Tuesday, June 3, 2014

Company Registration Process in Taiwan

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S & F CONSULTING FIRM LIMITED is an international business/ company registration consultancy firm.
Foreign Company Registration (100% Foreign Investment, Joint Venture, Virtual/ Branch/ Liason Office, Foundation), Taxation, Accounts & Audit, Legal, Company Secretarial & Management Consultancy.
Company Registration/ Formation/ incorporation in Taiwan, Foreign Direct Investment in Taiwan-FDI, FDI in Taiwan, Doing Business in Taiwan
Branch Office Registration in Taiwan
Lease of Office Space
Firstly, the parent company will have to enter into a tenancy agreement in relation to the office space to be used by the branch office. The office must be located in a commercial building.

Legalisation of Identity Documents of the Head Office>
The parent company is also required to arrange to have the identity documents, such as Certificate of incorporation and Articles of incorporation and bylaws (including all amendments to-date) of the parent company legalised by the Taiwan Embassy in the country where the parent company is registered.

Legalization of Board Minutes and Power
The parent company is also required to issue and have the Board Minutes, Power of Attorney appointing the company’s litigious and non-litigious agent and Power of Attorney appointing the branch manager legalised by the Taiwan Embassy in the country where the parent company is registered.

Other Documentation
The parent company at the same time needs to prepare other documents, such as photocopy of passports and address proof of the Agent and Manager.

Application for Registration of the Branch
(1) Name Search and Reservation

The registration process of a branch starts with name availability search. The name of the branch should follow the format:
Country name of the parent company + Name of Country where the parent company is registered + Taiwan Branch Office

Examination and Approval
As for the timing of approval, Ministry Of Economic Affairs is required to make its decision within 10 workings days from receipt of all the documentation.

Opening bank account and capital verification
Once obtaining the approval from Ministry Of Economic Affairs, the person in charge of the branch is required to visit Taiwan for the purpose of account opening.

Application for Business Registration License
Immediate after the head office remitted the operating funds to the bank account of the branch office in Taiwan, we will then submit the application for registration of the branch office to local government for registration.

In one to seven days, as the case maybe, the local government will issue the branch registration certificate and it is at this date of issue that the branch office is regarded as officially registered.

Post-registration Procedures
Once after the branch office is officially registered, it is required to perform the following procedures so as to enable it to commence business:
(1) Registration and Purchase of Official Tax Invoices

The branch office is required to apply to be registered with the State Tax Bureau and then it could purchase official tax invoices from the State Tax Bureau.

(2) Foreign Trade Registration
The branch office is also required to be registered with the Bureau of Foreign Trade so as to enable it to carry out import and export activities.

(3) Application for Approval and Carving of Company Seals Finally, we will arrange to make the chop and seal of the branch with authorised manufacturer.

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.

Foreign Trade Registration
The branch office is also required to be registered with the Bureau of Foreign Trade so as to enable it to carry out import and export activities.

Legalisation Costs
Our fees quoted above do not cover the costs for the legalisation of relevant documents as required by Taiwan Government for the sole purpose of registration of the branch office. If the company applying to set up the branch in Taiwan is a Hong Kong company, we can assist you to arrange the legalization at USD1,000.

Official Filing Fees
Our service fees stated in Section 4.1 above also does not cover any official registration filing fees. The official registration filing fees is around USD70.

