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iconEstablishing new company/branch office/firm business | iconForeign enterprises applying for TWSE/OTC/ESMT | iconInvestment on TWSE/OTC/ESM | iconPurchase of Land | iconInfrastructure projects | iconInvestment Structure Considerations

To attract investment in Taiwan, the government has actively opened the investment options and channels for foreign investors investing in Taiwan. A brief description of these investment options and channels are as follows:

Invest directly by establishing a new company/branch office/firm business

Any of the investors from all over the world who intends to develop a business and conducts activities in Taiwan, should apply to register a legal entity in the form of either a subsidiary, branch office or business firm in accordance with the related Taiwan regulations. To facilitate and promote investment, our government has simplified the application and registration procedures.

Alternatively, investors may consider participating in an existing Taiwanese enterprise or expending business activities in Taiwan by options of M&A, reinvestment and purchase of shares. In practice, there are so many factors such as tax issues, legal documents and valuation of assets will be taken into consideration while conducting M&A, reinvestment and purchase of shares. As a result, a general registration procedure can not be followed; instead, a case by case study is more appropriated or seeking for assistance or advice from professional consulting firms would be highly recommended.

For more detailed information, please click here "Introduction to Investment Registration".

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Foreign enterprises (overseas Taiwanese businesses) applying for listing on Taiwan Stock and Exchange (TWSE), Over-the-Counter(OTC) market and Emerging Stock Market in Taiwan

Due to the globalization in the capital market, and the Asia-Pacific's emerging markets are also expanding rapidly, moreover, the economic ties between Taiwan and Mainland China are developing stably. Taiwan will benefit from these facts and become a better-developed, drawing abundant capital from investors all over the world. Hopefully, Taiwan will be an enterprise's first choice for listing.

To facilitate Taiwan's capital market become more globalized, our government has made every endeavor to promote fairness, efficiency and security in Taiwan's capital market by setting up various mechanisms to encourage foreign enterprises (overseas Taiwanese businesses) to return to Taiwan and apply for listing on TWSE, OTC, and Emerging Stock Market. (Please link to the website of Taiwan Stock Exchange for more information)

We would like to share the securities trading platform with all business partners and look forward to enjoying the success together.

Methods for foreign enterprises applying for listing on TWSE
Methods Primary Listing on TWSE (Note1) Primary Listing on OTC (Note1) Secondary Listing on TWSE-Taiwan Depository Receipts (Note 2)
Restrictions on Qualifications 1.Foreign issuers that have not listed their shares on any other stock exchanges abroad applying for listing shares in Taiwan
2.Foreign Issuers have De-listed their shares overseas and applying for listing in Taiwan
Foreign issuers whose issued stock or securities representing stock are already listed for trading on an approved overseas securities market

Note 1: According to relevant provisions in the Law Governing Relations between Peoples of the Taiwan Area and the Mainland Area ("Law Governing Relations") , a foreign issuer intending to list in Taiwan shall comply with the following provisions:

  • If the foreign issuer was incorporated in mainland China, it may not seek a primary listing in Taiwan. However, it may have an offshore holding company apply for the primary listing in Taiwan.
  • If 30% or more of the shares or capital in a foreign issuer incorporated in a third jurisdiction is directly or indirectly held by mainland Chinese persons or legal entities, organizations or any other institutions from mainland China, or any shareholder with significant influence over such foreign issuer is a mainland Chinese person, or legal entities, organizations or any other institutions from mainland China, this foreign issuer is not eligible to apply for primary listing in Taiwan.

Note 2: A foreign issuer was incorporated in mainland China, it may not seek the listing of TDRs in Taiwan

Application Procedures

  • Primary Listing Applicant
  • Step 1: Apply for registration on Emerging Stock Market

    Applicant applies to the GreTai Securities Market (GTSM) for registration on Emerging Stock Market. In principle, the GTSM carries out only document review. The GTSM approves the application within 3 business days after receipt of the application documents if the applicant meets the OTC trading requirements. In addition, the GTSM will post a general description of applicant company on the GTSM website for at least five business days. At the earliest, trading on the Emerging Stock Market of the shares of the foreign enterprise can begin from the sixth business day after approval of registration on the Emerging Stock Market.

    Step 2: Apply for TWSE listing

    • Completion and submission of the Listing Application
    • Fill out the "Application for Primary Listing of Securities by Foreign Issuers" and submit the completed application with required attachments to Taiwan Securities Exchange (TWSE).

