INWARD INVESTMENT VIA COMPANY INCORPORATION

General Direction 

As a thumb of rule, Overseas Chinese and foreign nationals who wish to invest in Taiwan are required to obtain prior approval from the relevant authorities. In order to do so, they must first submit an application with the Investment Commission, Ministry of Economic Affairs (MOEA) in accordance with the Statute for Investment by Overseas Chinese or Statute for Investment by Foreign Nationals. After obtaining investment approval, they will be allowed to establish an entity in Taiwan in the form of a corporate vehicle (i.e. a branch company or a subsidiary) or a representative office in this country. The entity established must be then be registered with the authority in charge of company registration in accordance with the Company Law. 

Various documents required for investment approval 

The following documents will be required for investment approval by the MOEA :

Time Period for Investment approval 

Investment application review periods are as follows:

A. The review period for investment projects of NT$500 million or less that are not included on the negative list is approximately 3-5 days.
B. The review period for investment projects of NT$500 million or more that are not included on the negative list is approximately 4-6 days.
C. The review period for investment projects of NT$1 billion or more that are included on the negative list is approximately 14-40 days.
Upon successful application, the MOEA will issue an order requiring the inward remittance of capital into Taiwan as proof of actual investment. Upon submission of the proof of receipt of funds, the MOEA will require a further period 3 to 7 days of review before issuing a final approval.    

Restrictions on investment by foreign nationals

Apart from some of the regulated industries in Taiwan that includes chemicals, food and beverage manufacturing, transportation, aviation, financial services, broadcasting, etc., foreign nationals will be able to invest in a large variety of fields in Taiwan quite freely. For an exhaustive list regarding on the regulated industries, please contact the writer on this.

Investment Mediums

Foreign Investors are free to utilize the following as investment mediums:

A. Cash; 
B. Machinery and equipment or raw materials for own use; 
C. Patent rights, trademark rights, copyrights, technical skills or other intellectual property rights 
D. Other property in which the investor may invest under the Competent Authority's approval. 

Deadline for remittance of investment funds 

Upon approval of the investment application by the MOEA, the investor will be required to remit the investment funds into Taiwan within a specific time. According to Article 9 of the Statute for Foreign Investors, the investor should submit the entire approved investment amount within the required period. If the investor is unable to remit the investment amount, in whole or in part, within the required period of time, the amount -- which has not been brought in -- will be revoked upon the expiration of the prescribed time limit. 

The employment of foreign nationals in Taiwan

Investors will be allowed to employ foreign nationals to work in Taiwan after the investment entity has been successfully established. There is however a limit on the maximum number of foreign nationals such entities can hire in Taiwan. This will depend largely on the size of the entity here. According to the guidelines governing the employment of foreign nationals with specialized skills and Article 13 of the Guidelines Governing the Approval and Management of the Overseas and Foreign Companies, MOEA can determine the number of foreign nationals employed based on the business area, business scale, employment plan, operational efficiency and its contribution to the development of the domestic economy

The various entities available to investors for incorporation

Foreign investors establish establishing an entity in Taiwan may do so choosing between a subsidiary company, branch company, or representative office. 

A. Subsidiary companies are generally profit-seeking bodies, and are registered as companies under the ROC Company Law. Before establishing a subsidiary company, investment approval from the MOEA must be obtained. A search against the tentative name of the subsidiary company in Taiwan must then be performed. Registration and incorporation of the subsidiary company must be with the Commercial Department, MOEA (for those with capital over NT$100 million), or with the MOEA office in Central Taiwan or the Taipei City Government’s Bureau of Construction (for those with capital of NT$100 million or less). Subsidiary companies are taxable entities. 

B. Branch companies are also profit-seeking bodies. The functions of a branch company is largely similar to that of a subsidiary company. The difference would be that a branch company is viewed as an extension of the parent offshore company into Taiwan and thus is allowed to retain the name of that parent company for purposes of incorporation here. As a result, a name search is not required at the application stage. The branch company however binds the parent company in all legal activities conducted in Taiwan. As a result, parent companies can incur the liabilities of their branches. Branch companies are taxable entities in Taiwan.

C. Representative Offices: When foreign companies are unwilling to establish a subsidiary or branch in Taiwan and are interested in appointing someone to represent the company in a legal capacity, the company may, under Section 1 of Article 386 of the Company Law, set up a Representative Office here. A Representative Office for the purposes of the law is not a profit seeking body and therefore cannot be taxable. There is also no requirement for investors to remit a minimum operating capital into Taiwan as proof of inward funds received in order to seek investment approval. The work scope of a Representative Office is however restricted in the sense that it is barred from performing any profit making business activities except marketing calls and the signing of contracts.

Time Frame to incorporate or to amend an entity in Taiwan 

The time frame below applies only to the anticipated time taken by the governmental agencies to complete processing the relevant application made towards incorporation. This in no way takes into account the various documents and materials needed to be prepared in advance for submission along with each application. 

 FOR MORE INFORMATION concerning company incorporation in Taiwan, please contact the writer of this Article who is always willing to listen and help.

Writer's information: 

DARYL LAI

Email: daryl@jtjb-taipei.com
Telephone: 886-2-27720567