Table of Contents
- Introduction and Functions of Foreign Investment Office in Taiwan
- What tax burden does the office have?
- The procedure of setting up an office in Taiwan
- Notes for the operation of foreign offices Q&A
Introduction and Functions of Foreign Investment Office in Taiwan
- Foreign-funded enterprises come to Taiwan to set up companies, in addition to setting up subsidiaries and branches, they can also set up the office. For foreign companies to set up an office in Taiwan, the law is Article 386 of the Company Law. The legal action taken by the office in Taiwan is to “report” to the Ministry of Economic Affairs and cannot conduct business activities. If a foreign company does not intend to set up a branch in Taiwan for business, they can apply for Office registration. The scope of its business activities is limited to contract signing, quotation, negotiation, bidding, procurement, market research, and research activities in Taiwan.
- The office establishment in Taiwan can be divided into overseas Chinese and foreign investment offices according to the type of parent company. Generally, overseas Chinese and foreign investment offices do not have special requirements for the parent company. However, if a Chinese company applies to establish an office in Taiwan, except those special regulations that meet; its parent company shall meet the following regulations:
- Established for more than three years.
- The minimum paid-in capital is equivalent to more than NT$6 million.
- The company’s business must meet at least one project that meets the requirements of Chinese people’s investment in Taiwan before applying.
What tax burden does the office have?
- In addition to local market development factors for foreign investment in setting up business offices, “tax” should also be a key consideration. Since the office cannot engage in business activities, only expenses, and no income, naturally there is no taxation problem. A liaison office established by a foreign-funded profit-making enterprise in my country to handle the procurement business for its head office may be exempted from business registration if it has no external business. Purchasing expenses remitted by its foreign headquarters are not within the scope of the business tax levy and are exempt from profit-making business income tax.
The procedure of setting up an office in Taiwan
- The establishment of an office in Taiwan by foreign investors cannot do business. They can only promote business and sign contracts on behalf of foreign companies… Therefore, the establishment process is relatively simplified compared to the establishment of subsidiaries and branches. The basic procedures are as follows:
- Head office document verification.
- Head office approval, office filing.
- Bank account opening.
- Certificate application.
Notes for the operation of foreign offices Q&A
Q: Can I apply for an office in Taiwan to hire employees to pay salaries?
A: The office is a cost center. The foreign head office can remit operating funds and use the operating funds to pay for office expenses/salaries.
Q: What should the office pay attention to in taxation?
A: Please pay attention to the following things:
- Do not use the Chinese name of the office for legal actions. Legal actions must be presented in both Chinese and English.
- Do not use the Taiwan bank account of the office to charge Taiwan dollars, it may be considered as income and there will be underreporting problems.
Q: Can the office do business?
A: No. You can just negotiate business development, after the negotiation is completed, the contract must be signed with the parent company, and the office cannot collect any payment or make any payment on behalf of the company.