    • Examination of the Document
    • Following receipt of the application, the Administration Department of TWSE commences its examination of the application and its attachments. Moreover, depending on the needs that arise during the examination, TWSE may proceed with the following examination procedures:

      • Consult with the foreign issuer, the securities underwriter and the CPAs and request them to provide attestation to the relevant materials and to furnish further explanation.
      • Consult with the foreign issuer to retain the TWSE-appointed CPAs, lawyers and other organizations, and request them to execute an audit of the foreign issuer based on the scope of the audit as designated by the TWSE, and to submit the audit result to the TWSE.
      • Review Committee
      • The application for listing shall be submitted for deliberation by the Review Committee within six weeks after their receipt. Under certain circumstances, however, the TWSE may, based upon the review requirements or at the request of the applicant company, extend the deadline for submission to the Review Committee. Extension granted at the request of the applicant company shall be limited to a maximum period of one month.

        The TWSE shall retain outside reviewers with expertise in specific industries to give consulting opinions on specific matters. If questions arise relating to financial, accounting, or legal matters, TWSE may also retain outside financial, accounting, and/or legal professionals to give written opinions.

      • Ratification by the TWSE Board of Directors
      • After approval for listing is granted by deliberation of the Review Committee, the case shall be submitted to the Board of Directors for ratification.

      • Reporting to the Competent Authority
      • For listing application cases which the Board of Directors resolves to approve for listing, the Administration Department shall first notify foreign issuers via post mail to supplement relevant materials and shall examine the reasonableness of the foreign issuer’s responses to the listing Review Committee’s questions, after which, it shall request the lead underwriter to supplement its assessment or request for an opinion from a CPA. Thereafter, the Administration Department shall submit the securities listing contract and the review report to the Competent Authority for examination and approval. The TWSE will then issue a listing approval letter to the foreign issuer so that the foreign issuer may complete the public offering of the stock.

      Please link to the website of Taiwan Stock Exchange for more information (URL:http://www.twse.com.tw/ch/index.php)

  • Apply for Primary Listing on OTC
  • Step 1: Apply for registration on Emerging Stock Market

    Applicant applies to the GreTai Securities Market (GTSM) for registration on Emerging Stock Market. In principle, the GTSM carries out only document review. The GTSM approves the application within 3 business days after receipt of the application documents if the applicant meets the OTC trading requirements. In addition, the GTSM will post a general description of applicant company on the GTSM website for at least five business days. At the earliest, trading on the Emerging Stock Market of the shares of the foreign enterprise can begin from the sixth business day after approval of registration on the Emerging Stock Market.

    Step 2: Apply for OTC Listing

    • Completion and submission of the Listing Application
    • Fill out the "Application for Primary OTC Listing of Securities by Foreign Issuers" and submit the completed application with required attachments to the GreTai Securities Market (GTSM).

    • Examination of the Documents
    • Following receipt of the application, the Listing Examination Department of GTSM will commence an examination of the application and its attachments. Moreover, depending on the needs that arise during the examination, GTSM may proceed with the following examination procedures:

      • Consult with the foreign issuer, the recommending securities firm and the CPAs and request them to provide attestation to the relevant materials and to furnish further explanation.
      • If a material irregularity is discovered in the course of the document review which cannot be reasonably explained after examination of the working papers and other information submitted by the foreign issuer or the attesting CPA or the recommending securities firm, GTSM may designate a CPA or professional institution to undertake a targeted examination in accordance with the audit scope designated by the GTSM and to submit the results of the examination to the GTSM.
      • Review Committee for OTC Listing
      • Application for primary OTC listing filed on the first day of the current month shall be submitted for deliberation by the OTC Securities Review Committee (Review Committee) in the following month. Under certain circumstances, however, the GTSM may, based upon review requirements or at the request of the applicant company, extend the deadline for submission to the Review Committee.

      • Ratification by the GTSM Board of Directors
      • The results of the recommendation for listing by the Review Committee and the discussion and passage of the resolution for approval by the board of directors shall be recorded for each application for primary OTC listing. If the board of directors also adds supplementary resolutions, it shall notify the applicant company by post mail to supplement the required matters within a specified time period. When an application for a primary OTC listing of a stock is submitted to the board of directors and the board of directors resolves that further relevant information must be supplemented and the application must be resubmitted to the board of directors, the applicant company shall be notified by post mail to supplement the required information within a specified time period.

      • Submission to the Competent Authority for Examination and Approval
      • GTSM shall examine to ensure that the applicant company’s preliminary prospectus for public offering has been supplemented with required documents. Thereafter the Contract for OTC Trading of Securities established between The GTSM and the foreign issuer, along with the review report, may be submitted to the competent authority for examination and approval.

