Firm Profile > Lee and Li, Attorneys-at-Law > Taipei, Taiwan

Lee and Li, Attorneys-at-Law
8F, NO. 555, SEC. 4, ZHONGXIAO E. RD.
TAIPEI 11072

Banking and finance Tier 2

Lee and Li, Attorneys-at-Law's practice covers syndication lending, project financing, aircraft financing, ship financing, derivatives, factoring, distressed assets management, consumer banking and regulatory compliance. Clients include leading domestic and international banks, securities firms, insurance companies and other financial institutions.

Capital markets Tier 2

Lee and Li, Attorneys-at-Law's team has represented clients in landmark cases including the first issuance of American depositary receipts and Euro convertible bonds by Taiwanese companies, the first asset-backed securitisation of residential mortgage loans, the first cross-border securitisation of cash card and auto-loan receivables, and the privatisations of Chunghwa Telecom and China Steel. It also advises the government on laws, policies, standards and guidelines.

Corporate and M&A Tier 2

Lee and Li, Attorneys-at-Law represents both domestic and international clients in a range of corporate and investment work, including mergers and acquisitions for both financial and other institutions. Clients include foreign and domestic banks, investment banks, securities companies, insurance companies, securities investment trust companies, securities investment consulting companies and other financial institutions, as well as central and local government departments at all levels.

Insurance Tier 2

Lee and Li, Attorneys-at-Law's work in this area covers insurance claim handling, development of and filing applications for new insurance products, insurance sector M&A transactions, application procedures for incorporating insurance companies, acting as a claim agent to handle outstanding claims for insurance companies that are to be liquidated, and general insurance advice. Clients include AXA and Zurich.

Intellectual property Tier 2

The IP team at Lee and Li, Attorneys-at-Law provides a full range of trademark services, from acquisition, maintenance and dispute resolution to trademark exploitation. Patent prosecution and maintenance is another area of expertise, in Taiwan as well as in China, the US, Europe, Japan and Korea.

Labour and employment Tier 2

Lee and Li, Attorneys-at-Law advises on a range of labour issues for both local and international clients. The team frequently represent clients in negotiations, mediation and litigation with employees and unions.

Projects and energy Tier 2

Lee and Li, Attorneys-at-Law has extensive experience in handling energy and other infrastructure projects in Taiwan. Clients include Star Energy Power Corporation, Sun Bar Power Corporation, Hei Hu Power Plant and Chiahui Power Corporation.

Real estate and construction Tier 2

The team at Lee and Li, Attorneys-at-Law provides a full range of real estate and construction services, including commercial sales and purchases, advice on zoning and construction issues, and dispute resolution. Clients include multinational enterprises and domestic companies in virtually all business sectors, from warehouses to government agencies.

Tax Tier 2

Lee and Li, Attorneys-at-Law's tax team advises on dispute resolution, general tax matters, tax aspects of  M&A, preferential tax treatment and transfer pricing. The lawyers are licensed in and Taiwan and several overseas jurisdictions.

Dispute resolution Tier 3

Lawyers at Lee and Li, Attorneys-at-Law advise and represent clients in a range of disputes, including civil, criminal, public law, patents, constitutional litigation, administrative litigation, cross-border litigation, arbitration and ADR, and civil and administrative enforcement. They also work with with domestic and foreign law firms to manage and co-ordinate multi-jurisdictional actions.

TMT Tier 3

Lee and Li, Attorneys-at-Law's practice includes a wide range of areas, from regulatory aspects to M&A in the industry. The firm assists clients in obtaining special licences or permits, and advises them on regulatory compliance issues and business operations, antitrust reviews, market competition issues, fair trade practices, and contract matters relating to the telecom and media industries.

The firm

The history of Lee and Li can be traced back to the 1940s. Mr. James Lee, one of the two founders, began his practice with two U.S. attorneys during that period in Shanghai. The other founding partner, Dr. C. N. Li, also practiced in Shanghai at that time. Both of them specialized in transnational legal matters.

Mr. James Lee established his own firm in Taipei in 1953 and was later joined by Dr. C. N. Li in 1965, henceforth laying the foundations of Lee and Li. Mr. James Lee passed away in 1970. Subsequently, with an eye toward sustainable operations, Dr. C. N. Li renamed the firm Lee and Li. The firm had around 30 employees at that time and focused mostly on transnational legal matters and intellectual property right issues.

