Employing in Taiwan

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Expanding into
Taiwan

Taiwan is one of Asia’s so-called ‘Tiger Economies’ alongside Singapore, South Korea and Hong Kong. The Taiwanese economy developed as its rapid industrialisation and privatisation proved a significant encouragement for Foreign Direct Investment (FDI), supported by government incentives.

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Global Expansion is a step to make for any business, regardless of your goal. But the opportunities that can come with an expansion can be stimulating as well as intimidating and confusing, especially when you consider all of the registration procedures that need to be done and the documentation required.

Going at it without the proper support can increase the costs, time and risks involved.

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It can be best utilised when businesses are just beginning their expansion process and require more information before incorporating an entity and fully establishing themselves in that market.

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Country EOR Guide - Bradford Jacobs

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Download our Guide to Taiwan

Learn all about expanding into Taiwan and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs
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Hiring Staff
in Taiwan

Taiwan is one of Asia’s so-called ‘Tiger Economies’ alongside Singapore, South Korea and Hong Kong. The Taiwanese economy developed as its rapid industrialisation and privatisation proved a significant encouragement for Foreign Direct Investment (FDI), supported by government incentives. Since the 1980s, Taiwan has focused on developing knowledge-based industries away from the traditional areas of agriculture and textiles.

The move into producing radios, TVs, electronic equipment, ‘motherboards’ and computers was the precursor to becoming the
world’s largest manufacturer and supplier of semiconductors and the fourth-largest globally for electronic equipment. In 2020, Taiwan was unique among the ‘tigers’ to be the only one of the four to grow Gross Domestic Product positively. The World Bank rates Taiwan as a highly developed market economy, in the top 10 among Asian nations for GDP and the top 20 globally for Purchasing Power Parity (PPP).

However, challenges lay ahead to test the economy’s resilience and the demand for Taiwan’s high-tech exports. Taiwan’s GDP in 2021 was worth EUR 777.5 billion (USD 844.7 billion), according to statistics from the World Bank, the 22nd in the world. However, it is predicted to
drop to around EUR 763 billion (USD 829 billion) in 2022 by Trading Economics as it reacts to slowing consumer demand, global worries over European energy and fuel supplies and the impact of fluctuating COVID restrictions in mainland China, its leading trading partner.

Relations with neighbour China are another issue for the island nation, geo-strategically placed in the western Pacific but just 100 miles from the southeast coast of the Chinese mainland. Taiwan’s Directorate-General of Budget, Accounting and Statistics downgraded projected growth for 2022 to 3.76% from 3.91% and predicted growth of 3.05% for 2023.

Country:
Taiwan
Local Currency:
New Taiwan Dollar (NT$/TWD)
Time Zone:
National Standard Time (UTC+8)
Country Dial Code:
+886
Tax Year:
1 January – 31 December
VAT:
5%
National Minimum Wage:
Since January 1, 2023: TWD 26,400/month (EUR 800 – USD 870).
Taxpayer Identification Number (TIN):
Individuals: National ID Card Number (for nationals with a household registration) – 10-digit code (1 letter + 9-digit numeric string).
Individuals: UI number or Tax Code (for nationals without household registration, for mainland China and Hong Kong/Macau residents, and foreigners).
UI number: 10-digit code (1 letter + 9-digit numeric string)/Tax code: 7-digit code for mainland China residents, 10-digit code for Hong Kong/Macau residents and foreigners.
Non-Individuals: Business Administration Number (BAN) – 8-digit code.
Main trading partners (2022):
Imports: China (21.6%), Japan (14.7%), the USA (10.4%), South Korea (8%), Asia (69%), Europe (12%), North America (11.5%).
Exports: China (28.2%), Japan (6.5%), the USA (14.7%), Asia (72.3%), Europe (8.7%), North America (16.3%)

Hiring Staff
in Taiwan

Taiwan is one of Asia’s so-called ‘Tiger Economies’ alongside Singapore, South Korea and Hong Kong. The Taiwanese economy developed as its rapid industrialisation and privatisation proved a significant encouragement for Foreign Direct Investment (FDI), supported by government incentives. Since the 1980s, Taiwan has focused on developing knowledge-based industries away from the traditional areas of agriculture and textiles.

The move into producing radios, TVs, electronic equipment, ‘motherboards’ and computers was the precursor to becoming the world’s largest manufacturer and supplier of semiconductors and the fourth-largest globally for electronic equipment. In 2020, Taiwan was unique among the ‘tigers’ to be the only one of the four to grow Gross Domestic Product positively. The World Bank rates Taiwan as a highly developed market economy, in the top 10 among Asian nations for GDP and the top 20 globally for Purchasing Power Parity (PPP).

However, challenges lay ahead to test the economy’s resilience and the demand for Taiwan’s high-tech exports. Taiwan’s GDP in 2021 was worth EUR 777.5 billion (USD 844.7 billion), according to statistics from the World Bank, the 22nd in the world. However, it is predicted to drop to around EUR 763 billion (USD 829 billion) in 2022 by Trading Economics as it reacts to slowing consumer demand, global worries over European energy and fuel supplies and the impact of fluctuating COVID restrictions in mainland China, its leading trading partner.

