Viewpoints from Kaizen

1. Scope of Taxation The commodity tax is a single-stage excise tax levied on specific commodities manufactured domestically or imported from abroad. 2. Taxpayer For taxable commodities manufactured domestically, the commodity tax is levied upon departure from a manufacturer’s premises. For taxable commodities imported from abroad, the tax is levied when customs duties are paid. The following table shows the scope of taxation and responsible taxpayers under the commodity tax: Scope of Taxation and Taxpayers under Commodity Tax Scope of taxation Taxpayer Exception Commodities manufactured domestically Manufacturer Commodities manufactured under consignment contract Consignee (i.e. manufacturer) If the consignor is a manufacturer of taxable commodities, the consignor can apply to be the taxpayer Commodities imported from abroad Recipient of the goods, holder of the bill of lading or holder of the goods 3. Taxable Commodities, Tax Rates, and Tax Amounts Seven categories of commodities are subject to the commodity tax levied […]

On June 15, 2015, the Taiwan Legislative Yuan approved the amendments to the Company Act. A special section on “Closely-Held Company” (“CHC”) was added to Chapter 5 (Company Limited by Shares) as a result of the amendments and the purpose is to encourage the growth of startups and small and medium enterprises and to accommodate the unique needs of tech startups. The amendments aim to create more autonomy for such companies and to increase the flexibility in share ownership arrangement and business operations of CHC. The amendment took effect on 1 July 2015. Key features of CHC are briefed as follows. Definitions A close company is defined as a non-public company with no more than 50 shareholders, the articles of incorporation of which stipulate restrictions on transfers of its shares (Section 356-1). To maintain its ‘non-public’ status, a close company must be a company that has not attained ‘public company […]

1. Introduction In accordance with the relevant tax laws and regulations, all sales of goods and services in Taiwan, as well as the importation of goods into Taiwan, are subject to business tax. Business tax is imposed under two systems: the value-added-tax (VAT) system and the non-value-added tax (Non-VAT) system. 2. Scope of Taxation Pursuant to the “Value-added and Non-value-added Business Tax Act?(Business Tax Act or BTA), the sale of goods and the provision of services in Taiwan, as well as the import of goods into Taiwan, are subject to business tax. (1) Sale of Goods A sale of goods is defined as the transfer of goods to another entity for compensation in Taiwan. In addition, any of the following circumstances will be deemed to be a sale of goods for business tax purposes: (i) Goods are produced, imported, or purchased by a business entity for its own consumption (except […]

1. Scope of Taxation   The building tax is levied on buildings and construction that strengthens the utility of buildings.   2. Taxpayer   The taxpayer is the owner of the building, or if a dien right has been established, the dien right assignor.   3. Tax Base   The building tax is levied on the government-assessed value of the building at the applicable tax rate. The government-assessed value is not the market value of the building, but rather the value as assessed by the tax office based on standards issued by the MOF. The value assessment factors are location, construction type (i.e. steel frame, etc.), and the total number of units in the building.   4. Tax Rate   The building tax rates are set by the municipal and county (city) governments in view of the local conditions within the range in the following table. Once approved by the local people’s assembly, the […]

When a foreigners or a foreign company, including residents and companies from Hong Kong, Macau and Mainland China, intend to carry out business in Taiwan, they can consider setting up a company limited by shares, a limited company or a branch office in Taiwan. The article brief explains the major features, the registration procedures and the documents and materials required for the registration of a limited company in Taiwan. This article is prepared for the reference of our clients. “Company? Here in this article refers to Limited Company.        Features of Taiwan Limited Company (1) Name of Company A name that is similar to or identical to an existing company. A name that constitutes a criminal offence or is otherwise contrary to the public interest. A name that implies government patronage.   (2) Directors of a Taiwan Company A minimum of one director is required to be appointed at the […]