In 2015, Lee and Li enters its 50th year as the largest law firm in Taiwan owing to the solid foundation laid at the beginning. The firm is known for expertise in all legal fields and offers a full range of services. We have been steadfast in our commitment to the quality of services to clients and the country. To sustain its tradition of excellence and build on the competitive edge for which the firm is renowned, in 2004, an initiative was made to streamline the firm’s organization and management. On January 1, 2005, Dr. C. V. Chen was elected the Chairman and Chief Executive Officer, and Kwan-Tao Li was elected the Chief Senior Counselor. In 2008, Dr. C. V. Chen continued to serve as the Chairman and Nigel N. T. Li was elected the Chief Executive Officer. Kwan-Tao Li retired on January 1, 2009 and was appointed the Chief Of Counsel. The number of Lee and Li’s staff has increased since then. With expertise covering all professional areas and building on the foundations laid down over decades, the firm has been steadfast in its commitment to provide quality services to clients and the country.

Areas of practice

Lee and Li is a full-service law firm and understands the need to diversify and specialize. In response to the rapid developments in trade and technology and to satisfy the needs of our clients, we are constantly refining and expanding our practice areas. Over the decades, we have built one of the largest intellectual property right practices in Taiwan, and have been involved in the phenomenal growth of foreign direct investment since 1970s. We were a pioneer in developing banking and capital market practice in the 1980s, and played a pivotal role in the formation of technology law practice in the 1990s. We are also active in public construction, government procurement and merger and acquisition. We stay relevant by staying current on the latest developments in every industry and apply our legal skills to help clients achieve their business goals.

Constant improvement, teamwork and specialization enable us to provide quality services. We restructured our resources and formed practice groups, which span the five departments of the firm, i.e., banking and capital markets, corporate and investment, trademark and copyright, patent and technology and litigation and ADR. Our professionals are placed in the groups in accordance with their expertise and interests (please log onto our website for further details). We believe that the practice groups match the clients with the appropriate specialists and ensure both efficiency and specialization.

In addition to the vertical integration achieved through practice groups, we also formed cross-department, cross-specialty special task forces (“STF”) dealing with mainland Chinese and Japanese markets and dispute prevention and settlement (i.e., P.R.C. Practice STF, Japan Practice STF and Dispute Resolution STF). We integrated resources horizontally to further enhance the quality of our service.

Our services are performed by over 100 lawyers admitted in Taiwan, patent agents, patent attorneys, trademark attorneys, more than 100 technology experts, and specialists in other fields. In order to provide services related to law or intellectual property right issues, most of our professionals have degrees in law, technology and/or business management in Taiwan or from abroad. Many of our colleagues are licensed to practice law in the United States, and some have also passed the bar exam in the People’s Republic of China or are licensed patent attorneys in the United States and the People’s Republic of China.

Department Name Email Telephone
Banking and Finance Robin Chang
Capital Markets (Including Securities and Privatization) Patricia Lin
Insurance Hsin-Lan Hsu
Corporate and Investment Lihuei Mao
Mergers and Acquisitions - Non-Financial Institutions Ken-Ying Tseng
Mergers and Acquisitions - Financial Institutions Grace Wang
Tax Frank Lin
Labor Lawrence Yu
Food & Medical Jill Niu
Competition Laws Stephen Wu
Real Estate and Construction Yi-Jiun Su
Government Contracts Jack Y. Twu
Telecommunications and Media Patrick Marros Chu
Personal Data Protection Ken-Ying Tseng
Environmental Law Wei-Sung Hsiao
International Trade Doris Lin
Civil Dispute Resolution Sylvia Huang
Criminal Dispute Representation and Defense Jack Chih-Ke Wu
Public Law Dispute Resolution Kevin Liu
Patent Enforcement, Trade Secret Protection And Dispute Resolution Gloria Lu
Patent Prosecution and Maintenance Chia-Hsing Lin
Patent Drafting and Global Patent Protection Daisy Wang
Patent Search, Patent Validity And Infringement Assessment Chia-Hsing Lin
Trademark Arthur Li
Copyrights Enforcement, Maintenance and Dispute Resolution Cathy C. W. Ting
Trademark Dispute Resolution Ruey-Sen Tsai
Multinational Trademark/Copyright Protection (including Dispute Resolution) Joseph S. Yang






