Viewpoints from Kaizen

The Mid-Autumn Festival is one of the most important Chinese festivals, and many companies take the opportunity to present gifts to their clients or employees. In Taiwan, if a company distributes its own inventory as gifts, this should be regarded as the sale of goods, and an invoice must be issued based on the sale price, with business tax declared and paid accordingly. However, if the items were originally purchased with the intention of being given as gifts, and the input tax was not claimed as a deduction against output tax, the company is exempt from issuing an invoice.   Here’s an example: Company A purchased 100 units of inventory at a total cost of TWD 100,000 with input VAT amounting to TWD 5,000. At the time of purchase, the input VAT of TWD 5,000 was claimed as a deduction against the output VAT. Later, when Company A decided to […]

In Taiwan, companies can be categorized into three types: limited company, limited company by shares and foreign branch office. According to Taiwan’s Company Act, when establishing a company, the founders (shareholders) must hold a meeting to determine the company’s capital amount. The funds should then be transferred to the company’s designated bank account, and a certified public accountant must complete the capital verification before applying for company registration. The capital amount can be understood as the initial operating funds registered for the company. Currently, there is no minimum capital requirement; however, it must be reasonably sufficient to cover the company’s expenses for the first year, including rent, salaries, office equipment, and other costs.   In Taiwan, a limited company has only a total capital amount. Once the shareholders have determined the capital amount in the articles of incorporation, the actual funds must be in place in order to establish the […]

To determine if an employee is a tax resident in Taiwan, various factors such as the number of days they reside in Taiwan, whether they have a residence, household registration, and whether they work or do business in Taiwan should be considered. Generally, this can be categorized into three scenarios. If a company sends employees abroad for expansion, it is important to change in the employee’s tax status and handle salary income withholding at the correct tax rate. First, if an individual has household registration in Taiwan and resides in Taiwan for a total of 31 days or more, they are considered as resident. Second, if an individual resides in Taiwan for more than one day but less than 31 days, if the focus is living and economic is within Taiwan (e.g., they have labor and health insurance, their spouse and children remain in Taiwan, etc.), they can also be […]

The basic particulars of general companies (non-publicly listed companies) in Taiwan can be found on the Taiwan Business Registration Office website. These basic particulars include basic information such as company name, company address, names of directors, capital amount, and business items. However, detailed shareholder information cannot be accessed through this search.   To access documents beyond the publicly available information, such as company registration forms, article of association, board meeting minutes, and auditor’s reports, these documents are considered non-public and must be applied for either in the name of the company in Taiwan or on behalf of an interested party. Applications in the name of an interested party require supporting documents proving the interest, along with identity documents and an explanation of the reasons for the application. Supporting documents may include court summonses, judgements, lawsuit proof documents, contracts, negotiable instruments, proof of dishonor, or shareholder certificate documents. If these documents […]

Mr. Li has had a knack for financial management since his youth. During several economic recessions, he took the opportunity to enter the stock market and continued to hold his investments long-term after marriage. As he approached retirement, he had accumulated 100 shares of Hon Hai (Foxconn) and 100 shares of Taiwan Semiconductor Manufacturing Company (TSMC). As he entered his senior years, he began to think about estate planning. In June 2023, he gifted his 100 shares of Hon Hai stock to his wife. Unfortunately, in June 2024, Mr. Li was diagnosed with cancer and was given a life expectancy of only one more year by doctors. During his illness, his wife sold all the Hon Hai shares at TWD 130 each to cover medical expenses. Knowing his time was limited, Mr. Li decided to plan for the inheritance taxes and thus intended to transfer his 100 shares of TSMC […]

A Taiwan limited company by shares is required to appoint at least one supervisor to oversee and conduct audits of the company’s operations. The primary purpose of supervisor role is to serve as a check against the board of directors, ensuring that the rights of general shareholders are not infringed upon and that directors do not abuse their powers for personal gain. Consequently, a supervisor cannot hold the position of manager, director, or other employee of the organization at the same time. Additionally, information regarding the supervisor is publicly accessible and can be reviewed by the public.   The primary duties of supervisor in Taiwan company are as follows:   The supervisor may convene a shareholder meeting in the interest of the company when necessary, such as when the board of directors fails to convene the meeting or is unable to do so.   The supervisor is responsible for reviewing […]

Under Taiwan’s new unified real estate system, what is the best way to arrange the inheritance of real estate?   Transferring a house to children through a gift allows the use of the announced current value to calculate the gift amount, and there is a tax exemption available to save on taxes. However, if children sell the house later, they will face a huge unified real estate tax because the profit is calculated based on the announced current value at the time of the gift (which is about 30% of the market price, much lower) minus the actual selling price, resulting in a significant profit and a hefty unified real estate tax. If the transfer is done through a sale, the children need to come up with funds close to the actual market price to purchase it; otherwise, the Taiwan National Taxation Bureau might consider it a sham transaction that […]

According to the regulations of Company Law in Taiwan, the term of office for director and supervisor of a Taiwanese corporation is maximum of three years, and elections must be held at the end of each term. However, if the directors and supervisors elected in each election are the same as the previous one, they may be re-elected consecutively.   When the term of office for director and supervisor expires but there is no time for re-election, the term of office may be extended until the director is re-elected and takes office. The definition of failure to re-elect is based on whether the company has elected new directors upon the expiration of the term of the directors and supervisors. As for the reasons, the Taiwan Economic Department will not conduct further inspections. However, the Taiwan Economic Department has the authority to order the company to conduct elections within a specified […]