Expanding to Taiwan

Taiwan, a nation renowned for its vibrant democracy, and strategic location in East Asia, presents a compelling destination for businesses seeking global expansion. With a highly skilled workforce, a robust economy, and a government actively fostering foreign investment, Taiwan offers fertile ground for businesses of all sizes to flourish.

However, navigating a new market, particularly one with distinct cultural and business landscapes, can be a complex undertaking. This is where Innovare steps in as your trusted partner, guiding you through every step of your Taiwanese expansion journey.

In this blog series, we'll delve into the compelling reasons to expand into Taiwan, explore the intricacies of the market, and highlight the unique advantages Innovare brings to your expansion strategy. So, buckle up and get ready to unlock the exciting possibilities that Taiwan holds for your business!

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How to Set Up a Business in Taiwan

Taiwan's thriving economy, skilled workforce, and strategic location in East Asia make it an attractive destination for international businesses. However, navigating the process of setting up a company in a new market can be challenging.

This guide will walk you through the key steps involved in establishing your business in Taiwan, ensuring a smooth and successful entry.

Factors to Consider for Starting a Company in Taiwan

• Market Potential: Taiwan boasts a population of over 23 million and a strong middle class, offering a significant consumer base for your products or services.
• Business Environment: The World Bank consistently ranks Taiwan among the top 15 for "ease of doing business," signifying a streamlined and efficient business environment.
• Cultural Considerations: Taiwanese culture emphasises trust, fairness, and relationship building. Understanding these nuances is crucial for fostering successful business partnerships.
• Government Support: The Taiwanese government actively encourages foreign investment and offers various incentives to support business development.
• Competition: Research your target market and identify established competitors. Develop a clear strategy to differentiate your business offering.
• Legal and Regulatory Framework: Familiarise yourself with relevant regulations, tax laws, and licensing requirements for your industry.

By considering these factors and partnering with a reliable local expert like Innovare, you can set your business up for success in the dynamic Taiwanese market.

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How to Set Up a Company in Taiwan

Here are the key steps involved in setting up your company in Taiwan, ensuring a smooth and successful entry into the market.

Business Structure:

Selecting the right business structure is crucial for your company's operations. Here are the main options:

• Limited Liability Company: The most common type, offering limited liability protection for shareholders.
• Branch Office: An extension of an existing foreign company, with limited liability protection for the parent company.
• Representative Office: Ideal for market research and promotional activities, but cannot engage in direct business transactions.

Registration Process (Step-by-Step):

1. Company Name Search and Reservation: Check for availability and reserve your desired company name online or by mail through the Ministry of Economic Affairs (MOEA). The name must be in Chinese characters.
2. Foreign Investment Approval: Submit necessary documents to the MOEA for approval. For companies, include a business plan outlining activities, financial projections, and funding sources. Processing times typically range from 2 weeks to 1 month.
3. Preparatory Bank Account and Capital Injection: Open a temporary bank account at a local bank to deposit the minimum required capital (amount varies depending on business type). Funds must be transferred in foreign currency (USD, EUR) and verified by a local certified public accountant (CPA). This process usually takes 1-2 weeks.
4. Business Registration: Once capital injection is verified, file for business registration with the MOEA Department of Commerce. Approval typically takes 2 weeks.
5. Tax Registration: Register with the National Tax Administration to obtain a tax identification number. This process requires an interview with a tax officer and takes 2-3 weeks.
6. Transfer to Official Bank Account: Convert the funds from the preparatory account to your official company bank account. KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures may require additional documentation.

Local Regulations:

• Compliance: Regular reporting to relevant authorities, such as the Ministry of Justice (MOJ) is mandatory.
• Industry-Specific Regulations: Specific industries may have additional regulations. Conduct thorough research to ensure compliance with all applicable regulations for your sector.

Taxation:

• Corporate Income Tax (CIT): Resident corporations are taxed on worldwide income, while non-resident corporations with a local presence are taxed only on Taiwan-sourced income. CIT is fixed at 20% in general.
• Tax Incentives: The government offers various tax benefits and deductions to encourage foreign investment and business development. Explore programs available through the MOEA.

Banking and Finance:

Taiwan boasts a sophisticated banking system offering various financial services for businesses. Here's what you need to know:

Corporate Bank Accounts: Open a dedicated account for your business operations. Leading banks like CTBC Bank, Taiwan Cooperative Bank, and First Commercial Bank offer services tailored to international clients.

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How Do I Go About Manpower and Human Resources?

Building a successful team in Taiwan requires understanding the legalities and processes surrounding manpower and human resources. This guide explores key aspects to consider when attracting and retaining top talent in this dynamic market.

Types of Visa/Work Permit

The type of visa your foreign employees require depends on their nationality, job duties, and length of stay. Here's a breakdown of common visa categories:

• Work Permit: Ideal for foreign professionals with relevant qualifications and experience.
• Taiwan Employment Gold Card (TEC): Aimed at attracting global talent in specific industries, providing residence privileges and tax incentives.

