FAQ's on Doing Business in Taiwan
2011-04-04
LABOR/EMPLOYMENT LAW: What are the basic severance payment rules for Taiwan?
The Labor Pension Act applies to employees, falling under that Act (in general Taiwanese employees). The severance payment is calculated as half a month per year of service, but the total amount shall be maximum 6 months of salary. Labor Standard Act applies to the other employees, e.g. foreign employees. The severance payment is calculated as 1 month of salary per year of service.
SETUP OF COMPANY: What possibilities do I have to setup a small business in Taiwan and to secure a work permit for myself at the same time?
If the person is an individual, he or she may obtain a work permit by setting up a company limited by shares or a limited company. For companies, the work permit would be issued with regard to the position of the chief representative, the General Manager, or the branch manager of the representative office or the branch office.
SETUP OF COMPANY: Subsidiaries: How many directors does a limited company need to have? Is it enough if I am the only director?
Yes, it is enough if there is only one director. A limited company shall have at least one but not more than three directors.
SETUP OF COMPANY: Can a natural person as a shareholder of a limited company appoint a director?
Yes, a person as a shareholder of a limited company can appoint a director. However, the director shall be a shareholder as well and needs the approval of 2/3 of all shareholders. So, if there is only one shareholder, he or she himself shall be the director.
SETUP OF COMPANY: What are the requirements for the future registered business address of my subsidiary?
The future registered business address needs to be suitable and meet the requirements for running the business, with regard to the zoning of the property (e.g. commercial or industrial, but not purely residential).
SETUP OF COMPANY: Are there any special regulations for investments from Hong Kong and/or China?
Investments from Mainland China are currently only permitted in certain industries approved by the MOEA. Investments from Hong Kong are subject to the regular regulations of foreign investment in Taiwan.
SETUP OF COMPANY: What is the minimum amount of money do I need to prepare to invest in Taiwan?
For the setup of a limited company or branch office, currently no minimum investing is required. However it needs to be shown that the company is financial sound. It is recommendable to have an investment of over 150,000 TWD. If special permits and/or work permit(s) are required, higher amounts are necessary.
SETUP OF COMPANY: Is it necessary for me to be physically present in Taiwan for the setup process of my branch office or subsidiary?
During the setup process, the future legal representative would need to be physically present in Taiwan at least once, for opening of the temporary bank account which is necessary for the capital contribution.
SETUP OF COMPANY: Branch office: Do the legal representative and branch manager need to be residents in Taiwan?
No, the legal representative does not need to be a resident in Taiwan. However, managerial personnel shall have a residence or domicile within Taiwan.
SETUP OF COMPANY: Branch office: Can the position of the legal representative and branch manager be split?
What is the “legal representative” after all? A legal representative is the designated representative of a foreign company who represents the company in all litigious and non-litigious matters and to serve as its responsible persons in Taiwan. Usually the legal representative is at the same time also the Branch Manager, but the two positions can be split, i.e. can be held by two different individuals.
SETUP OF COMPANY: Does a subsidiary need to have a General Manager?
No, for a subsidiary a General Manager is not necessary. A subsidiary may have one or more managerial personnel in accordance with its Articles of Incorporation. However, within the position of General Manager, it is usually easier to obtain a work permit as a foreign national.
SETUP OF COMPANY: Can a limited company have a supervisory board?
No, a limited company cannot have a supervisory board. It shall be the shareholders who supervise the operations of the company.
SETUP OF COMPANY: What is a supervisor? How many supervisors does a company limited by shares need to have?
The supervisor is a person supervising the execution of business operations of the company, investigating the business and financial conditions of the company at any time, examining the accounting books and documents, and requesting the board of directors or managerial personnel to make reports thereon. A company limited by shares need to have a least one supervisor.
SETUP OF COMPANY: Subsidiaries: How many directors does a limited company by shares need to have? Can I ask friends or relatives from my home country to be one of the directors?
The board of directors of a company shall have at least three directors. Yes, you can ask friends or relatives to me one of the directors, since Taiwan does not have any requirements with regard to domicile or nationality of directors.
SETUP OF COMPANY: What are the advantages/ disadvantages of subsidiaries vs. branch offices?
For branch offices, the advantage is that there is no 20% withholding tax on the repatriation of after-tax profits. The disadvantage is liability, as the main company abroad is fully liable for its branch office in Taiwan. For subsidiaries, the advantage is that the liability is restricted. The disadvantage is that there will be the withholding tax of 20% on dividends paid to the shareholder(s) abroad.
VISA/ARC: How can my Chinese (PRC) wife or husband get a permission to stay in Taiwan?
A spouse from PRC can also obtain a permission, but there are more requirements need to be met and more formality regarding documents from Mainland China. VISA/ARC: How can my family members obtain an ARC? The family members can obtain an ARC by being dependent on the foreign employee.
VISA/ARC: How can I obtain an Alien Residence Certificate (ARC) and what is it?
To obtain an ARC, foreigners should file in the application to National Immigration Agency. Alien Residence Certificate is a document given by National Immigration Agency for foreigners who intend to reside in Taiwan for certain purposes, for example for an employment, marriage, or investment in Taiwan. The valid term differs from different purpose of residence.
VISA/ARC: What are the requirements for permanent residency, and what are the advantages compared to an ARC?
Foreigners who have legally and continuously resided in Taiwan for five years or the spouses and/or children of nationals with registered permanent residence in Taiwan who have legally and continuously resided in Taiwan for five years or have legally resided Taiwan for more than fifteen years during which they have resided for more than one hundred and eighty three days each year for five years, may apply for permanent residence (and the Alien Permanent Residency Certificate, or “APRC”) from the authority if they:
* (1) Are at the age of twenty and over, whereas the nationals' children are fourteen and over;
* (2) Have a decent character;
* (3) Have considerable properties, skills or talents that are enough to enable them to make a living by themselves;
* (4) Have resided in Taiwan for over 270 days each year during their legal and continuous residence in Taiwan, whereas the nationals' spouses or children have resided for over 183 days each year;
* (5) Are favorable to the national interests of Taiwan.
With the APRC, foreign employees may apply for an open work permit from the Council of Labor Affairs, and would not need to apply for work permits through their employers. However, one problem faced by those who have the APRC is that the permanent residency status is still based upon maintaining the required annual 183 days of residence within Taiwan – in other words, the status can be lost.
WORK PERMIT: I am married to a Taiwanese citizen; do I still need a work permit?
Aliens who are married to citizens of the R.O.C and who have made the necessary household registrations, are not required to apply for work permits. With the Alien Resident Certificate the foreign nationals possess the right to work in Taiwan.
WORK PERMIT: Can the new company employ other foreigners in addition to myself?
Yes. There are different purposes of hiring foreign employees, and some purpose requires some conditions to be met, for example the capital amount of the company.
WORK PERMIT: Can my company employ foreign students or interns?
Yes. There are three kinds of permission you may obtain to employ foreign students or interns: the permission from Foreign Investment Committee, student work permit from Council of Labor Affairs, and the regular work permit.
WORK PERMIT: When and how can I extend my work permit?
To extend the work permit, foreign employees can file an application to the Council of Labor Affairs within 6 month before the due date.
Article provided courtesy of Eiger Law www.eigerlaw.com
For more information, contact John Eastwood (john.eastwood@eigerlaw.com) or Nathan Kaiser (nathan.kaiser@eigerlaw.com).
