Corporate compliance requirements for Taiwan companies.

Corporate compliance is a critical aspect of doing business in Taiwan, ensuring that companies adhere to both local and international legal standards. Understanding the compliance requirements for businesses operating in Taiwan is essential for maintaining a lawful and efficient operation. These requirements cover various areas such as ongoing business obligations, accounting and tax filings and labour laws.

This guide provides an overview of the key corporate compliance requirements that every company in Taiwan must follow, ensuring that both foreign investors and local businesses can operate smoothly and avoid penalties.

Company set-up requirements

Registered office

Every company registered in Taiwan is required to have a registered office within the country. This address is the official location for receiving legal documents and government correspondence.

The registered office must be a physical location; using a P.O. Box is unacceptable. Additionally, any changes to the registered office address must be reported to the relevant authorities within 15 days of the change.

Company secretary

While Taiwan’s Company Act does not explicitly require the appointment of a company secretary, having one is considered best practice. A company secretary assists in ensuring compliance with statutory obligations, maintaining company records and facilitating communication with regulatory bodies. This role is vital for the smooth administration of corporate governance matters.

Data protection and data protection officer

Taiwan’s Personal Data Protection Act (PDPA) governs personal data collection, processing and use. Companies must obtain consent from individuals before collecting their data and ensure it is used only for specified purposes.

While the PDPA does not mandate the appointment of a Data Protection Officer (DPO), having one can enhance compliance efforts and demonstrate a commitment to data privacy. Companies should implement internal policies and training programmes to ensure adherence to data protection regulations.

Industry-specific licences

Certain industries in Taiwan are subject to additional regulatory requirements and may require specific licences or permits to operate legally. Businesses in sectors such as finance, healthcare and telecommunications must obtain the necessary approvals from relevant authorities.

For instance, financial institutions must obtain appropriate licences from the Financial Supervisory Commission to conduct activities like deposit-taking, foreign exchange services or investment consulting.

On-going compliance requirements

Annual general meeting

Companies in Taiwan are mandated to hold an Annual General Meeting (AGM) to discuss and approve financial statements, elect directors and supervisors and address other significant matters.

The AGM must be convened within six months after the end of the fiscal year. Notice must be given to shareholders at least 20 days before the AGM. Additionally, directors must prepare financial reports and ensure they are available at the company’s head office for shareholder inspection at least 10 days in advance.

Keeping of company registers and records

Companies are obligated to maintain accurate and up-to-date records, including registers of shareholders, directors and supervisors, as well as minutes of meetings and financial statements. These records must be kept at the company’s registered office or another designated location in Taiwan and be readily available for inspection by authorised parties.

Annual reports/annual filing

Taiwanese companies are required to file annual reports with the Ministry of Economic Affairs (MOEA). These reports typically include information on the company’s financial status, shareholder structure and any changes in directors or supervisors. The annual report must be filed within six months after the end of the fiscal year. Timely and accurate filing is crucial to avoid penalties and maintain good standing.

Accounting and tax compliance requirements

Corporate tax filing

Taiwan’s standard profit-seeking enterprise income tax is 20%. However, companies with taxable income below TWD 120,000 are exempt from profit-seeking income tax.

The fiscal year for Taiwanese companies aligns with the calendar year (1 January to 31 December). However, companies can change their fiscal year if Taiwan’s tax authorities approve it.

Corporate tax returns must be filed annually, with the tax filing deadline typically falling on 31 May following the fiscal year’s end. For companies with a fiscal year different from the calendar year, the return is due by the last day of the fifth month after the fiscal year ends.

VAT registration

Companies with a business entity or permanent establishment conducting trade in Taiwan must register for VAT and file returns. Additionally, from 1 May 2017, foreign e-commerce operators without a fixed business location in Taiwan must register for VAT if their annual Taiwan sales exceed TWD 480,000. VAT registration can be done when registering a legal entity in Taiwan or through a special application to the tax office.

The standard VAT rate in Taiwan is 5%. VAT returns are generally filed every two months, though businesses with regular VAT credits, such as those providing zero-rated supplies, may file monthly. Returns are due by the 15th of the month following the reporting period. Filing is done electronically, and any VAT due must be paid simultaneously.

Withholding tax

Taiwan’s withholding tax system applies to income earned by both residents and non-residents, with rates varying based on income type and residency status. Different payments are subject to specific withholding tax rates, and reduced rates may apply under a double taxation agreement between Taiwan and the taxpayer’s country of residence.

