State for Investment by Foreign Nations

• Enacted on July 6, 1954 as a law that stipulates the guarantees, restrictions, and processing standards related to foreign investment in Taiwan.

• https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?pcode=J0040002

• The Taiwanese government is seeking to revise the Foreign Investment Ordinance, which has remained the same for more than 20 years since November 1997.
  The revision is characterized by converting investment of less than $1 million into a post-reporting system and continuing to apply pre-deliberation only to exceptions due to investment of more than $1 million, investment restrictions and prohibitions, and other special circumstances.
  If this happens, about 85% of the conventional foreign investment screening cases will be able to invest through post-reporting, making it easier to enter simple mergers and startups.
  In addition, on the premise that all necessary documents have been submitted, the investment review period will be shortened to less than one month and transparency will be improved by disclosing investment review standards and grounds for judgment.
  The amendment began deliberation on the Legislative Yuan (National Assembly-like) in February 2019, but is pending without much progress (as of May 2022)

• If the investor is a Chinese, it shall be in accordance with the "State for Investment by Overseas Chinese."

Negative List for Investment by Overseas Chinese and Foreign Nations

• It specifies areas that restrict or prohibit investment in overseas Chinese and foreigners.

• Investment in certain industries is prohibited by law and industries that are feared to adversely affect security, public order, customs, and health, and investment-restricted industries must obtain permission from the competent ministries to invest. investment incentives

To enter the Netherlands for investment, it is crucial to craft a well-defined entry plan.
Successful entry hinges on a comprehensive plan that factors in investment size, type, area, and marketing strategy.
Selecting an investment area in accordance with the Dutch investment environment requires regional environmental surveys tailored to industry characteristics.
The establishment of marketing strategies and networks is essential to enhance the business performance of investment companies.

1) R&D Support Incentives

It is a system that reduces corporate tax based on the amount of R&D investment.
The tax reduction ratio is deducted from corporate tax for one year within the range of not exceeding 15% of the R&D investment amount or reduced corporate tax for three years within 10% of the investment amount.
(It is premised that the reduction amount does not exceed 30% of the corporate tax for the current year.)

2) Small and medium-sized enterprises' additional employment of local people, wage increase incentives:

Small and medium-sized companies that have newly or increased investments will hire additional local regular employees to reduce corporate taxes for the current year within 130% of the annual salary of new employees if the company's labor costs rise.
Regardless of the legal minimum wage increase, corporate tax for the current year will be reduced within 130% of the increased annual salary if the wages of local beginner employees (average monthly ordinary wages are less than NT$50,000 for full-time workers).

3) Participation in Public Construction

Corporate tax exemption for public construction projects: Corporate tax exemption for up to five years from the year when public construction projects involving private companies officially began operation.
Corporate tax reduction for public construction project investment: Corporate tax reduction for up to five years at the level of 5-20% of the investment amount. (However, the amount of reduction or exemption shall be limited to within 50% of the corporate tax for the current year.) If it is not produced in Taiwan as a mechanical facility/part used in the project, import tariffs will be exempted, and if it is produced in Taiwan, tariffs can be paid in installments.
Part of the land tax/building tax/contract tax levied on the property is reduced during the construction period of the project or during the operation period after completion.
If you hold stocks issued by companies participating in public construction for more than four years, corporate tax will be reduced for up to five years within the 20% limit of the stock value. (However, the amount of reduction or exemption shall be limited to within 50% of the corporate tax for the current year.) Restrictions and Prohibitions (Industry)

Restrict or prohibit investment in areas specified in the Negative List for Investment by Oversseas Chinese and Foreign Nations.

Investment prohibited industries (13 in total based on small categories): chemical raw material manufacturing, other chemical products manufacturing, other base metal manufacturing, other machinery manufacturing, land transportation, postal service, wireless radio/TV broadcasting, private notarized service, special entertainment, post office financial service, etc Investment-restricted industries (28 in total based on small categories): agricultural product cultivation, livestock, chemical raw material manufacturing, power/liquid fuel supply, water supply, ship/air transportation, satellite TV, land registration agency service, etc

More detailed prohibition and restriction classification criteria (items by industry, competent ministries) can be found on the website of the Ministry of Economy's Investment Review Committee.

ㅇ https://www.moeaic.gov.tw/english

Special Economic Zones and Free Trade Zones

1) Science Park

It is largely classified into Hsinchu-Northern Region, Central and Southern Science Park.
Each complex has a different core industry.
The new complex is concentrated with semiconductors, precision machinery in the central part, and leading photoelectronics and semiconductor companies in the southern part.

Several satellite complexes are distributed with a central base for each complex.
In the case of the Shinju Science Complex, Taiwan's leading companies such as TSMC, prestigious universities in science and engineering, and high-tech research institutes are gathered, forming a total of six, including the Shinju Complex called Taiwan's Silicon Valley.
The central complex manages four satellite complexes centered on Taichung, and the southern complex manages one satellite complex centered on Tainan.