理律是全方位的法律服務機構,更是積極落實專業分工的法律服務機構。因應全球快速的經貿及科技發展及變動,理律提供之專業服務領域不斷精進、擴展,以切合客戶所需。無論是理律已發展累積數十年之久的智慧財產權業務,或是理律自1970年代起所處理的外人投資業務、1980年代所引進的金融與資本巿場服務、1990年代所推動的科技法律服務,乃至公共工程與政府採購以及企業併購法律業務,理律均掌握最新的產業趨勢與法律動態,以融合客戶經營管理觀念創新突破。理律長期在各專業領域不斷精進與團隊兼顧分工暨整合,是理律得以為客戶提供高品質服務的核心因素。在金融暨資本巿場、公司投資、商標著作權、專利暨科技、訴訟及爭端處理等五個部門的基礎上,根據同仁在相關專業領域之專長與興趣,建構了兼顧效率及專業分工之專業領域分組(Practice Groups)架構,經由數十個專業領域小組(詳細資訊參見理律網站),客戶所需各種服務,均由最具專業經驗的理律同仁提供服務。

除了專業領域分組(Practice Groups)架構所涉及的縱向專業考量外,理律透過跨部門及跨專業領域分組之工作小組(Special Task Forces),包括大陸案件小組、日文案件小組與跨PG爭端處理小組,達到橫向整合全所之專業資源,以進一步提昇服務品質。








当事務所は、総合法律事務所として、専門分業体制を徹底して進めております。世界の経済・貿易、科学技術の急速な発展や変動に伴うクライアントの多様化したニーズに対応するため、当事務所の提供する専門サービスの分野はますます前進し、拡大しております。当事務所では、数十年来、発展を続ける知的財産権業務、1970年代から提供を開始した外国人投資業務、1980年代に導入した金融・資本市場関連のサービス、1990年代から開始した科学技術分野におけるリーガルサービス、更には政府契約・インフラ関連及び企業M&Aに関するリーガルサービスと、いずれの分野においても最新の産業動向及び法律動向を把握し、時代に即した新たな経営・管理のあり方を追求してきました。長年にわたり各専門分野において継続して前進していること、チームが分業体制と統合体制を兼ね備えていることは、当事務所がクライアントのために高品質のサービスを提供し得る核心的な要素であります。当事務所は金融・資本市場、会社投資、商標・著作権、特許・科学技術、訴訟及び紛争解決などの5つの部門を柱に、当所所員個々の専門分野や関心に応じ、効率と専門分業を兼ね備えた「専門分野グループ(Practice Groups)」を設けています。数十にのぼるPractice Groups(詳細は当事務所のウェブサイトをご覧ください。)により、もっとも豊富な専門的経験を有する所員がクライアントの必要とするサービスを提供することができます。

専門分野を縦割りで編成する専門分野グループ(Practice Groups)以外にも、当事務所は、「中国案件グループ(P.R.C.PracticeSTF)」「日本語案件グループ(Japanese Practice STF)」「紛争処理グループ(DisputeResolution STF)」という各部署及び各専門分野に跨る特別チーム(Special Task Forces)により、当事務所全体のリソースを横断的に統合し、さらなるサービスの質の向上を図っています。当事務所は現在、100名以上の中華民国弁護士のほか、多数の弁理士、特許代理人、商標代理人、100名余りの科学技術分野の専門知識を有する技術者、及びその他の専門人員を擁しており、全所員が一丸となってクライアントの求める専門的サービスの提供に努めております。また、法律/知的財産権分野における専門知識を



Taiwan is located in Asia along the Pacific Ring of Fire. Its neighboring countries include, among others, Korea, Japan, the People’s Republic of China (PRC), and the Philippines. This strengthens Taiwan’s position as an attractive economic hub for major economies and emerging markets.



In 50 years starting from 1949, Taiwan went from an agriculture-based economy to being an economic powerhouse and leader in the field of high-tech goods. Its Gross Domestic Product (GDP) grew from US$1.2 billion in 1951 to US$589.5 billion in 2018. According to the World Bank, the GDP value of Taiwan represents 0.95 percent of the world economy. According to the FocusEconomics, it is expected that the GDP will grow 2.0% in 2020 and that economic activity will increase 2.2% in 2021. Further, the inflation rates are expected to average 1.0% in 2020 and 1.2% in 2021, respectively.

Due to the China–US trade war starting in 2018, private equity (PE) investors returned and foreign companies redirected investments to Taiwan to avoid US tariffs against China. According to Bloomberg, the Taiwanese dollar strengthened 0.1 percent in the third quarter of 2019, which achieved its first quarterly rise since March 2018. The economic growth rates are estimated to be 2.4% in 2019 and 2.34% in 2020 by the Central Bank of the Republic of China (CBC).