Requirements

Specific requirements vary by visa type, but generally include:

• Educational qualifications and work experience documentation
• Letter of employment from the Taiwan company
• Medical certificates
• Passport and photographs

For a comprehensive list of requirements, consult the relevant Taiwanese embassy or consulate in your home country.

Visa Application Process

Foreign employees typically apply for visas through the Taiwanese embassy or consulate in their home country. The employer in Taiwan may need to provide supporting documentation. Processing times can vary, so plan accordingly.

Social Security Management

Taiwan mandates social security contributions for both employers and employees. These contributions cover various benefits, including:

• National Health Insurance (NHI): Provides healthcare coverage for employees and their dependents.
• Labor Insurance (LI): Offers benefits such as unemployment insurance, workplace injury compensation, and retirement pensions.
• Employment Insurance (EI): Provides unemployment benefits and job search support.

Employers are responsible for deducting employee contributions from salaries and making combined employer and employee contributions to the relevant social security institutions.

Contract Details

A well-defined employment contract is crucial for a healthy employer-employee relationship. Key elements to include are:

• Job title and responsibilities
• Salary and benefits
• Working hours and overtime pay
• Vacation and sick leave entitlements
• Termination terms and conditions

Onboarding:

Taiwanese law mandates a probationary period of up to three months for new hires. The onboarding process should provide a smooth introduction to the company culture, roles, and responsibilities.

Salary Payment:

Salaries are typically paid monthly through bank transfers. Taiwan adheres to a minimum wage, which is adjusted periodically. Employers are obligated to comply with these minimum wage requirements.

Leave:

Employees are entitled to paid annual leave, public holidays, and sick leave. Specific entitlements may vary depending on the employment contract and industry regulations.

Termination:

Termination procedures must comply with Taiwanese labor law. Notice periods, severance pay, and other conditions are outlined in the law and employment contract.

Employer Costs and Insurance

Apart from social security contributions, employers may consider additional costs and insurance options, such as:

• Workplace accident insurance
• Private health insurance
• Bonuses and incentives

By understanding these aspects of manpower and human resources in Taiwan, you can develop a comprehensive plan for attracting, onboarding, and retaining top talent for your business.

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Should I Set Up My Own Entity or Outsource to a Local Expert in Taiwan?

Expanding your business to Taiwan presents exciting opportunities, but navigating the legalities and complexities of a new market can be daunting. 

A critical decision you'll face is whether to establish your own wholly-owned entity or partner with a local expert. Let's explore the advantages and disadvantages of each approach to guide your decision-making process.

Setting Up Your Own Entity:

• Advantages:some text
  • Full control over operations and decision-making.
  • Potential for long-term brand building and market share capture.
  • Profits remain entirely within your company.
• Disadvantages:some text
  • Complex setup process with legal and regulatory requirements to navigate.
  • Time-consuming, requiring dedicated resources to manage local operations.
  • Potential for higher initial investment costs.
  • Difficulty in accessing established networks and navigating cultural nuances.

Outsourcing to a Local Expert:

• Advantages:some text
  • Faster market entry with a streamlined setup process handled by the local expert while still maintaining “actual” control over your business.
  • Leverage local expertise in navigating regulations, compliance, and cultural norms.
  • Access to established networks and potential cost savings through shared resources.
  • Reduced initial investment and ongoing operational costs.
• Disadvantages:some text
  • Potential for profit-sharing arrangements with the local partner.
  • Reliance on the expertise and capabilities of the chosen partner.

Choosing the Right Path

The optimal approach depends on your specific business goals, resources, and risk tolerance. Here's a table summarising key considerations to aid your decision:

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Innovare: Your Trusted Expansion Partner in Taiwan

Regardless of which approach you choose, Innovare can be your strategic partner throughout your Taiwanese expansion journey. Our team of experts possesses unparalleled knowledge of the Taiwanese market, legal landscape, and business culture.

Here's how Innovare can assist you:

• Entity Setup and Registration: Streamline the company formation process, ensuring compliance with all regulations.
• Outsourcing: Innovare can assist you to enter the market in a quick and compliance manner without huge capital set up. Easy to enter the market and exit if needed. Provide a convenient way to expand your business before you make a long term commitment.
• Market Entry Strategy: Develop a tailored market entry strategy aligned with your specific business goals.
• Regulatory Compliance: Advice on navigating complex legal and regulatory requirements. Reduce your operation and HR risks.
• Talent Acquisition and HR Support: Assist with recruiting top talent and managing human resources functions.
• Accounting and Tax Services: Ensure compliance with Taiwanese tax regulations and financial reporting requirements.
• Business Networking and Partnerships: Connect you with key stakeholders and potential partners in Taiwan.

Innovare's comprehensive solutions and local expertise empower you to navigate the Taiwanese market with confidence. Contact us today to discuss your expansion plans and unlock the full potential of this dynamic business landscape!

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