Relations with neighbour China are another issue for the island nation, geo-strategically placed in the western Pacific but just 100 miles from the southeast coast of the Chinese mainland. Taiwan’s Directorate-General of Budget, Accounting and Statistics downgraded projected growth
for 2022 to 3.76% from 3.91% and predicted growth of 3.05% for 2023.

Country:
Taiwan
Local Currency:
New Taiwan Dollar (NT$/TWD)
Time Zone:
National Standard Time (UTC+8)
Country Dial Code:
+886
Tax Year:
1 January – 31 December
VAT:
5%
National Minimum Wage:
Since January 1, 2023: TWD 26,400/month (EUR 800 – USD 870).
Taxpayer Identification Number (TIN):
Individuals: National ID Card Number (for nationals with a household registration) – 10-digit code (1 letter + 9-digit numeric string).
Individuals: UI number or Tax Code (for nationals without household registration, for mainland China and Hong Kong/Macau residents, and foreigners).
UI number: 10-digit code (1 letter + 9-digit numeric string)/Tax code: 7-digit code for mainland China residents, 10-digit code for Hong Kong/Macau residents and foreigners.
Non-Individuals: Business Administration Number (BAN) – 8-digit code.
Main trading partners (2022):
Imports: China (21.6%), Japan (14.7%), the USA (10.4%), South Korea (8%), Asia (69%), Europe (12%), North America (11.5%).
Exports: China (28.2%), Japan (6.5%), the USA (14.7%), Asia (72.3%), Europe (8.7%), North America (16.3%)

The Main Sectors of the Taiwanese Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Electronics, Semiconductors, Integrated Circuits

Taiwan’s role in this sector has accelerated due to demands from the automotive industry in developing 5G networks, the post-pandemic swing towards home-working, and the increasing requirement for laptops, tablets, mobile phones and all ICT products. Taiwan’s response to these demands has made
it a global leader in production, testing and packaging. Taiwan is home to the world’s largest semiconductor foundry and the most valuable semiconductor company in the world, the Taiwan Semiconductor Manufacturing Company, with headquarters in the Hsinchu Science Park.

Early manufacturing was primarily based on textiles, footwear and small appliances, then developed into producing radios, electronic equipment, optics, TVs and computers before Taiwan became one of the world’s major suppliers of semiconductors, integrated circuits and the complete range of hardware peripherals.

Despite limited petroleum deposits as a natural resource, Taiwan developed a thriving petrochemical industry by importing fuel to create supplementary products such as plastics, drugs and synthetic materials. Joint agreements with American and Japanese companies also saw Taiwan develop steel and other metals to construct ships, oil rigs and vehicles. The sector supplies around 38% of the GDP and employs about 30% of the workforce.

The sector accounts for almost two-thirds of the GDP and employs two-thirds of the workforce (65%). The most important segments are wholesale and retail trade; government services; finance and insurance; real estate, renting and leasing; transport and storage; health care and social services; professional and high-tech support; accommodation, hospitality and food services; education, culture, sports and recreation; tourist-related activities.

Inevitably, tourism suffered during the early pandemic, after a record 11.84 million foreigners arrived in 2019. In 2020, revenue dropped to EUR 1.8 billion (USD 1.95 billion), eight times less than the previous year.

Finance

The Central Bank maintains money supply and stability, controls the banking sector, and has one of the world’s largest foreign exchange reserves. In 2022, the Central Bank conducted trials with the banking sector to create CBDC – the Central Bank Digital Currency although there was no timetable for roll-out at that stage. There are over 30 domestic and international banks, with the latter including ANZ, Bangkok Bank, BNP Paribas, Barclays, ABN Amro and American Express Bank.

There is also a well-developed insurance sector. The Taiwan Stock Exchange has grown to be among the largest globally since opening in 1962 and deals in bonds, investments, and stocks.

Once a solid economic sector, agriculture and fisheries have declined. Since 2002, when Taiwan joined the World Trade Organisation, it became cheaper to import foreign produce rather than farm traditional crops or keep livestock. Speciality vegetables and fruits maintain a market share, with consumers showing a greater interest in organic farming. Rice remains the most valuable crop. Taiwan is a major exporter of orchids. The sector employs around 5% of the Taiwanese workforce.

The Main Sectors of the Taiwanese Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Electronics, Semiconductors, Integrated Circuits

Taiwan’s role in this sector has accelerated due to demands from the automotive industry in developing 5G networks, the post-pandemic swing towards home-working, and the increasing requirement for laptops, tablets, mobile phones and all ICT products. Taiwan’s response to these demands has made
it a global leader in production, testing and packaging. Taiwan is home to the world’s largest semiconductor foundry and the most valuable semiconductor company in the world, the Taiwan Semiconductor Manufacturing Company, with headquarters in the Hsinchu Science Park.