Foreign trade has been the engine of Taiwanese rapid economic growth during the past 50 years. The category of export products changed from agricultural products to industrial goods. Currently, Taiwan’s most important industrial export sector is the electronics sector. On the contrary, raw materials and capital goods are Taiwan’s main imported products. According to the World Trade Organization (WTO), Taiwan is the 18th largest exporter in the world with US$335.9 billion in exported goods and the 17th largest importer in the world with US$286.3 billion in imported goods.


Business environment

The amendments to the Company Act were enacted on July 6, 2018 and took effect on November 1, 2018. These amendments, which have had a significant impact on the business environment in Taiwan, can be organized into the following categories:

  • To create a friendly environment for innovation and entrepreneurship;
  • To strengthen corporate governance;
  • To provide more flexibility on corporate management;
  • To protect shareholders’ interests;
  • To promote digitization and paperless processing;
  • To build an international environment;
  • To increase the flexibility of closely held corporations; and
  • To comply with international anti-money laundering regulations.

Please refer to the link for more details about the amendments to the Company Act in Taiwan:

Business Structure

Generally speaking, the business structures that a foreign investor can use to do business in Taiwan with include a company limited by shares, a limited company, a closely-held company, a partnership, a branch of a foreign corporation and a representative office. Most foreign investors choose to start their businesses in Taiwan by forming a subsidiary company, which is a distinct legal entity with the ability to own assets as well as employ workers and is subject to Taiwan taxation. The most common forms of such subsidiary are a company limited by shares and a limited company. A company limited by shares must be established by two or more shareholders or at least one corporate or governmental shareholder. The total capital of a company limited by shares is divided into shares, and the liability of each shareholder is limited to the payments in full for the shares subscribed by the shareholders. A limited company is a company established by one or more shareholders. The liability of a shareholder of a limited company is limited to the amount of its capital contributions. The key comparisons between a company limited by shares and a limited company are set forth in the following table:

Basic Corporate Structure Company Limited by Shares Limited Company
Basic Structure
1.      Number of Shareholders At least 1 corporate, 1 government or 2 individual shareholders At least 1 shareholder
2.      Limitation on Foreign Ownership No restriction No restriction
3.      Number of Directors and Supervisors l   Directors

(1)   With the Board of Directors: at least 3

(2)   Without the Board of Directors: 1 to 2

l   Supervisors:

(1)   Publicly held company: at least 2

(2)   Privately held company: at least 1

(3)   A single-shareholder company may choose not to have any supervisors.

(Note: In principle, directors or supervisors cannot be PRC citizens)

l   Directors: l to 3

l   Supervisors: Not applicable. (Shareholders not conducting the business operations may exercise power of audit.)

(Note: In principle, directors or supervisors cannot be PRC citizens)

4.      Shareholder Meeting l   Must be held at least once a year

l   Function of Shareholder Meeting will be exercised by the Board Meeting for a single-shareholder company

Not applicable (the ultimate authority of a limited company rests with each of the shareholders through the shareholder’s consent)
Capital and Finance
5.      Shareholder’s Liability Limited to the payments in full for the shares subscribed by the shareholder(s) Limited to the amount of capital contributed by the shareholder(s)
6.      Minimum Capital No

(Exception: if the Company wishes to hire a foreign general manager to work in Taiwan – NTD 500,000; if the Company wishes hire expatriates other than the general manager to work in Taiwan – NTD 5,000,000)

7.      Limitation on Retained Earnings 5% undistributed earning tax on undistributed net profit Same
8.      Repatriation of Profits, Capital, Interest Statutory right protected Same
9.      Foreign Exchange Control USD 50,000,000 per year (except for (i) equity-based inflows and outflows; (ii) outward remittance for import/export purposes or service payments)

No restriction on the repatriation of the original investment amount, capital gains or dividends


10.  Legal Reserve Must set aside 10% of annual after-tax profit as legal reserve prior to distribution of profit Same
11.  Profit-Seeking Enterprise Income Tax l   If the total taxable income is more than NTD 500,000, the income tax rate shall be 20%.

l   If the total taxable income is not more than NTD 500,000,

(1)   the income tax rate for the 2018 tax year shall be 18%.