All factory sites and buildings in the science complex can only be moved in by lease.
Tariffs/ commodity taxes/value-added taxes are waived when a tenant imports machinery/raw materials/fuel/semi-finished products for its own use, and value-added taxes are waived when exporting goods/services.

2) Industrial Park

More than 170 industrial complexes are distributed across Taiwan, including the Ministry of Economy, Trade and Industry, and private development industrial complexes, and 63 and 76 complexes are operated by the Ministry of Economy, Trade and Industry and local governments, respectively.

Sites and factories can be rented and sold, and preferential benefits are also provided for each complex.
The Ministry of Economy's Investment Attraction Service Center (https://investtaiwan.nat.gov.tw/homePage?lang=eng) ) and the Industrial Bureau (https://idbpark.moeaidb.gov.tw ) are supporting the search for the site.

Imported mechanical equipment/raw materials/fuels/semi-finished products are exempt from customs duties and VAT is exempted when exporting goods/services.
It also supports low-interest loans related to machinery equipment purchases and investment.

3) Technology Industrial Complex ( Processing Export Zone)

A total of 10 complexes are distributed in Taichung in the central region and Kaohsiung and Pingdong in the southern region, respectively.
In the early days, it was a specialized zone (processed export zone) that processes and exports light industrial products, but as the industry advanced, more people moved into the IT industry, it was renamed and operated as "Technology Industrial Complex" in 2021.

By region, the Taichung material complex houses optical electronics, flat panel displays, metals, machinery, information and communication services, digital content, and e-commerce industries, while the Kaohsiung complex houses semiconductors, flat panel displays, monitors, S/W, and digital content industries.

The site is only available for lease, and investors can build or purchase factories themselves.
Land rent is about 2-5% of the official land price and can be rented for up to 20 years (10 years in principle).
When moving in, it is highly convenient because it handles various company establishment/operation-related procedures such as screening, proof of origin, customs clearance, labor administration, and business registration in the investment application.
Import duties/goods taxes/value-added taxes may be waived on machinery equipment/raw materials/fuel/semi-finished products/samples imported from abroad, and value-added taxes may also be waived on exports of goods/services or machinery equipment/raw materials/fuel/semi-finished products sold to tenants in the complex.

4) Free Trade Zone

Free Trade Zones operate in a total of seven complexes (airport 1, port 6) at international airports and ports, and its main areas vary from complex to complex.

Administrative work for import and export customs clearance is simple, and various tax breaks can be enjoyed when moving in.

Imported raw materials can be exempted from tariffs, commodity taxes, value-added taxes, tobacco taxes, liquor taxes, and port service costs, and imported fuel, semi-finished products, and machinery can be exempted from tariffs/goods taxes/value-added taxes/port services/trade promotion services.
Value-added tax is exempted for exports of goods/services and raw materials/semi-finished products/mechanical facilities purchased from Taiwan's taxable area.

Taipei

• Area: 272㎢

• Population: 2,490,445 as of March 2022

It is the capital of Taiwan and has developed commerce.
Retail distribution channels such as department stores, convenience stores, large marts, and supermarkets are concentrated, and 28% of Taiwan's population is concentrated in the metropolitan area when the population of New Taipei outside Taipei is added

Taichung

• Area: 2,215㎢

• Population: 2,806,385 as of March 2022

It is a central city in the central region, where the light industry and machinery industries are concentrated.
It is composed mainly of small and medium-sized family companies, so the network and division of labor in the industry are closely related.

Kaohsiung

• Area: 2,952㎢

• Population: 2,731,782 as of March 2022

Kaohsiung Port, Taiwan's largest international port, is located as a central city in the southern region.
Subcontractors are formed in a pyramid structure under large steel/petrochemical companies that hold raw materials/order rights.

New Taipei

• Area: 2,053㎢

• Population: 3,989,880 as of March 2022

It is a city surrounding Taipei and has the largest population among local governments.
Traditional industries (mechanical, metal, plastic, textile) and IT industries are concentrated in the western region, while leisure and tourism are developed in the east/south/northern regions.

This is an appropriate form of establishment if you have a comprehensive business activity plan in the country and intend to set up an independent business with substantial investment, without a parent company's relationship of responsibility.

Corporations are less likely to encounter conflicts with local tax authorities compared to branch offices.
Furthermore, since corporations can directly sign contracts, the efficiency of company operations is higher compared to branch offices.
Even foreigners must adhere to local laws and regulations, as they carry the same legal obligations as local companies.

The establishment process follows a sequence of steps: company name/work industry application, investment application/deliberation, corporate account opening, investment fund remittance/deliberation, corporate establishment report, and business registration.
Required documents include the Chinese company name, sales information, investment agent's power of attorney, investor identification, investment fund arrival notice, exchange certificate, bankbook copy (cover, stamped/balance sheet), balance certificate, accountant capital survey report, office lease agreement (copy), and recent building tax payment certificate.