When a foreigners or a foreign company, including residents and companies from Hong Kong, Macau and Mainland China, intend to carry out business in Taiwan, they can consider setting up a company limited by shares, a limited company or a branch office in Taiwan. The article brief explains the major features, the registration procedures and the documents and materials required for the registration of a branch office in Taiwan by a foreign company. This article is prepared for the reference of our clients. 1. Features of Branch Office in Taiwan (1) Name of Branch Office The name of the branch office should be in the following format: Name of country of registration of the foreign company + name of the foreign company + Taiwan Branch Office. For example, a Hong Kong registered company named Kaizen Corporate Services Limited applies to set up a branch office in Taiwan, the name of […]

1. Introduction In accordance with the prevailing laws and regulation, businesses registered in Taiwan are required to maintain accounting records and prepare annual financial statements in accordance with Taiwan Generally Accepted Accounting Principles (GAAP), which largely follow International Financial Reporting Standards (IFRS) and US GAAP. In addition, Taiwan’s income tax law requires that a profit-seeking enterprise keeps sufficient and accurate account records and supporting documents for calculation of its taxable income. 2. Accounting Books and Records (1) Accounting Period Businesses generally use the 1 January to 31 December calendar year as their accounting year, which is the same as the fiscal year for tax purposes. However, a company may, with permission, adopt a non-calendar year-end. (2) Bookkeeping Currency Accounting books must be denominated in the local currency (New Taiwan dollar, NTD). If accounts are kept in a foreign currency due to business needs, such currency must be translated into the […]

(1) No Distinct Legal Identity In general, a Taiwan branch office of a foreign company does not have an independent legal personality. Establishing a branch in Taiwan theoretically subjects the foreign head office to the jurisdiction of the Taiwan courts. A branch office does not have shareholders, directors or supervisor(s). The foreign head office shall appoint an individual as its agent for litigious and non-litigious matters and a branch manager. The same person may be designated as both the litigious and non-litigious agent and branch manager, or two different individuals may be designated. In either case, the designated agent and the branch manager receive all instructions from the foreign head office. (2) Scope of Business The branch office is allowed to carry out business activities different from those of the head office or as approved by the business registration authority or any other licensing authority in Taiwan if such license […]

It is estimated that the whole registration process would take around 6-8 months. The table below shows the estimated time frame for each of the steps for the registration process. Step Description Who is Responsible Working Days Preliminary 1 Legalization of identification documents of the head office Investor Investor’s schedule 2 Lease of office and execution of tenancy (lease) agreement Investor Investor’s schedule 3 Other documents Investor Investor’s schedule Application for Registration 4 Perform name available search Kaizen 5 5 Application for Approval from Ministry Of Economic Affairs, R.O.C Kaizen 10 6 Opening bank account Kaizen 7 7 Contribution and remittance of operating funds of the branch office Investor   8 Application for Business License (營利核准) Kaizen 7 Post Registration Procedures 9 Perform State Tax Registration(國稅局稅籍登記) Kaizen 7 10 Application for Approval and Carving of Company Seals Kaizen 3 11 Application for registration with the Bureau of Foreign Trade (optional) […]

Type of Entity Branch Office of Foreign Company Subsidiary Limited Company Company Limited by Shares Character Foreign companies apply for recognition and set up branch office, for doing business in Taiwan. Shareholders apply for an independent corporation, for doing business in Taiwan. Company Name Translate foreign company name into Chinese language and apply for name verification. Name company & apply for name verification Documents 1. Certificates of the status of foreign companies /nationals 2. Authorization letter of proxy which legalized by Taiwan embassy 3. Investment plans Minimum Number of Shareholders 0 1 1-2 (Note 1) Minimum Number of Directors 1 (Note 2) 1 3 Minimum Number of Supervisors N/A N/A 1 Corporate Directors Permitted No (Note 2) No Requirement for Local Directors No Requirement for Local Supervisors N/A No Requirement for Registered Office Yes Requirement for Local Meeting No Yes Minimum Authorized Capital(Note3)   Requirement for share certificates N/A No […]