The three vehicles
A foreign company can establish in Taiwan as a representative office, as a branch of the foreign company, or as a subsidiary incorporated under Taiwanese company law.
A representative office may perform legal acts and liaison activities. It may not trade. Companies regularly discover this after choosing it for speed.
A branch may conduct general trading, domestic sales and manufacturing. It is not a separate legal person, so the foreign head office remains liable for anything the branch leaves unsettled.
A subsidiary is a separate legal entity with the liability shield that implies, and the compliance overhead that comes with it.
The tax difference that decides it
Corporate income tax is 20 per cent, and business tax — Taiwan’s value-added tax — is 5 per cent. Those apply either way.
The difference that matters is retained earnings. A 5 per cent profit retention tax is charged on current earnings that remain undistributed by the end of the following year. Taiwan branches of foreign companies are not subject to it.
For a business that intends to repatriate rather than accumulate, that single line often decides the structure.
Your company needs a Chinese name, first
Before anything else, the Chinese company name and business scope are pre-reviewed and reserved with the Ministry of Economic Affairs. This is the first step in the sequence, not an afterthought, and the name you want may not be available.
Foreign investment approval is then sought from the Department of Investment Review at the Ministry of Economic Affairs, on Roosevelt Road in Taipei.
The sequence
Name and business scope reserved. Foreign investment approval obtained. A bank account opened in the name of the preparatory office. Capital remitted in foreign currency and converted. Capital verification filed. Company registration completed.
Taiwan has abolished the general minimum capital requirement: outside certain regulated industries, capital need only be sufficient to cover reasonably expected costs. Capital adequacy is a commercial judgement rather than a statutory threshold.
If you are locating in a science park
Companies located in the Hsinchu, Central Taiwan or Southern Taiwan science parks register with the Science Park Bureau rather than the city government. It is a different counterparty with different expectations, and assuming the standard municipal route wastes weeks.
Two kinds of subsidiary
A subsidiary is incorporated either as a company limited by shares or as a limited company. The choice is not cosmetic: it governs how shares transfer, how the board is constituted, and how much process sits between a shareholder decision and its execution.
A limited company is the lighter vehicle and suits a wholly-owned operation with a single foreign parent. A company limited by shares carries more formality and is the one to choose if you expect outside investors, a local joint-venture partner or an eventual sale of part of the business. Converting later is possible and tedious; choosing correctly at registration costs nothing.
What leaves Taiwan is taxed on the way out
Profit that stays in Taiwan meets the 20 per cent corporate rate. Money that leaves meets a second charge, and the rate depends on what you call it.
Absent treaty relief, dividends are withheld at 21 per cent, interest at 15 or 20 per cent, royalties at 0 or 20 per cent, and service fees generally at 20 per cent. Those are material numbers on an intercompany flow, and they are regularly modelled at zero by finance teams who assumed Taiwan behaves like the last market they entered.
There is relief worth knowing about. Where a foreign company supplies technical services, a deemed profit rate of 15 per cent can be applied, which reduces the effective withholding on that income to roughly 3 per cent. It requires an application rather than an assumption, and it is the largest structural saving available on a services flow.
Losses carry forward ten years
Taiwan allows trading losses to be carried forward for ten years. For a market-entry operation, which is usually loss-making while it builds distribution, this is the provision that makes an early entity survivable rather than merely expensive.
It also changes the argument about when to incorporate. Costs incurred inside an entity that will eventually be profitable are not wasted — they shelter later income. Costs absorbed by the parent generally are.
Staff, permits and what people cost
A foreign professional working in Taiwan needs a work permit under the Employment Service Act and an Alien Resident Certificate. Neither is automatic, and both attach to the employing entity — which is one of the few genuine reasons a first-year entity earns its overhead.
For budgeting: average monthly regular earnings across Taiwan were TWD 48,400 in December 2025, and unemployment was 3.29 per cent in January 2026. A modest headline wage in a tight labour market is a combination that catches people out — the salary is affordable, the competition for anyone good is not.
The honest answer for most first entries
Most companies do not need an entity to begin selling in Taiwan. Import, product registration, distribution and even retail listing can run through a distributor or a neutral importer of record.
The moment to incorporate is when you need to hold your own licences, employ your own staff, or take direct control of channel relationships — which is usually after the market is proven, not before.
Common questions
Do we need a Taiwanese entity to start selling?
Usually not. Import, registration and distribution can be handled through a distributor or a neutral importer of record. Incorporation earns its overhead once you need your own licences, staff or direct channel control.
Branch or subsidiary?
A branch escapes the 5 per cent profit retention tax charged on a subsidiary’s undistributed earnings, but leaves the foreign head office liable for the branch’s obligations. A subsidiary gives separation at the cost of that tax and more compliance.
Can a representative office sell?
No. A representative office is limited to legal acts and liaison activities.
Is there a minimum capital requirement?
Taiwan has cancelled the general minimum. Outside certain industries, capital must simply be sufficient to cover reasonably expected costs.
What withholding applies when we send money home?
Absent treaty relief, dividends are withheld at 21 per cent, interest at 15 or 20 per cent, royalties at 0 or 20 per cent and service fees generally at 20 per cent. Technical service income can qualify for a 15 per cent deemed profit rate, cutting the effective withholding to roughly 3 per cent.
How long can we carry losses forward?
Ten years. For an entry operation that is loss-making while it builds distribution, that is often what makes incorporating early defensible.
Can we employ a foreign manager in Taiwan?
Yes, with a work permit under the Employment Service Act and an Alien Resident Certificate. Both attach to the employing entity, which is one of the clearest reasons to incorporate.
Company limited by shares, or limited company?
A limited company is lighter and suits a wholly-owned operation. A company limited by shares carries more formality and is the right vehicle if you expect outside investors, a joint-venture partner or a future partial sale.