Required Documents
The following documents and materials needed to be prepared by the application before submitting an application for registration:
(1) One set of identification documents of the head office (i.e. Certificate of Incorporation and/or Registration Certificate and Articles of incorporation and bylaws ) duly legalized by the Taiwan Embassy or Consulate in the country where the parent company is registered.
(2) The Board Minutes authorising the establishment of the branch office duly legalised by the Taiwan Embassy or Consulate in the country where the head office is registered;
(3) A copy of Power of Attorney appointing the company’s litigious and non-litigious agent duly legalised by the Taiwan Embassy or Consulate in the country where the parent company is registered;
(4) A copy of Power of Attorney appointing the branch manager duly legalised by the Taiwan Embassy or Consulate in the country where the parent company is registered;
(5) The original Tenancy Agreement of the office to be used by the proposed branch and an agreement evidencing the consent granted by the landlord as to the use of the office property;
(6) A photocopy of Property Duty- pay tax receipt and a copy of property ownership certificate;
(7) A copy of the passport and address proof of the litigious and non-litigious agent;
(8) A copy of passport and address proof of the manager;
(9) The Chinese name of the proposed branch;
(10) The amount of investment intended for the branch office;
(11) A brief description of business scope of the branch (or that of the head office);

Limited by share/ Subsidiary
In order to establish a corporation in Taiwan, the foreign investor(s) should obtain approval under the Statute for Investment by Foreign Nationals ("SIFN"). A company established under SIFN is usually referred to as a Foreign-Investment-Approved ("FIA") company. Certain industries are prohibited or restricted from foreign investment under SIFN. The prohibited industries are those which (1) may negatively affect national security, public order, good custom, or national health; and (2) are prohibited by laws and regulations. The application for investment in a restricted industry is subjected to the special approval of the competent authority in charge of such industry.

Minimum Registered Capital
A company limited by shares must have a minimum registered capital of NT$1,000,000. A limited liability company must have a minimum registered capital of NT$1. Indeed, the Taiwan Government has already abolished the requirement on registered capital in respect to the registration of limited liability company (LLC).

Shareholders, Directors and Supervisors
A company limited by shares must have at least two shareholders, three directors and one supervisor. A limited liability company must have at least one shareholder and one director. Under SIFN, the nationality and domicile requirements do not apply to an FIA company.

The directors are elected and appointed by the shareholders. One of the directors should then be elected as Chairman of the board of directors and has the power to represent the company externally. Note very carefully that under the law, the Chairman is the legal representative of the Company.

The supervisor represents the shareholders to supervise the performance of directors andmanagement. The supervisor may also audit the books of accounts of the company. The supervisor is elected and appointed by shareholders. The supervisor could not serve as a director, managerial officer or other employee of the company at the same time. At least one of the supervisors must be a resident in Taiwan.

Increase in Capital
When a company limited by shares increases its capital in cash, it is required to provide 10% to 15% of the new shares to employees for subscription. If the employees reject such offer, then those shares may be issued to any other person or entity (including the parent company).

However, this requirement of offering shares to employees does not apply to an FIA Company if the foreign investor(s) owns 45% or more of the capital.

Benefits available to Foreign Investors
The prevailing Taiwanese laws and regulations require a foreign investor to obtain FIA for investment into an Taiwan company. FIA does, however, provide certain benefits both to the foreign investor and to the foreign invested company. (1) Reduced withholding tax rate - The withholding tax rate on dividends paid by an FIA company to its foreign non-resident shareholders is reduced to 20% from 30%.
(2) Repatriation of capital and dividends - An FIA company may repatriate its capital and dividends to foreign shareholders regardless of the US$5,000,000 ceiling.
(3) Other tax incentives - An FIA company may be eligible for certain tax incentives under the Statute for Upgrading Industries.

Normally, registering an FIA company takes about four to eight weeks provided that all required documents are complete and submitted on a timely basis. If the FIA company is to be engaged in certain prescribed industries and special approval or permit is required, additional four to ten weeks may be needed to obtain the special license.

Tax on Profit Retained and Distributed
When the company retains its profits and does not distribute to its shareholders, it is liable to pay an additional 10% income tax on the undistributed profits. When the profit is distributed to the foreign shareholders, a withholding tax at the rate 20% will be charged on the dividends, but the relevant 10% income tax previously paid on the undistributed profits can be deducted as a tax credit.

Fees: Lower cost/ Fees/ Charge
Email us: contact@sfconsultingbd.com
Taipei, Taiwan