(2)   the income tax rate for the 2019 tax year shall be 19%.

(3)   the income tax rate for the 2020 tax year and thereafter shall be 20%.

12.  Dividend Tax 21% withholding tax (unless any tax treaty applies) Same


Most subsidiaries formed by foreign investors are private companies, which cannot offer their shares for sale to the public before being converted into public companies and applying for the prior approval of the Financial Supervisory Commission (FSC). Thus, when foreign investors would like to have the stocks of their Taiwanese subsidiaries traded publicly on the Taipei Exchange (TPEX) or the Taiwan Stock Exchange (TSE), these subsidiaries must become public companies and apply for the FSC’s prior approval. Public companies are subject to more regulations and reporting requirements to protect investors than private companies.

How to Invest in Taiwan?

Forms of investments in Taiwan include: (1) the acquisition of stock or contribution of capital to a Taiwanese company; (2) the establishment of a branch office, proprietary business, or partnership; and (3) the extension of loans for terms of over one year to those invested Taiwanese companies referred to in (1) and (2). A foreign investor should obtain the foreign investment approval (FIA) from the Investment Commission (IC) of the Ministry of the Economic Affairs (MOEA) when it intends to invest in Taiwan. An FIA entity may enjoy the benefits under the Statute for Investment by Foreign Nationals (SIFN); for example, it has the right to enjoy the same privileges as local investors, including the repatriation of profits, government guarantee against expropriation for certain years, and the waiver of nationality and domiciliary requirements for directors, supervisors and shareholders.


Legal system

Taiwan is a civil law jurisdiction adhering to the rule of law. The civil/criminal procedures in Taiwan basically follow the inquisitorial system and the judge is responsible for directing the proceedings, investigating the evidence, finding the facts, and determining the legal consequences. No jury takes part in the proceedings.

Three levels of courts are established in Taiwan: the District Court, the High Court, and the Supreme Court. These courts have jurisdiction over civil and criminal litigation. A judgment made by the District Court in the first instance may be appealed to the High Court in the second instance, and a second appeal to the Supreme Court is available only for controversies involving a claim over NT$1,500,000, or a possible sentence of more than three years in prison in principle.

Generally speaking, the District Court and the High Court are trial courts that hear factual and legal issues, whereas the Supreme Court, as the third instance, hears a case only when significant legal issues are involved. The following are the main stages in the civil/criminal proceedings: (a) Filing of a complaint/Payment of court costs; (b) Service of process on the defendant; (c) Preparatory proceeding: investigation of evidence and exchange of pleadings; (d) Oral debate session; and (e) Judgment rendered.

Arbitration in Taiwan

Arbitration is the main alternative dispute resolution vehicle. Currently, there are four arbitration associations in Taiwan: the Chinese Arbitration Association, Taipei (CAA), the Taiwan Construction Arbitration Association, the Chinese Construction Industry Arbitration Association, and the Chinese Real Estate Arbitration Association. The CAA has the longest history among these arbitration associations.

The CAA is also capable of handling international disputes in arbitration. Further, the CAA could complete the arbitration proceeding between 6 and 9 months, which is a relatively shorter timeframe compared to the proceedings of arbitration conducted by an international tribunal such as Hong Kong International Arbitration Center or Singapore International Arbitration Center.

Enforcement of Foreign Arbitral Awards in Taiwan

A foreign arbitral award can be enforceable in Taiwan after it is recognized by a Taiwanese court. A Taiwanese court shall dismiss a petition for recognition of a foreign arbitral award if (a) the recognition and enforcement of the arbitration award run afoul of the public order or good morals of Taiwan or (b) the subject matter of the disputes is not capable of arbitration by its nature under the Taiwanese laws. Moreover, the court may dismiss a petition for recognition of a foreign arbitral award, upon the request of the respondent, if any of the circumstances in the Arbitration Law of the ROC occur.

In addition, a Taiwanese court may dismiss the petition for the recognition of a foreign arbitral award if there is no reciprocity in the recognition and enforcement of arbitral award between Taiwan and the country in which the award is made or the country whose arbitration rules are followed.


Foreign investment restrictions

Regulatory Environment

Foreign investment can be divided into foreign (i.e. non-PRC) investment, and PRC investment. In general, foreign investors are subject to less investment restrictions than PRC investors.

