Foreign entrepreneurs in Taiwan say the environment here is conducive to doing business, with the costs of operating a company quite low and regulations reasonably clear. Hu of Universal Law said that while accountants or lawyers could take care of most of the bureaucratic burden, foreigners, just like any entrepreneurs anywhere, had to think clearly about what they were doing before embarking on starting a company.
"The registration part is quite straightforward," she said. "The important thing is that you have a plan for your business, how much money you will need and what the key issue will be to make your company succeed."
Some sectors of the economy are off-limits to foreigners, either because they are sensitive, dangerous or protected. Foreigners may not invest, for example, in companies related to the production of various kinds of chemicals, the postal service, certain agricultural products, radio and television broadcasting, and various kinds of military equipment.
As for the tax issue, companies basically have to pay 25 percent tax on profit every year and a 5 percent sales tax every two months, said Ann Hu. Deductibles are quite clear, and there's not much you can deduct from your taxes anyway.
Tips on getting your own business started
* Many companies choose the same route as Titoma, by setting up a holding company overseas, usually a PO Box address in Hong Kong or a tax haven, and then creating a branch of the company in Taiwan. The company must apply to the Ministry of Economic Affairs' Department of Commerce for a Chinese name, company licence and an operating licence, thereby obtaining an identification card for the company.
* The next step is to find a location for the company that complies with zoning laws, and apply to the local government for a permit to set up operations there. Another way is to set up a "subsidiary," which, despite the name, can mean creating a new company totally unrelated to any existing company overseas.
* There are two kinds of "subsidiary": a company limited by shares, similar to a corporation in the US, and a limited company, otherwise known as a limited liability company.
* The minimum investment required for a company limited by shares is NT$1 million, and for a limited company it is NT$500,000.
* While a limited company has lower minimum investment requirements, some decisions need to be made unanimously by shareholders and the company can't go public. Setting up a "subsidiary," unlike a branch, requires approval of the MOEA's Investment Commission, which wants to know what kind of business it is, how much is being invested, and where the money's from.
* Depending on how much business the company does overseas, a branch company may be able to avoid some taxes that "subsidiaries" have to pay, but they are prevented from doing things, like owning real estate. Foreigners can also set up representative offices in Taiwan for companies based overseas, but as the name suggests, its functions are restricted, mainly to functions such as collecting orders.
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