How to Set up a Limited Company in Taiwan?

Introduction

Setting up a limited company in Taiwan is a simple process that appeals to both local and foreign enterprises. The World Bank ranks Taiwan 15th in the world for ease of doing business, owing to its effective legal structure and robust intellectual property protections. Foreign investors can control up to 100% of a corporation, making it ideal for worldwide expansion. Taiwan’s corporate tax rate is 20%, with additional financial incentives available in specialised industries. 

In this blog, we’ll go over the benefits, registration requirements, taxation, employment, and foreign investment options in Taiwan.

Benefits of a Limited Company in Taiwan 

Here’s why setting up a limited company in Taiwan is a smart move:

• Limited Liability Protection: Liability is restricted to the amount invested in the company, so your personal assets are secured.
• 100% Foreign Ownership: Taiwan, unlike many other countries, allows complete foreign ownership, making it an excellent choice for international entrepreneurs.
• Simple Registration Process: Starting a limited business in Taiwan is a quick and easy process with little red tape.
• Tax Advantages: Corporate tax rates are 20%, while certain industries provide incentives and tax exemptions.
• Global Market Access: Taiwan’s strategic location in Asia makes it an ideal gateway to key markets including China, Japan, and Southeast Asia.

In the following part, we’ll go over the procedures required to launch your company!

Steps to Register a Limited Company in Taiwan

Here’s how you can establish a limited company in Taiwan, step by step:

1. Choose a Company Name: First, see if your selected company name is available and get it approved.
2. Prepare Required Documents: Prepare the required documents, which include articles of incorporation, shareholder information, and a company strategy.
3. Capital Requirement: There is no minimum capital requirement, however you must make your initial investment with a local bank.
4. Send Registration Application: Send your documents to the Ministry of Economic Affairs (MOEA) for approval.
5. Obtain a Business Licence: Once approved, you will be issued a business licence, which will formally document the start of your company.

Finally, contact the tax office to register for VAT and business taxes.

With these procedures, you’re ready to start your business in Taiwan!

Corporate Taxation and Financial Obligation

When you set up a limited company in Taiwan, here’s what you need to know about corporate taxation and financial obligations:

• Corporate Tax Rate: Taiwan’s corporation tax rate is a competitive 20%, which applies to firm profits.
• VAT (Value-Added Tax): VAT is 5%, and enterprises must register if their revenue exceeds specific levels.
• Annual Filing Requirements: Every business must file an annual tax return, and proper bookkeeping is vital.
• Withholding Tax:Dividend payments to international shareholders are subject to a 21% withholding tax.
• Tax Incentives: Taiwan provides tax advantages to businesses in research, technology, and other vital industries.

Staying compliant with Taiwan’s tax obligations is critical for running a profitable business, and we’ll go over this in depth!

Hiring Local Employees and Employment Laws

When you set up a limited company in Taiwan, hiring local employees is a key step.

Here’s what you need to know:

• Work Contracts: All employees must have formal contracts defining their responsibilities, salaries, and benefits. It is a legal necessity.
• Minimum Wage: Taiwan’s current minimum wage is NT$27,470 per month, which ensures that workers are fairly compensated.
• Labor Insurance and Pension: To create a safe working environment, employers must provide labour insurance and contribute to employee pensions.
• Work Hours and Overtime: The usual workweek is 40 hours, with any extra hours requiring overtime compensation.
• Foreign Workers: Hiring foreign workers is possible, but you must obtain work licences for them.

Understanding employment rules will assist you in establishing a strong, compliant workforce in Taiwan!

Foreign Ownership and Investment Incentives

When you set up a limited company in Taiwan, the advantages of foreign ownership and investment incentives are significant:

• 100% Foreign Ownership: Taiwan allows 100% foreign ownership, making it a desirable location for international businesspeople.
• Investment incentives: The government provides tax reductions and grants to enterprises in the high-tech and innovative sectors.
• Streamlined Procedures: Taiwan has simplified the registration and approval processes for international investors, minimising bureaucratic delays.
• Market Access: Establishing your business here gives you quick access to Asia-Pacific markets, which boosts growth potential.

These advantages make Taiwan an intriguing destination for foreign investors seeking to broaden their horizons!

Conclusion

Finally, establishing a limited business in Taiwan is an exciting prospect for entrepreneurs looking to enter the thriving Asian market. Taiwan is positioned as a business-friendly environment, with a simple registration process, 100% foreign ownership, and substantial tax advantages. You may build a solid basis for your firm by understanding its legal frameworks, financial commitments, and employment rules. 

Whether you want to innovate in technology or build a local presence, Taiwan has the resources and support you need to grow. So, why are you waiting? Begin your travels in Taiwan today!