As a member of international organizations such as the WTO and APEC, Taiwan offers a high level of economic freedom and provides protection for property rights in accordance with international standards. According to the "2021 Index of Economic Freedom" published by the U.S. Heritage Foundation, Taiwan ranked 6th among the 184 economies across the world, its best results in the 27 years since first publication of the index. Taiwan has made significant improvements in "government integrity", which shows that Taiwan's government has received recognition of the international community for the results of the free and open economy, an ethical and able government, and improved legal system.
Taiwan offers a competitive investment environment with a national tax rate lower than Japan, South Korea, and most advanced Western countries. The profit-seeking enterprise income tax rate was adjusted to 20% starting from 2018. The government provides suitable tax incentives based on industry policies and the effective tax rate is only 13%-14%. Taiwan has actively signed income tax agreements with other countries to resolve the issue of double taxation when companies engage in cross-border investments and trade activities. Taiwan has signed 34 comprehensive tax agreements that have been brought into force and an additional 13 individual agreements for mutual exemption of income tax on income from international transportation by sea, air, or both.
As of August 2021, Taiwan ranked 5th in the world in terms of foreign reserve (US$543.578 billion) and retains robust net asset positions. In July 2021, the average non-performing loans ratio of domestic banks was 0.21%, which was well below the reasonable limit of 2%. In the first quarter of 2021, the average capital adequacy ratio of domestic banks was 14.77%, which was higher than the reasonable minimum requirement of 8% and demonstrated sound repayment capacity.
Taiwan retains an immense current account surplus that can absorb the impact of the outflow of capital and reduce risks of confidence crises. The economic decline has given birth to the next wave of growth. Taiwan's economy is relatively healthier than other emerging countries and its banking system has abundant funds. Coupled with the reconciliation between China and Taiwan, new momentum for growth is expected after short-term corrections in the economy.
Taiwan's advantages in innovation and manufacturing and the expansion of Taiwanese businesses'''''''' supply chain in Asia makes it a platform for multinational corporations to enter Mainland China and emerging Asia-Pacific markets, and from there, expand across the globe. The following advantages have helped Taiwan become a financing center in Asia Pacific:
For more information, please refer to the websites of the Banking Bureau and Securities and Futures Bureau of the Financial Supervisory Commission, Taiwan Stock Exchange Corporation (TWSE), Taxation Administration, Ministry of Finance, and the Central Bank.
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