Business, Investment and Digital Nomadism in Taiwan
Taiwan seldom makes the radar of international news, which is surprising when one considers that it’s home to the 18th largest GDP in the world. It’s less surprising when looking at a map of Taiwan, as it’s inevitably dwarfed by massive neighbouring China, writes Oliver Taylor.
For a relatively tiny island (although Taiwan is a massive island in comparison to many other business destinations), it’s impressive that the Taiwanese economy shouts so loudly across the world stage. Two out of three of the world’s laptops are made in Taiwan, and local infrastructure and overall quality of life is good.
Taipei has two international airports and Taiwan boasts an extensive high-speed train network that is both fast and effective. Very business orientated, Taiwan is very much like China, except without the Gestapo, neat, clean, and West-welcoming.
The Taiwanese people are gregarious and friendly, unlike the hostility and distrust often shown towards foreigners in China, and a vastly more cosmopolitan attitude pervades Taiwanese society. As the fifth largest economy in Asia, Taiwan is more akin to Thailand in its attitude to life, and more economically like Hong Kong than Beijing. Taipei presents as an obviously Asian city, but much like Seoul, Korea, has had the good fortune to have adopted a welcoming approach to foreign influence. Possibly motivated by the acrimonious separation of Taiwan’s people from mainland China not that long ago, Taiwan has always needed international friends.
Research and development in a number of fields is high in Taiwan, and although China is gaining the reputation of tech whizz on the international stage, Taiwan at least matches if not exceeds China’s manifestation of cutting edge technologies.
Very business orientated, Taiwan looks out from the happy base of its domestic economy and shows a collaborative face to the world, while China looks out to consume the world’s resources for internal gain. This difference in approaches is manifest on the ground, as is the fact that Taiwan has been more relaxed and also development-minded for almost 100 years longer than China. Full of vibrant green inner-city and urban spaces, Taiwan lies just over 2,000 km from China’s coast, and has a population of around 24 million people.
The relatively low cost of living makes Taiwan attractive to foreigners — and the Taiwanese government’s initiatives that are geared towards attracting foreign talent have recently taken an upswing. The New Taiwan Dollar (TWD) is currently trading at around 0.03-0.04 to the USD.
THE TAIWANESE GOLD CARD
Prime among those initiatives has been the Gold Card visa — a digital nomad programme that seeks to attract professional performers in a host of fields. Although imagined as a more general business visa to enable foreign business research and conduct on Taiwanese soil, many freelancers who gain employment in a Taiwanese company enter through the programme, as well as self-employed freelancers who have a registered agency and draw a salary from the business.
Unfortunately, the visa won’t be granted to freelance workers who seek to settle in Taiwan for the three years allocated by the visa — there has to be an employment offer or business proceeds on the table. No matter this single catch to the deal, applicant numbers were low to begin with, but are now doubling every year.
The Gold Card programme begun in 2018 and includes the option of sponsoring a spouse. Successful applicants gain access to public schooling and public healthcare, which in Taiwan is decent. Well organised and broadly serving the interests of citizens, Taiwanese local government has a good social contract with the people.
Many come to Taiwan not to work, but to relax and take in the sights, and here visitors are also spoiled for choice. Luxury tourism in Taiwan is something of a best kept secret, as China’s dynamism and massive size demands attention, while many other exotic Asian destinations surrounding Taiwan have a well-established tourism sector.
Those in the know, however, avail themselves of Taiwan’s beautiful beaches and culturally exquisite small towns, as well as the luxurious hotels that dot the landscape. Touring and standalone travelling on the island state is hugely enabled by a well-established rail, bus, and overall touring infrastructure, and extremely modern facilities greet tourists wherever they go.
Possibly a direct result of the competition between Taiwan and China, the country has sought to present a far more international look and feel. Polished and professional, Taiwan is like a slice of China with genuine free market principles in play, as well as a far more established cosmopolitan, friendly approach to life.
BUSINESS IN TAIWAN
Before looking at the benefits of incorporating a business, investing, or establishing a trust in Taiwan, it’s worth looking at the processes involved to gauge ease of use.
There are typically eight steps to establishing as an existing or new business in Taiwan. Ever practical, the Taiwanese route starts with checking name availability on the Ministry of Economic Affairs’ website, whereafter filling in an application form is easy via the link. You will need to visit your chosen Taiwanese bank in person with your identity documents and proof of business (if established) to set up your business bank account. Details here need to be squeaky clean, and might include some kind of authorisation from the home country confirming your intentions to incorporate in Taiwan.
You will be required to transfer the exact amount stipulated in the application process to your new account to start the ball rolling, and then be able to visit the MOEAIC (the business and investment body dealing with foreign business matters) with the relevant forms, proof of bank account and remittance.
You will also need to be certified as having the capital deposited by a local CA, whereupon you can search for business premises and glean additional certification from the economic affairs agency. Finally, after all of these steps have been completed, you’ll visit the Ministry of Finance to complete business registration.
It might sound long-winded, but the process is quick and covers all needed bases for you to establish a business on the island. Taiwan’s proximity to several key markets and trading stations is not lost on the many foreigners who have established businesses there. Many tax incentives are offered to business that runs from special economic zones established by the government, and establishment in one of these zones comes with import and export commodity and VAT tax breaks, lease concessions, and a host of other subtle and overt incentives to set up shop and get busy.
INVESTING IN TAIWAN
Taiwan has a proactive approach to foreign investment, and the Statute for Investment by Foreign Nationals promulgated circa 1954, is testament to a long history of seeking investment and trade. This was followed in 1968 by the Program for Strengthening Investment Screening Agencies, something that further streamlined foreign investment, and which today makes for a brisk and effective protocol for foreign investors.
High Net Worth Individuals will find that banking services and overall investment facilitation are good in Taiwan. The government has matched its talk with the walk, and investors in Taiwan will experience a withholding tax rate on dividends of 21%, while interest and royalties due to a non-resident are both pegged at 20%.
The withholding tax rate for bond interest is 15%, as it is for securitised products, as well as short-term commercial papers. There are a variety of details that enable treaties concerning royalties, interest and dividends that can bring the withholding tax rate down as low as 15–5%. Not the cheapest bundle of costs for similar activity elsewhere in the world, but the local infrastructure and dynamism compensate capably.
Returning to business, legitimately established businesses will pay a VAT rate of between 5% and zero, depending on the concessions available to the industry. The personal tax rate of 20% for residents also illuminates that for a highly functional country with extensive public works and an ongoing development programme, tax is not onerous, and tax receipts are effectively reinvested in building and development.
Trustees will find costs comparably low in Taiwan, and a highly efficient and established fintech sector provides competitively priced services around trusts and investment vehicles. As with Hong Kong, Taiwan has a reputation of being transparent and dynamic, with no real fears around skulduggery in financial circles.
Taiwan is a clean country in more ways than one. An inheritance tax of 10% is in play, while capital gains are viewed as income and attract the prevailing tax rate only.
Finally, those wishing to make Taiwan their home base can apply for a Resident visa for Investment. A $200,000 investment will secure your and your family’s residency, as long as a minimum of 183 days per annum are spent in Taiwan, and the investment capital is maintained via an investment fund, active business, or by any vehicle identified by the authorities as contributing to the country’s economy as a whole. EG