  • Foreign Investment

The Taiwan government has adopted various measures to encourage foreign investment in Taiwan. On July 14, 1954, it promulgated the SIFN, which was last amended on November 19, 1997. Under the SIFN, foreign investment may consist of a variety of assets, including (1) cash; (2) machinery and/or supplies required for own use; (3) patent rights, trademark rights, copyrights, know-how and/or other intellectual property rights; and/or (4) other assets approved by the competent authorities.

Foreign investment in the following businesses is prohibited: (1) businesses which are in conflict with national security, public order and/or good morals or might have adverse impact on national health; and (2) any type of business for which foreign investment is prohibited by law. If a foreign investor intends to invest in an industry in which investment is restricted by law or by an order given under the applicable law, such foreign investor shall obtain approval thereof or consent thereto from the competent authority in charge of the industry concerned when applying with the IC for the FIA.

In 1988, the Taiwan government promulgated a set of guidelines called the “Negative List,” which was last amended on June 17, 2013. The Negative List sets forth the sectors in which foreign investment is either restricted or prohibited. Those sectors not on the Negative List are open to foreign investment without any restriction. Generally, except for the restriction stated on the Negative List, Taiwan does not discriminate against any foreign investors.

In Taiwan, a Taiwan company is permitted to distribute the dividends to its foreign shareholders. No prior regulatory approval or registration is required for distribution of dividends to a foreign shareholder. Dividends declared by a company to its foreign shareholders shall be subject to 21% withholding income tax (or a lower tax treaty rate if applicable). Moreover, under the SIFN, a foreign investor is legally granted the right to remit their entire annual investment return out of Taiwan. If a foreign investor transfers their investment upon government approval, the investor is guaranteed by law to repatriate 100% of their total equity investment.

Businesses in which a foreign investor invests are treated the same as local businesses of the same nature. Furthermore, if a foreign investor’s investment is 45% or more of the total capital of an approved enterprise, the enterprise may be exempt from the requirement of having to reserve 10% to 15% of newly issued shares for subscription by its employees.

In addition, under the SIFN, as long as foreign capital accounts for 45% or more of the total capital of the enterprise in which foreign investors invest, specific protection will be afforded to foreign investors against requisition or expropriation for 20 years from the commencement of business, if the foreign continues to hold 45% or more of the total capital.

  • PRC Investment

Unlike the attitude towards non-PRC foreign investment, the Taiwan government takes a more prudent and conservative attitude toward the PRC investment. Hence, PRC investors are subject to more investment restrictions than non-PRC investors in Taiwan.

According to the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, a PRC investor should obtain the approval from the IC to engage in any investment activities in Taiwan. Furthermore, a PRC investor is only permitted to invest in the permitted businesses on the “Positive List,” which sets forth the industries that may be invested in by PRC investors as promulgated by the IC of the MOEA on June 30, 2009, and last amended on March 30, 2012. A PRC entity is also required to obtain approval from the competent Taiwanese authorities and establish a branch or a representative office in Taiwan before it may conduct any business activities in Taiwan. The business scope of the Taiwan branch of a PRC-invested entity is limited to its business items registered with the MOEA, which are those listed on the Positive List.

Nevertheless, according to the Regulations Governing Investments by Nationals in Mainland Area (GINMAR), while the area that a PRC Investor intends to invest in is on the Positive List, the IC still has the discretion to restrict or block a PRC investment application if such investment may fall into any of the following situations: (a) the invested enterprise has an exclusive, oligopolistic or monopolistic economic status; (b) the investment is politically, socially or culturally sensitive or would affect national security; or (c) the investment would cause an adverse impact on the local economic development or financial stability. In this regard, this discretionary power possessed by the IC brings greater uncertainty over PRC investments compared to non-PRC investments.

According to the GINMAR, a PRC Investor refers to:

  • an individual, juristic person, organization or any other institution of China (a “PRC Entity“); and
  • any company located in any “third area” (an area other than the PRC or Taiwan) and invested in by any PRC Entity whereby (i) the capital contributed or shares held directly or indirectly by PRC Entities in aggregate exceed 30% of the total number of shares or total amount of capital contribution of said third-area company, or (ii) the PRC Entity has “control” over the third-area company.

With regard to the power of control, a PRC investor is deemed as having control over another company if it:

  • has control over the majority of the votes pursuant to an agreement with other investors;
  • has control over the financial, operational, and/or human resources policies pursuant to the law or regulations or contractual commitments;
  • has the right to appoint or discharge a majority of the directors on the board (or its equivalent organization), which has control over the entity’s operations;
  • has control over the majority of the votes of the directors on the board (or its equivalent organization), which has control over the entity’s operations; or
  • has other controlling power as prescribed in No. 5 and No. 7 of the Statements of Financial Accounting Standards published by the ROC Accounting Research and Development Foundation.

