Taiwan

Economic and Legal Climate

Taiwan boasts a robust and advanced economy known for its high-tech industries and manufacturing prowess. The business environment is highly favorable, with strong legal protections and a transparent regulatory framework. Taiwan's legal system is based on civil law, influenced by the German legal system. The government has implemented numerous reforms to streamline business operations and attract foreign investment.

Official Languages

The official language of Taiwan is Mandarin Chinese. While English is widely taught and used in business, especially in major cities, proficiency levels can vary. Engaging local legal and business experts fluent in Mandarin is advisable for international investors.

Banking System

Taiwan's banking system is well-regulated by the Financial Supervisory Commission (FSC). The country is home to a variety of local and international banks, offering a wide range of financial services. The banking sector is known for its stability and efficiency, with advanced digital banking services and robust regulatory oversight ensuring a secure environment for financial transactions.

Maintenance Costs

Maintenance costs for companies in Taiwan are moderate. Annual compliance requirements include renewing business licenses, filing tax returns, and conducting audits. These processes are relatively straightforward and affordable, contributing to manageable ongoing operational expenses.

Setting Up Costs

Setting up a company in Taiwan involves several costs, including incorporation fees, legal fees, and registration with various government departments. The process includes obtaining approval from the Investment Commission, registering with the Ministry of Economic Affairs (MOEA), and obtaining necessary business licenses. The incorporation process is efficient, typically completed within a few weeks, provided all required documentation is in order.

Corporate Tax Rate

Taiwan’s corporate tax rate is 20% on net profits, which is competitive in the region. The country also offers various tax incentives and exemptions for specific industries and activities, such as high-tech innovation, research and development, and investments in designated regions.

Territorial or Non-Territorial Principles

Taiwan operates a modified territorial tax system. Resident companies are taxed on their worldwide income, but certain foreign-sourced income is exempt if it meets specific criteria. This structure enhances tax efficiency for businesses engaged in international operations.

Currency Regulation

Taiwan imposes certain regulations on foreign exchange transactions, managed by the Central Bank of the Republic of China (Taiwan). While there are some controls on capital movements, the government has been gradually liberalizing these regulations to facilitate foreign investment and international business operations.

Advantages of Setting Up a Company in Taiwan

1. Advanced Economy: Taiwan’s highly developed economy offers a stable and prosperous environment for business operations.
2. Strategic Location: Positioned in East Asia, Taiwan provides easy access to major regional and global markets.
3. Innovative Environment: Strong focus on technology and innovation, with significant government support for R&D activities.
4. Highly Skilled Workforce: Access to a well-educated and skilled labor force, particularly in technology, engineering, and manufacturing sectors.
5. Efficient Infrastructure: Taiwan boasts world-class infrastructure, including advanced transportation, logistics, and communication networks.

Disadvantages of Setting Up a Company in Taiwan

1. High Costs: The cost of living and doing business in Taiwan can be relatively high, particularly in major cities like Taipei.
2. Regulatory Complexity: Navigating Taiwan’s regulatory environment can be complex, requiring a thorough understanding of local laws and procedures.
3. Political Considerations: Taiwan's unique political status and relations with Mainland China can pose challenges for some international businesses.

Conclusion

Taiwan offers a highly attractive environment for setting up a company, with its advanced economy, strategic location, and focus on innovation. Despite challenges such as high costs and regulatory complexity, the advantages of a skilled workforce, efficient infrastructure, and government support make Taiwan a compelling destination for business expansion. Global Expand can assist you in navigating the complexities of setting up a company in Taiwan, ensuring a smooth and successful entry into this dynamic market.