Taiwan

  Tax Differences Between Setting Up a Branch and a Subsidiary in Taiwan   For a foreign entity that is seeking to do business in Taiwan, a branch and a subsidiary are two commonly utilized methods. From an accounting perspective, a branch is equivalent to an extension of the parent organization and maintains its accounts jointly with the parent. The parent company is fully liable for the branch’s liabilities and legal claims. In comparison, a subsidiary is a separate corporate entity set up by the holding company. It maintains a separate set of books and its liabilities and legal claims cannot be passed on to the parent. When a foreign corporation expands its business in Taiwan, it usually involves in trading of common products, warehouse registration, manufacturing for domestic sale or export sale, or further invest in other business entities in exchange for shares.   Which is the most tax-efficient […]

Introduction to Individual Income Tax in Taiwan   Individual Income Tax (IIT) in Taiwan, it is levied on incomes generated by individuals that income sourced from Taiwan. Tax residence and non-tax residence had been introduced to difference tax rates, Tax Residence calculate their tax payable for the year in accordance to progressive tax rate, however non-tax residence will be tax at a different rate accordance to the Income Tax Act.   Tax Basis   IIT is residence-based income tax levy, which is, when a person had been determined as taxable person in Taiwan, the worldwide income which they had been obtained in the year is subjected to be taxable. The above situation will be varied due to the situation involved in each tax residence: – (1)     Taiwan citizens which had earning (e.g employment incomes) from the Peoples Republic of China (China) would obtain tax rebate if the taxpayer had pay […]

Guide to Taiwan Profit-Seeking Enterprise Income Tax   Introduction   The Profit-seeking Enterprise Income Tax is the income tax levied by the Taiwan government on the surplus of Taiwan’s profit-seeking enterprise, and the nature of it is similar to Enterprise Income Tax in China. The taxpayers includes corporate legal persons, and sole proprietorship, partnership, company (including a Taiwan branch of a foreign company), and any other form of organization that operates for profit-seeking purposes through a fixed place of business, regardless of whether the enterprise is owned by the government, private sector, or jointly by the government and the private sector. The taxable income of profit-seeking enterprise is the net income after deducting various expenditures, losses and taxes from their total income.   Tax Base and Tax Rate   A profit-seeking enterprise in the form of a sole proprietorship, partnership, or company (including a subsidiary that is wholly owned by […]

Guide to Taiwan Business Tax Introduction   Taiwan implemented the business tax, which levied on value added in 1986. The scope of taxation includes the sales of goods, services and import of goods. The tax base is the balance of its total revenue minus capital equipment and non-capital expenditures in every month or every two months. Business tax rate divided into two types, the general tax calculation business entities and special tax calculation business entities. The former refers to the business entities who are taxed on value added tax, and the latter refers to the business entities who are taxed on the total amount of revenue.   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 subjected to business tax. […]

Comparison of Taiwan Branch and Subsidiary When a foreign company decides to set up an operation in Taiwan to carry out business activities, it could choose either a limited liability company (or a company limited by shares) or a branch office. A limited liability company is a separate legal entity independent from its parent company, whereas a branch office is merely an extension of the operation of the head office. This article introduces briefly the difference between a limited liability company and a branch office in Taiwan. 1. Definition and Main Differences Between a Branch and a Subsidiary A subsidiary is incorporated pursuant to the Company Act and is an independent legal entity. A subsidiary can be listed in the stock market and is entitled to various tax incentives. When a subsidiary distributes dividends to its foreign shareholders, it is subject to 20% withholding tax. A branch is also incorporated […]

Types of Taiwan Visas In terms of Taiwan Statute Governing Issuance of ROC Visas in Foreign Passports, there are four types of visa that may be issued in foreign passports, namely: 1. Visitor’s Visa There are four main types of visitor visa, namely: 1. two weeks – intended for short stays only, no extension allowed; 2. one month – intended for short stays only, no extension allowed; 3. sixty-days – can be extended for legitimate reasons unless bear the words “No extension will be granted” and 4. ninety-days – can be extended for legitimate reasons. A maximum of two extensions for 90 and 120 days may be obtained from any city/county police headquarters in Taiwan. 2. Landing VISA May be issued to the holders of USA passport, Hungary, Poland and Slovak, which the duration is for 30 days starting from the day after arrival and is not extendable nor be […]

1. Report to Department of Commerce, MOEA of registration particulars of foreign head office and establishment of representative office Documents required: (1) Application form (2) Certificate of incorporation issued by the government authority (authenticated by the representative of the Taiwan government in the country where the foreign head office is resident) and Chinese translation (3) Business registration certificate (for Hong Kong companies only) (authenticated by the representative of the Taiwan government in the country where the foreign head office is resident) and Chinese translation (4) Power of attorney appointing the legal representative in Taiwan (authenticated by the representative of the Taiwan government in Hong Kong) and Chinese translation (5) Photocopy of the ID card of the litigation / non-litigation agent in Taiwan (if a Taiwan national) (6) Photocopy of the passport of the litigation / non-litigation agent in Taiwan (if a foreign national) (7) Photocopy of Hong Kong permanent ID […]

1. Application to Department of Commerce, MOEA to reserve a Chinese company name General information required: Application for Reservation of Corporate Name and Business Scope (Chinese name of the proposed company and type of organization, applicant’s name, chop, passport or ID card number and residence address) Note: The applicant should be one of the incorporators   2. Application to Investment Commission of MOEA, SPA or EPZA (based on location of the invested company) for approval of foreign investors General information required: (1) Application form (2) Amount of foreign investment to be contributed in cash (3) Composition of total capital investment (4) Documents required from the foreign investor: (a) Photocopy of Certificate of Incorporation or passport (authenticated by the representative of the Taiwan government in the country where the foreign company is resident) (b) Power of Attorney appointing an ROC individual as attorney-in-fact to file the application (authenticated by the representative […]

1. Forms of Capital Contribution The Statute for Investment by Foreign Nationals provides regulations relating to the protection and administration of investments by foreign investors, individuals or enterprises within the ROC. It recognizes four forms of putting up capital: (1) Cash in the form of foreign exchange that is remitted or brought in. (2) Machinery, equipment, or raw materials imported for own use against self-provided foreign exchange. (3) Technical know-how or patent rights. (4) Investment principal, capital gains, net profits, interest or any other income generated as a result of transfer of investment, education of capital, or dissolution/liquidation as approved by the government.   2. Types of Investments There are three types of investment: (1) Investments for establishing a new business or expanding the capital base of an existing business, made individually or in association with other foreign nationals, the ROC government, Chinese nationals, or juridical persons. (2) Purchases of […]