employee benefits are quite light in Taiwan, so you’ll often pay less than 1.1 times an employee’s salary to make a hire.
On paper, you only need NT$1 in share capital to open a business in Taiwan, but don’t be fooled – you’ll also need to deposit a minimum of NT$100,000 (around £2,700) into a business account to register your business with the local authorities.
Yes, this should be one of the first things you do. A business bank account needs to be opened in person in Taiwan. If you’re not in the country, assign somebody in Taiwan Power of Attorney over your business affairs or enlist a local partner.
The Taiwanese working week is Monday to Friday, usually from 8am to 5pm. The authorities are strict about this, so you’ll likely need to pay overtime if you wish employees to work longer hours.
If you can supplement an employee’s pension with a private policy, this will be welcomed by most job applicants. Mental health care is also taken seriously in Taiwan, so consider building this into your benefits package.
No, Taiwanese employees are well protected, and “at will” dismissal is verboten by the Labour Standards Act unless the employee has committed a criminal offence or gross misconduct. Employees can be terminated with notice and/or severance pay, but a reasonable explanation needs to be provided.
Taiwanese employees are initially entitled to 3 days of personal holiday, with the allocation rising steadily until it is capped at 30 days after 25 years of service.
Yes, and this could be a way to circumnavigate the need to pay the NT$1,000,000 fee involved with registering a new business.
If you don’t hold a Taiwanese passport, you’ll need an Alien Resident Card and a visa that entitles you to work in the country. If you’re heading to Taiwan to start a business, apply for an Entrepreneur visa – this will enable you to stay in the country for a year (if paired with an ARC) while you get your business up and running.
Anybody that wants to stay in Taiwan longer than 90 days needs an Alien Resident Card and a relevant visa. SME owners can apply for an Entrepreneur visa, while anybody with a job offer on the table should apply for a Single Entry Resident visa. If applicable, get an Employment Gold Card, which acts as an ARC, visa, and work permit in one for up to three years.
An Alien Resident Card costs NT$1,000 (£25) for every year of validity – an ARC can be valid for anywhere from one to five years. A standard work permit costs the same. Application for a standard Single Entry Resident visa into Taiwan, for anybody looking to stay longer than 180 days, is around £55 when applied for from within the UK, while an Entrepreneur Visa could be up to £400.