The name of a Taiwanese subsidiary of a foreign company generally follows the format of "Taiwan OO Co., Ltd." This process typically takes around 20 days when entrusted to a local accounting office.
Foreign language materials need to be translated into Chinese and notarized at Taiwan's overseas missions.
For branch offices, since there is no withholding tax of 20% on dividend transfers, this option is suitable when planning business activities (including imports and exports) in Taiwan without a significant capital investment plan.

Branch offices are part of the headquarters, subject to the same laws that apply to the headquarters, which makes controlling the headquarters easier.
However, since contracts must be executed in the name of the headquarters, flexibility and work speed are lower, and any issues with the branch would impact the headquarters' responsibility.

The establishment process includes applying for the company name/work industry, verifying evidence from the headquarters, opening a branch preparation fund remittance account, obtaining a foreign company investment permit, registering the branch establishment, and transferring operating funds.
In this process, required documents include a business registration certificate (copy), articles of incorporation (copy), minutes of the headquarters' board of directors, a branch agent's details, a mid-level manager's certificate, a litigation/non-litigation agent's ID, an office lease (copy), a copy of the operating fund arrival notice, and an exchange certificate.

The name of the branch office is generally in the format of "Hansang OO Co., Ltd. - Taiwan Branch," and all foreign language documents need to be translated into Chinese and notarized by Taiwan's overseas missions.
The process usually takes about 20 days when entrusted to a local accounting office

This is an appropriate form of establishment if there's a need for active business with Taiwan, smooth business contacts, and a dedicated channel for market research.
During the initial phases of expanding overseas business, it's common to start with a liaison office and then transition to a branch or corporation for business activities if necessary.

For a liaison office, it's important to note that only legal actions related to business, such as contract signing, providing estimates, price negotiations, purchasing, and market research, can be conducted.
If the Taiwanese government determines that the liaison office is engaged in taxable business activities, penalties such as corporate tax and value-added tax may be imposed, along with potential criminal liabilities such as fines or imprisonment.

The establishment process will follow the sequence of verifying headquarters documents, reporting the establishment of the liaison office, and applying for the issuance of a unique tax identification number.
In this procedure, documents like the headquarters business registration certificate (copy), headquarters articles of association (copy), identification of litigation/non-litigation agent, power of attorney for litigation/non-litigation agent, office lease agreement (copy), and recent property tax payment proof need to be translated into Chinese and notarized at overseas diplomatic offices in Taiwan.
When entrusted to a local accounting office, this process typically takes about 15 days.

The company name usually follows the format of "Hansang OOO Co., Ltd.," like that of a branch office.

Shareholders are comprised of two or more natural persons or one or more corporations and are liable for their investments.
Three directors, one auditor, and an investment registration agent (consignment accountant) are required.
There is no specific minimum capital regulation, but if a foreign CEO is appointed, they must invest more than T$500,000.
You can invest in stocks in Taiwan or directly issue them on the Taiwanese stock market.

Shareholders are composed of one natural person or one or more corporations and are responsible within the investment.
One director and an investment registration agent (consignment accountant) are required, and there is no minimum capital regulation, but if a foreign CEO is delegated, he or she must invest more than NT$500,000.
You can invest in stocks in Taiwan, but you cannot issue them directly.

When establishing a private company, it can be done through a "business registration" method.
However, foreigners cannot register for commercial purposes unless they possess a permanent residence in Taiwan or a visa for local family members.
Therefore, the establishment of a limited company must follow the corporate establishment procedure.

If the business status is later changed to commercial registration, and if a permanent residence certificate is obtained five years after the incorporation of the corporation (limited company), the corporation can be dissolved, and a new commercial registration can be initiated.

Unlike corporations, commercial registration differs in terms of the imposition of value-added tax, which varies based on the level of monthly sales.
Value-added tax is exempted for monthly sales totaling less than NT$80,000, set at 1% for sales exceeding NT$80,000 but less than NT$200,000, and 5% for sales exceeding NT$200,000.

Business income is subject to personal income tax for the representative or partner, instead of corporate tax.
Additionally, there is a distinction in that the surplus of unused profits is not separately taxed, unlike in a corporation.

Corporations are only liable up to the amount invested by shareholders.
On the other hand, in commercial registration, while thorough accounting records are not mandatory, individuals are still responsible for business management risks and settling debts, regardless of the invested amount.

The procedures for business registration closely resemble those of a corporation.
These steps are handled by local governments, apart from investment applications/deliberations, which fall under the jurisdiction of the central government's Ministry of Economy and Finance Investment Review Committee.
Foreign investment applications and permits are also obtained through this process.

For commercial registration trade names, the term "Company" cannot be used.
Instead, designations like "○○ Enterprise," "○○ Enterprise," and "○○ Upward" are utilized.
While a corporation's company name is registered with a central government agency, providing nationwide legal protection, commercial registration trade names are registered at the local government level, resulting in limited protection in terms of uniqueness.