Foreign Exchange Controls

In the past, investments in Taiwan were subject to currency and foreign exchange control. Since 1987, the CBC has promoted a major liberalization of its foreign exchange regulations, which prompted greater business opportunities for two-way, direct, and portfolio investments. The Regulations Governing the Declaration of Foreign Exchange Receipts/Disbursements or Transactions, which were promulgated on August 30, 1995 and last amended on November 13, 2018, are regulated to lift restrictions and provide certain exemptions from the CBC’s prior approval for foreign exchange settlements.

The inward and outward remittances which are not items (a) to (e) below and any inward or outward remittances exceeding the monetary limitations noted below would require the approval of the CBC:

  • Inward and outward remittances for foreign trades in goods;
  • Inward and outward remittances for services;
  • Direct investments and portfolio investments approved by the competent authorities;
  • Inward or outward remittances made by a company or firm of an aggregate amount not exceeding US$50 million in a calendar year, or by an organization or individual of an aggregate amount not exceeding US$5 million in a calendar year; and
  • Inward or outward remittances made by a foreign individual who does not have an alien residence certificate or a person from a jurisdiction not recognized by the Taiwan government as allowed to do business in the country, of an amount per transaction not exceeding US$100,000.

Any person residing in Taiwan who wishes to make an inward or outward remittance of foreign exchange income or expenditure not exceeding the prescribed amount only needs to file a report with a designated bank that handles foreign exchange transactions. Once the report has been filed, the above foreign exchange settlement may be processed by the bank without any further approval from the CBC.

Tax Overview

The Ministry of Finance (MOF) governs the taxation in Taiwan. If a company is duly incorporated in Taiwan based on the Company Act, such company is considered a Taiwanese company regardless of whether it is wholly or partially owned by foreign investor. On the contrary, a company which is incorporated under laws other than those of Taiwan is considered a foreign company from the Taiwanese tax perspective. We only set forth some of the more common taxes, which should not be considered as an exhaustive list of all potentially relevant taxes.

  • Profit-Seeking Enterprise Income Tax

In general, Taiwanese companies are subject to profit-seeking enterprise income tax on their worldwide income, and foreign companies are subject to profit-seeking enterprise income tax on their Taiwan-sourced income only.

The company in Taiwan is subject to a flat rate of 20% on taxable income. However, if the taxable income of the Taiwanese company is less than NT$500,000, then the flat rate is 18% for 2018, 19% for 2019 and 20% for 2020.

  • Undistributed Earnings Tax

If a Taiwanese company does not distribute its net earnings generated in a fiscal year (Year 1) by the end of the following year (Year 2), a 5% undistributed earnings tax will be imposed thereon (Year 3). This 5% undistributed earnings tax reduces the retained earnings available for future distribution by the domestic corporation.

  • Dividend Tax

Dividends (whether in cash or common shares) distributed by a Taiwanese company out of retained earnings and paid out to foreign shareholders are normally subject to Taiwanese income tax collected by way of withholding at the time of distribution. The current rate of withholding for foreign shareholders is 21%, unless a lower withholding rate is provided under a tax treaty between Taiwan and the jurisdiction where the foreign shareholder is a resident.

  • Business Tax

Business tax is imposed on the sale of goods or services within the territory of Taiwan and the importation of goods. There are two forms of business tax: (i) value added tax (VAT); and (ii) gross business receipts tax (GBRT). Business entities under seven industries, namely, banking, insurance, investment trust, securities, futures and commercial papers businesses and pawnshops, are subject to GBRT. Other business entities are subject to VAT.

Current opportunities and future prospects

In light of the Taiwanese government’s policy to promote renewable energy, investment projects to set up renewable energy operation in Taiwan as well as acquisitions in the renewable energy sector have recently become active in Taiwan. Some shareholders sold parts of their equity interest in the renewable energy projects to other investors in 2019. It is expected that there will be more investments or M&A projects in the renewable energy sector in Taiwan in the coming years. Meanwhile, M&A transactions with regard to either private or public companies are still booming in Taiwan. The government is also making efforts to facilitate and foster the development of tech companies, such as fintech, bio-tech or artificial intelligence companies.