Financial statements

Companies are required to prepare annual financial statements in accordance with Taiwan Generally Accepted Accounting Principles (GAAP), which largely align with International Financial Reporting Standards (IFRS). These statements typically include the balance sheet, income statement, statement of changes in equity and cash flow statement.

Audit requirements

Financial statements audits are mandatory for companies that meet certain criteria, such as having paid-in capital exceeding TWD 30 million, annual sales reaching TWD 100 million or more, employing 100 or more individuals, being publicly listed or operating as financial institutions. The audit must be conducted by a certified public accountant (CPA) licensed in Taiwan.

Financial year-end

The financial year in Taiwan typically follows the calendar year (January 1 to December 31). However, some businesses may choose alternative financial year-ends based on operational needs, which require approval from the relevant authorities and may involve additional administrative steps.

Safekeeping of proper accounts and records

All accounting records must be retained for at least five years, while accounting books and financial statements must be preserved for a minimum of ten years after the annual closing procedures are completed.

HR requirements

Minimum wage

Starting 1 January 2025, the minimum wage in Taiwan is set at:

• TWD 28,590 per month for full-time employees
• TWD 190 per hour for part-time or hourly workers

Work hours and overtime laws

In Taiwan, the standard workweek is 40 hours, usually split into five eight-hour days, with a maximum of 12 hours per day, including overtime. The overtime compensation offered to employees is 134% of the regular pay for the first two hours of overtime and 167% of the regular pay for the following two hours.

Leave entitlements

Employees in Taiwan are entitled to various types of leave, including annual, sick, and maternity/paternity leave. Paid annual leave ranges from three to 30 days, depending on the length of service.

Pregnant employees with at least six months of service receive eight weeks of paid maternity leave at full pay. Employees with pregnant spouses are entitled to seven days of paid paternity leave, which can be used during labour or for prenatal check-ups.

Employees who are sick but do not require hospitalisation are entitled to 30 days of sick leave per year, paid at 50% of their regular pay, while those who are hospitalised are entitled to 12 months of sick leave.

Social security contributions

Employers and employees are required to make contributions to Taiwan’s social security programs, which are:

• Labour Insurance Program (LIP): The premium rate is 12.5% of the employee’s monthly insured salary, with employees contributing 20%.
• National Health Insurance Program (NHIP): The total premium is 5.17%, with employees covering 30%.
• Labour Pension Program (LPP): Employees may voluntarily contribute at least 6% of their monthly salary to an Individual Pension Account.

Severance and termination

Employers in Taiwan may terminate employees for reasons such as redundancy, misconduct or poor performance. A notice period is required unless dismissal is due to serious misconduct. The notice period varies by length of service:

• 10 days for employees with three months to one year of service
• 30 days for employees with more than one year of service

Severance pay is mandatory for employees and is calculated based on their length of employment and average salary over the past six months.

Immigration requirements

Work permit

Employers in Taiwan must register with the Workforce Development Agency (WDA) before hiring foreign employees and apply for a work permit through the Ministry of Labour. Once approved, employees apply for a work visa through the Bureau of Consular Affairs (BOCA), a Taiwan Economic and Cultural Office (TECO) or a local embassy.

Within 15 days of arrival, employees must obtain an Alien Resident Certificate (ARC) from the National Immigration Agency (NIA). The ARC, required for stays beyond 90 days, is valid for one year and can be renewed annually for up to three years.

Visas

Taiwan offers several visa options to attract foreign talent and investment. The Resident Visa for Investment is for foreign nationals making significant investments in Taiwan, requiring proof of at least USD 200,000 in investment. The Entrepreneur Visa allows foreign nationals to establish startups in Taiwan, with eligibility criteria including securing venture capital or obtaining patents. The Employment Gold Card combines a visa, work permit and residence permit for experienced professionals, enabling them to live and work in Taiwan for up to three years.

Conclusion

Understanding and adhering to corporate compliance requirements is vital for companies operating in Taiwan. From maintaining a registered office to ensuring timely tax filings, businesses must manage various regulations to remain in good standing with authorities. Compliance with labour laws, social security contributions and industry-specific licences further solidifies a company’s operational integrity. With proper attention to these requirements, businesses can avoid penalties, build a positive reputation and focus on growth and success within Taiwan’s growing market. Consulting with local experts can provide invaluable guidance in maintaining compliance and achieving long-term business goals.

How Acclime can help with corporate compliance requirements

Acclime can assist businesses in Taiwan by providing expert guidance on corporate compliance requirements. From setting up the necessary company registrations to ensuring timely tax filings, annual reports and adherence to labour laws, Acclime ensures that companies meet all legal obligations. Contact us to find out more about how we can help.