      Please link to the website of GreTai Securities Market for more information (URL:http://www.twse.com.tw/ch/index.php)

  • Secondary Listing Applicants for TDR
  • Step 1︰Completion and submission of the Listing Application

    A foreign issuer shall fill out the "Application for Market Listing of the Taiwan Depository Receipts" and submit with the required attachments to the Taiwan Securities Exchange(TWSE).

    Step 2︰Examination of the Documents

    Starting from the date when the application was received, the examination of the application shall be completed within 10 business days.

    Step 3︰TWSE issues a listing approval letter. The foreign issuer shall apply to the Competent Authority for public issuance within 30 days after the receipt of the approval letter.

    Please link to the website of Taiwan Stock Exchange for more information (URL:http://www.twse.com.tw/ch/index.php)

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Investment on stocks listing on TWSE (OTC Market) and Emerging Stock Market

In order to increase the level of foreign investments in Taiwan, the government has gradually relaxed several restrictions on foreign investment. Foreign investors are classified into four categories-"offshore foreign institutional investors", "offshore overseas Chinese and foreign natural persons" , "Onshore foreign institutional investors" and "onshore overseas and foreign natural persons" according to their residency and qualifications. Meanwhile, the rule on investment quotas for offshore institutional investors was removed and the review process for investment by overseas Chinese and foreign investors in domestic stocks was changed from the "permit" system to the "registration" system. The simplified application procedures have accelerated the progress of opening Taiwan’s stock market for foreign investment. According to the "Regulations Governing the Investment in Securities by Overseas Chinese and Foreign Nationals", overseas Chinese and foreign nationals investing in the Taiwan securities market are required to register with the TWSE. A brief comparison of the requirements between foreign institutional investors and overseas and foreign natural person is as follows:

Investor Category

Investor Category

Application Procedures:

  • Offshore Overseas Chinese and Foreign Nationals
  • Offshore Overseas Chinese and Foreign Nationals

  • Onshore Overseas Chinese and Foreign Nationals
  • Onshore Overseas Chinese and Foreign Nationals

    Please link to the website of Taiwan Stock Exchange for more information (URL:http://www.twse.com.tw/ch/index.php)

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Purchase of Land

Foreign investors planning to invest in real estate in Taiwan must first meet the" Reciprocity Principle" qualification. Secondly, foreign nationals acquiring land for personal use, investment, or public welfare purposes, and for the usages specified below, may file an application to the local land registration offices directly, without securing prior approvals from the competent authorities of central government.

  • Residences
  • Business sites, offices, shops, factories
  • Churches
  • Hospitals
  • Schools for children of foreigners residing in Taiwan
  • Embassies or consulates, public welfare institutions offices
  • Cemeteries
  • For an inquiry of the " List of Reciprocal Nations for Foreigners Acquiring Land in Taiwain, R.O.C.", please link to the website of the Department of Land Administration, M.O.I.(URL:http://www.land.moi.gov.tw/).

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Participate in infrastructure projects

In order to increase the quality of public service, expedite social economic development and encourage private participation in infrastructure projects, the government offers relevant tax incentives to private institutions participating in infrastructure projects as a reward for their contributions to the overall infrastructure in the country. The procedures for participating in infrastructure projects are described as follows:

  • The authority in charge makes public announcement of the operational plans of the infrastructure projects and the qualifications of the applicants and relevant matters to invite private participation. Applicants should prepare qualification documents and apply to the authority in charge before the deadline.
  • The authority in charge shall establish a Selection Committee to review applications. The Selection Committee evaluates the applicants based on the information submitted.
  • The applicant evaluated as the best applicant shall organize relevant matters and complete the procedures of signing the investment contract with the authority in charge within a specified timeframe.
  • The applicant establishes a company and works with private institutions to advocate and execute the construction and operation of the infrastructure project, in accordance with the joint-venture contract of the authority in charge with the applicant
  • For more information, please link to the website of the Public Construction Commission, Executive Yuan (URL:http://www.pcc.gov.tw/cht/index.php?)

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Investment Structure Considerations

Capital vs. Loans

    Capital Contributions

    Capital contributed by foreign investors should be approved by the Investment Commission of the Ministry of Economic Affairs (MOEA) in advance. Dividend income received by foreign investors is subject to a 20% withholding tax if the investment is approved by the Investment Commission.

