Taiwan Business Entity Formation | U.S. Taxpayers & FATCA – International Tax Lawyers
The country of Taiwan is actively promoting foreign investment. In fact, the Taiwanese government itself has made it very easy for individuals to build business in Taiwan by easing the requirements for forming a Taiwanese company, which can now be handled entirely online.
Operating in Taiwan can be a great benefit to foreign investors. Unlike United States that has a 34% or 35% corporate tax rate, in Taiwan, the corporate tax rate is only 17%. Even for foreign investors from the United States, if the company is structure properly there can be a limited amount of tax liability for operations stemming from Taiwan.
The following is a summary of business entity formation in Taiwan:
There are basically four different types of four business structures that can be formed in Taiwan. They include an Unlimited Company, Unlimited Company with Limited Liability Shareholders, Limited Companies, and Companies Limited By Shares.
An Unlimited Company in Taiwan is not the preferred method for foreign investors. As indicated by the name itself, a limited company means that the owners of the company will be joint and severally liable for the obligations, debts and liabilities for the company. Any other benefits of having a limited company in Taiwan would be far outweighed by the unlimited liability aspect of the business — especially for the foreign investor.
A Limited Company is a much more common option, when there must be at least one shareholder and one Director The limited company is governed by the Company act in Taiwan which sets forth the specific rules of managing and overseeing the operations of the company. There is no minimum funding requirement and there are certain tax restrictions when funds are distributed by the company to the foreign investor. A foreign person or for a company can own shares of a limited company, but first must obtain approval from Investment Commission of the Ministry of Economic Affairs (MOEA) in order to be come aForeign Investment Approved (FIA) company.
This that the company is one of the more common types of company structures used in Taiwan. For the most part, owners of the shares are only liable to the amount of their investment – although due to law modifications back in 2013 serious circumstances may result in “piercing the corporate veil” similar to how the United States corporate law works. In Taiwan, a company limited by shares is the only type of company that may go public and there are certain restrictions and formalities above and beyond the other types of business structures.