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Establish a Subsidiary in Taiwan

Establish a Subsidiary in Taiwan

Subsidiaries in Taiwan are registered as companies according to the Company Law of Taiwan. Prior to setting up a subsidiary here, the parent company has to effectuate a background check for the company name which will be registered with the Commercial Department at the Ministry of Economic Affairs. Our company formation consultants in Taiwan can provide assistance related to setting up a subsidiary here.

Documents needed to set up a subsidiary in Taiwan

Opening a subsidiary in Taiwan is relatively simple and it requires a straightforward procedure. There are, though, certain aspects to take into account and certain procedures have to be followed. One of the legal requirements for starting a business here is to register for taxation purposes; this also involves the VAT and investors can receive advice from our specialists on the procedure for VAT registration in Taiwan

It is, therefore, recommended to seek the advice of reputed Taiwan company formation advisors when proceeding with such a business endeavor.

The documents needed to set up a subsidiary in Taiwan are:

  • An application form;
  • An approval letter for other organizations;
  • An application form for the business name verification;
  • Documents of the corporate organizations;
  • Copy of the business regulations;
  • Official meeting minutes of the shareholders or of the board of directors, in which it is required to receive permission to set up a business in Taiwan;
  • The notification letter for inward remittance and remittance purchase slips for working capital in Taiwan;
  • The power of attorney which designates the representative of the subsidiary in Taiwan;
  • The power of attorney from the subsidiary manager;
  • Other documents: our company registration agents in Taiwan can present all the relevant details related to these other documents.

Registration procedure for a subsidiary in Taiwan

In order to set up a subsidiary in Taiwan, the procedure involved has seven steps and it takes around 41 days. Our team can help you in this matter, and can also assist in the steps to immigrate to Taiwan

After the reservation of a Chinese name with the Department of Commerce, the power of attorney which designates the representative of the subsidiary and the copy of the certificate of incorporation have to be authorized and notarized. This process takes around 15 days. In order to be able to arrive here for business purposes, you will also need a residence permit in Taiwan

Our company formation representatives in Taiwan can provide all the necessary information related to the rest of the registration procedure for a subsidiary here. They can also assist you in case you want to open a new company in Taiwan.

Types of subsidiaries in Taiwan

A foreign company can establish a subsidiary in Taiwan by incorporating either a limited company or a company limited by shares, following Taiwanese company law. This subsidiary will operate as a separate legal entity from the parent company, which can have various advantages, such as limiting liability, separating financial records, and facilitating local business operations. Our specialists in company formation in Taiwan will detail the types of companies that can be incorporated as subsidiaries.

A limited company is a popular type of business structure that can be established as a subsidiary in Taiwan and has the following characteristics:

  • Shareholders are only liable for the amount of capital they invest in the company;
  • It is suitable for small to medium-sized investors who contribute a significant amount of capital to start the business;
  • At least one natural member is required to incorporate a limited company;
  • Shareholders must seek permission from all other shareholders before transferring their shares.

The company limited by shares can also be established as a subsidiary in Taiwan and is distinguished from a limited company by the following:

  • Shareholders’ liability is also limited to the capital they invest in the company;
  • The company must have a legal person status;
  • When shareholders transfer their shares, they are subject to a security transaction tax of 0.3%;
  • Unlike a limited company, shareholders may have multiple voting rights based on their shareholding pattern.

Ultimately, deciding which is the best structure for opening a subsidiary in Taiwan depends on your business goals and ownership structure. You can discuss further details with our Taiwan company formation specialists for guidance.

Taxes on subsidiaries in Taiwan

Before you establish a subsidiary in Taiwan, it is important to know the taxes that will apply to your company.

All subsidiaries in Taiwan are subject to corporate income tax on the revenue generated from their operations in Taiwan. The tax rate is 20%. Please note that resident companies with a taxable income of less than TWD 120,000 are exempt from paying taxes.

Non-resident companies without a fixed place of business in Taiwan and a Taiwan agent may be subject to withholding tax on their income in Taiwan. Tax rates in Taiwan can change based on tax agreements with the parent company’s country.

If a company does not distribute its profits to shareholders or reinvest them in the business before the end of the year following the year in which the profits were earned, it may have to pay an extra 5% tax on those retained profits.

Why invest in Taiwan

Expanding your business and opening a subsidiary in Taiwan can be an interesting opportunity for investors, especially looking at some insights into the country’s economy:

  • In 2022, Taiwan’s GDP amounted to approximately 760.46 billion U.S. dollars;
  • Taiwan’s services sector contributes the highest share of its GDP, accounting for approximately 62%;
  • The industry sector in Taiwan contributes about 35% to the overall GDP;
  • Taiwan has maintained a trade surplus over the last decade.

If you want to set up a company in Taiwan, you should also be familiar with the tax incentives available to businesses opening subsidiaries in specific areas.

When businesses open a subsidiary in Taiwan, they can get special tax benefits in certain areas like export processing zones and free trade zones. Additional incentives apply if they are involved in special Government-approved sectors such as biotechnology.

We can provide more details regarding taxes and company registration in Taiwan.

If you would like to know more about subsidiaries in Taiwan, or for help if you intend to open a company in Taiwan, please speak to our friendly staff.