【2020Ver.】4 things to know to start your company in Taiwan (Pt.1)

【2020Ver.】4 things to know to start your company in Taiwan (Pt.1)

I’m Leo, the CEO of applemint Ltd.
I started my digital marketing agency back in 2017.
It’s been 3 years since I’ve started.

I constantly receive inquiries about how I started my company in Taiwan as a foreigner so I have been sharing my experience in applemint’s blogs.
So how come you don’t see them?
Well, I’ve been writing contents in Japanese over the past 2 years.
But in 2020, I’ve decided to channel part of my resource to share my experience in English.

This blog is the 1st part of 3 blogs that I am going to write.
In this blog, let me share my experience about how to setup salary, requirements for capital, steps for company’s registration, and documents to prepare to start a company.

In the next blog, I will share the cost of starting a business in Taiwan, the process one has to go through and how long it takes to start a company.

Foreigner’s salary

If you are a foreigner in Taiwan, there is minimum salary unlike the locals.
You need to receive at least roughly 48,000NT for your monthly salary unless you marry a Taiwanese and obtain a citizenship.
Of course, you can receive more than 48,000NT.

From a foreigner worker’s perspective, this information gives you a sense of reassurance because if you get a job in Taiwan, you will at least get 48,000NT.
If you think 48,000NT is too little, don’t worry. It is enough to get by in Taiwan.
If you join the national health insurance in Taiwan, you are normally charged just 150NT (roughly 5USD) for medication and seeing a doctor.

But think about this salary from manager’s point of view.
If you want to hire a foreigner, you need to pay at least 48,000NT.
The average salary in Taiwan is roughly 43,000NT so that explains how high 48,000NT salary is.

When I started my company in Taiwan, I actually started with my local partner Eric.
I thought about making Eric the CEO externally on any outside documents and make myself the CEO internally to make decisions.
Why?
I knew that it is easier for the local Taiwanese to start a business in Taiwan.

But I soon learned that this was a mistake.

In Taiwan, when you apply for labor insurance, the CEO’s salary must be higher than any other employee’s salary.
So taking this into account, if I made my Taiwanese partner the CEO, his salary must be over 48,000NT because the foreigner’s minimum wage is determined by the law.

In conclusion, if you are a foreigner and you want to start a business in Taiwan, do not compromise and make your Taiwanese friend the CEO.
I know things become much easier to proceed if a Taiwanese start a company, but the fixed cost becomes at least 96,000NT.
If you can afford this fixed cost, go for it but if not, do make yourself the CEO.

My suggestion is to make yourself CEO of the company and try to lower fixed cost while you can.

Capital

First of all, for a foreigner to start a business in Taiwan, you need 500,000NT capital.
What’s worse is that this 500,000NT capital must be remitted from a foreign bank account.
If your foreign bank account is located somewhere far from Taiwan, you may have to go back to your country and make a transaction from there.

I know most of you are thinking this is nonsense, but you cannot pay 500,000NT out of your pocket.
However, there is a way to get by.

If you can prove that you have previously earned more than 500,000NT in Taiwan, you do not need to go outside of Taiwan and remit 500,000NT.
How do you prove it?

A copy of your annual income tax return does.
A copy that states how much income tax you pay show how much money you’ve earned in Taiwan.
Be careful, a copy of your bank account balance does not work.

So the easiest way to start your business in Taiwan is to first work for a company for 2 years.
Make sure you earn more than 500,000NT between January and December.

For instance, if you start your job in July and earn more than 500,000NT til next June but earn less than 500,000NT til December, your income tax states only your earnings between July and December.
In such case, you will have to wait another full year to get an approval that you have paid tax for more than 500,000NT income.
That is why I wrote you may have to work about 2 years in Taiwan.

Revenue

There is a myth in Taiwan that if you start your company here, you need to make 3 million NT revenue annually.

My company has been fortunate to exceed 3 million NT revenue in the first year so I’ve never really worried about this issue but it is said that you need to make 3 million NT within 2 years since your company’s establishment.

Why?

This is because the Taiwanese Taxation Bureau wants business tax.

In Taiwan, there is no consumption tax but there is business tax between corporate and corporate.
For instance, a BtoB company like my company will charge my client (advertiser) 5% tax on top of our service fee.
We then pay 5% of what we earned as revenue to the Taiwanese government afterwards.

If your company makes 3 million NT, you will end up paying at least 150,000NT to the government.
Basically the government expects your company to pay at least 150,000NT tax.

That is the reason why there is revenue quota for a startup.
But conversely, even if you do not make 3million NT revenue, if you pay 150,000NT business tax to the government, you can get by.
I’ve heard a person who’s done so but ask for more details if you know any accountant in Taiwan.

Capital usage

I got some people asking me about whether they can use the 500,000NT capital or not.
The answer is Yes you may do so.

In fact, most of the time, the 500,000NT is the only cash people can use if they are not funded so go ahead and use the money.

Just because you need to show other people that you have 500,000NT capital doesn’t mean the 500,000NT must be untouched.

Company’s registration

When you think about company’s registration, there are 2 options you may consider:

1. borrow registration address and work from cafe or home
2. rent an office and register your company under its address

if you choose #1, your cost of borrowing address every month is roughly 2,000NT ~ 3,000NT.
The price may vary depending on whether you want mailing service or not.
I strongly suggest you add mail service because you will be getting lots of mails (receipt of National health insurance, Labor insurance, invoice and so on)

※ You cannot register your house’s address unless you own the property.
House owners will not allow you to register your company using their address.
Why?
Their property tax becomes higher if their address is used as company’s registration.

try Google “Taiwan rental office”.
Most of the rental offices just let you borrow address.

We eventually decided to rent an office.
Although it may cost higher, knowing that we may end up paying 200NT for coffee everyday at a cafe, we decided to rent an office.
Here is a picture of the office space we used in our 1st year:

6,000NT/month

Documents you need to prepare

Lastly, let me list all the documents necessary to start a business in Taiwan.
It is possible to get all the documents by yourself but I strongly recommend you get in touch with a local accountant.
If you need me to introduce one, let me know.

1. 公司名稱預査表 (approval of company’s registration)
2. company’s seal (company’s stamp) & the representative’s seal
3. Rental office’s contract or a certificate that shows your office is registered under a certain address
4. a copy of ARC and passport
5. Initial investment application
6. Agreement of stakeholder
7. Letter of Attorney

Lastly, let me list all the necessary URLs to prepare these documents (Mostly written in Chinese):

http://ezworktaiwan.wda.gov.tw/ezworkch/home.jsp?pageno=201508100053&acttype=view&dataserno=201508140052

https://www.moeaic.gov.tw/download-file.jsp?do=BP&id=L1ZXa8Su0mI=

http://gcis.nat.gov.tw/mainNew/subclassNAction.do?method=getFile&pk=411&sub=20

https://gcis.nat.gov.tw/mainNew/matterAction.do?method=showFile&fileNo=t70194

I know it is daunting to read all the articles in Chinese and it takes time so my suggestion is to look for a local accountant.
It may cost somewhere between 30,000~50,000NT but I think it is worth it.

Good luck!

Click to contact applemint.

Leo Sato 佐藤峻

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