Features of Taiwan Branch Office of Foreign Company
(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 is required.
(3) Name of Branch Office and Approval Required
The name of the branch is always in the following formation:
Name of country where the head office is registered + Name of the company + Taiwan branch office
Example: Hong Kong Kaizen Corporate Services Limited Taiwan Branch Office
Pre-approval is required for use of a name. It is possible to reserve a name of a proposed branch. It is essential to check that there is no similar or identical name on the register, which would prevent the company being incorporated.
(4) Registered Capital
As it is not a separate legal entity, there is no capital requirement for the registration of branch office in Taiwan. As such, it is purely a matter of the investor’s decision as to the amount of investment to be made for the branch office. However, we suggest amount of investment should be sufficient to cover the operating costs for running the branch before it could generate enough funds to support its own operation.
(5) Litigious and non-litigious agent
A branch is required to have a litigious and non-litigious agent. The agent must be a natural personal and reside in Taiwan.
(6) Manager
A branch is required to appoint manager and full details of that person must be filed with the Taiwan government. The manager must be a natural personal and can be any nationality.
(7) Registered Office/Business Address
A branch office must maintain a business address in Taiwan where the correspondence from Taiwan Government can be served and business is carried out.
(8) Taxes
A business in Taiwan is mainly subject to Business Tax (VAT) and Enterprise Income Tax.
Business Tax (VAT)
Business tax is assessed in accordance with law whenever goods or services are sold or goods imported within the territory of the ROC.
There are three different VAT rates:
(a) 5% tax for manufacturing industries
(b) 2% tax for banks, insurance companies, trust companies, securities firms, futures companies, bills and finance companies, and pawn brokerages.
(c) 1% tax for small-scale businesses and businesses which the Ministry of Finance has deemed as exempt from reporting total revenues.
Profit-Seeking Enterprises Income Tax
Those profit-seeking enterprises with a general headquarters within ROC territory shall pay consolidated profit-seeking- enterprise income tax on the income of all profit-seeking enterprises within and outside the ROC. Those profit-seeking enterprises with a general headquarters outside the ROC shall pay tax on only their ROC source income. If a foreign tax credit is available for income tax paid in other countries on income derived outside Taiwan, the credit may not exceed the incremental tax liability that would result if the foreign-source income were added to the Taiwan taxable income and taxed at the applicable domestic rate. For profit-seeking enterprises, the income taxes rate is 17% from 2010.