    Shareholder Loans

    A profit-seeking enterprise can be financed by shareholder loans. The interest paid on the loans may be deducted by the Taiwan enterprise, provided the interest rate does not exceed the market rate and the creditor’s name and address are stated in the account book. Interest paid to foreign lenders is subject to a 20% withholding tax, unless the rate is reduced under an applicable tax treaty.

    Treaty Utilization

    Taiwan’s tax treaties typically reduce the withholding tax on dividends, interest and royalties from the normal 30%, 25% and 20% to 10% or 15%.

Source of Equipment

    Purchase

    A profit-seeking enterprise can purchase equipment for its business. Equipment purchased will be recorded as a fixed asset at its acquisition cost and depreciated over its service life. When calculating the depreciation, unless the assets qualify for government incentives the depreciation period cannot be shorter than the period in the fixed assets table. The profit-seeking enterprise can claim depreciation expenses on its income tax returns.

    Capital Contributions

    An equipment owner can contribute equipment as capital to a profit-seeking enterprise and become a shareholder thereby. Thus, foreign investors can contribute cash, property, automated machinery or raw materials, trademark rights, property rights, patents, specialized skills and other intellectual property rights to a Taiwan profit-seeking enterprise as capital. However, this type of foreign investment must be approved by the Investment Commission of the MOEA.

    Lease

    A lease of equipment by a Taiwan profit-seeking enterprise that meets one of the following criteria is considered a capital lease:

    • The lease unconditionally transfers ownership of the equipment to the lessee at the end of the lease term.
    • The lease contains a bargain purchase option.
    • The lease term is equal to 75% or more of the prescribed service life of the leased equipment.
    • The current value of the lease calculated on the basis of the total rental and bargain purchase paid at the start of the lease term is 90% or more of the book value of the leased equipment

    In a capital lease, the lessee must record the equipment as a fixed asset, and the depreciation and interest expenses resulting from the lease are deductible expenses.

    An equipment lease that does not meet the above criteria is an operating lease. Under an operating lease, the lessee will not record the equipment as a fixed asset and, accordingly, will not recognize depreciation. However, rent paid to the lessor is deductible by the lessee.

Intellectual Property/Know-how

    Capital Contribution

    An owner of intellectual property can contribute intellectual property or know-how as capital to a company and thus become a shareholder. Any excess of shares obtained by the shareholder over the cost of the intellectual property is subject to income tax.

    License

    A profit-seeking enterprise whose head office is outside Taiwan can license its intellectual property in Taiwan and charge license fees or royalties. The license fees or royalties will be subject to a 20% withholding tax. If a competent authority’s approval is obtained, the license fees, royalties or special rights received by the foreign profit-seeking enterprise are exempt from income tax. The withholding tax rate also may be reduced under an applicable tax treaty.

Technical Services

A foreign enterprise can provide technical support to its Taiwan entity in exchange for service fees. Although the fees are normally subject to a 20% withholding tax, the foreign enterprise may apply to the NTA for review as to whether the fees qualify as technical service fees. With NTA approval, 15% of the gross technical service fees are deemed to be the foreign enterprise’s taxable profit, subject to withholding tax at 25%. This reduces the effective withholding tax on gross technical service fees from 20% to 3.75% (15% deemed profit x 25% withholding tax rate).

Allocation of General and Administrative Expenses

A foreign enterprise can allocate general and administrative expenses to its Taiwan branch. If the following conditions are satisfied, the allocated general and administrative expenses are tax deductible for the branch, and not taxable for the foreign head office:

  • Where the foreign head office does not engage in active business activities itself (i.e. non-operational) but does so through subordinate business units, the head office’s administrative (non-operational) expenses can be allocated among its operating business units and branches.
  • Where the branch does not include the allocated administrative expenses in the cost of purchases from the head office, or pay interest or rent on funds or other property provided by the head office

The allocated general and administrative expenses may not exceed a set ceiling calculated as a percentage of each branch’s operating revenue to the head office’s total operating revenue. Individuals with special situations must apply for approval from a competent authority and use a reasonable allocation method. The allocated general and administrative expenses can be supported by a statement of general and administrative expense allocation and the financial statements of the head office. These supporting documents should be certified by a certified public accountant and authenticated by a Taiwan government representative in the country where the head office is located or by the relevant foreign tax authorities.

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( 2012/08/31 Update )

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Invest in Taiwan
Department of Investment Services

8th Fl., 71 Guanqian Rd., Taipei 100-47, Taiwan, R.O.C.
Tel : +886-2-23892111 - Fax : +886-2-23820497/8 Hot Line : +886-2-23914950 ( Investment Information )