Early manufacturing was primarily based on textiles, footwear and small appliances, then developed into producing radios, electronic equipment, optics, TVs and computers before Taiwan became one of the world’s major suppliers of semiconductors, integrated circuits and the complete range of hardware peripherals.

Despite limited petroleum deposits as a natural resource, Taiwan developed a thriving petrochemical industry by importing fuel to create supplementary products such as plastics, drugs and synthetic materials. Joint agreements with American and Japanese companies also saw Taiwan develop steel and other metals to construct ships, oil rigs and vehicles. The sector supplies around 38% of the GDP and employs about 30% of the workforce.

The sector accounts for almost two-thirds of the GDP and employs two-thirds of the workforce (65%). The most important segments are wholesale and retail trade; government services; finance and insurance; real estate, renting and leasing; transport and storage; health care and social services; professional and high-tech support; accommodation, hospitality and food services; education, culture, sports and recreation; tourist-related activities.

Inevitably, tourism suffered during the early pandemic, after a record 11.84 million foreigners arrived in 2019. In 2020, revenue dropped to EUR 1.8 billion (USD 1.95 billion), eight times less than the previous year.

Finance

The Central Bank maintains money supply and stability, controls the banking sector, and has one of the world’s largest foreign exchange reserves. In 2022, the Central Bank conducted trials with the banking sector to create CBDC – the Central Bank Digital Currency although there was no timetable for roll-out at that stage. There are over 30 domestic and international banks, with the latter including ANZ, Bangkok Bank, BNP Paribas, Barclays, ABN Amro and American Express Bank.

There is also a well-developed insurance sector. The Taiwan Stock Exchange has grown to be among the largest globally since opening in 1962 and deals in bonds, investments, and stocks.

Once a solid economic sector, agriculture and fisheries have declined. Since 2002, when Taiwan joined the World Trade Organisation, it became cheaper to import foreign produce rather than farm traditional crops or keep livestock. Speciality vegetables and fruits maintain a market share, with consumers showing a greater interest in organic farming. Rice remains the most valuable crop. Taiwan is a major exporter of orchids. The sector employs around 5% of the Taiwanese workforce.

Commercial Laws in
Taiwan

Payroll in Taiwan

Individual Income Tax (IIT): A tax allowance of TWD 124,000 (EUR 3,765 – USD 4,088) applies to individual taxpayers with five bands from 5% to 40%. A tax allowance of TWD 248,000 EUR 7,527 applies to spouses filing joint returns.

Income Basic Tax (IBT): Foreign-sourced income is included if the individual is a tax resident and/or the foreign-sourced income exceeds TWD one million (EUR 30,352 – USD 32,973), and basic income exceeds TWD 6.7 million (EUR 203,356 – USD 220,922). Liability can be offset against foreign taxes paid on the foreign-sourced income. Under the Income Tax Act, Taiwan imposes IBT of 20% on tax residents, including foreigners residing in Taiwan for 183 days or more in a tax year.

Corporate Income Tax: Resident companies are taxed at 20% on worldwide income above TWD 120,000 (EUR 3,643 – USD 3,957). Non-resident companies are generally taxed on income sourced in Taiwan but are treated as resident companies if they have a permanent, fixed place of business.

Value-Added Tax (VAT): 5% VAT applies to the sales of general industries. Gross Business Receipts Tax (GBRT): Rates of 1%, 2% or 5% apply to specified business categories.

Commodity Tax: This varies from 8% to 30% on categories specified by the Commodity Tax Act. Other Taxes: These include Property Tax, Land Value Increment Tax, Real Property Transfer Tax, Deed Tax, Stamp Tax, Securities Transaction Tax and Luxury Tax.

The National Taxation Agency (NTA) of the Ministry of Finance: The Agency comprises six divisions for income tax, consumption tax, property tax, inspection and corruption prevention, auditing and tax collection.

The National Taxation Bureau of Taipei (NTBT): The NTBT collects taxes on behalf of the NTA. The NTA levies business tax. The NTBT collects taxes for enterprise income, personal income tax, commodity tax, estate tax, gift tax, securities transaction tax, futures transactions tax, tobacco and alcohol tax, and specially selected goods and services tax.

The National Taxation Bureau of the Northern Area (NTBNA), the National Taxation Bureau of the Central Area (NTBACA), and the National Taxation Bureau of the Southern Area (NTBASA): These regional authorities collect taxes on behalf of the NTA in the same categories as those collected by the Taipei Taxation Bureau. Additionally, the three regional authorities also collect the following taxes: Agricultural land tax, land value increment tax, house tax, vehicle license tax, deed tax, stamp tax and amusement tax. The NTA collects contributions towards social insurance funds from employers, who also deduct and remit contributions on behalf of their employees. The funds include the Labour Insurance Program (LIP), the National Health Insurance Program (NHIP) and the Labour Pension Program (LPP).

The Labour Standards Act (LSA) prescribes the terms and conditions of written employment contracts, which are standard, but not mandatory for Taiwanese citizens but compulsory for foreign workers. The LSA does not recognise oral contracts. Any terms of employment, such as benefits and entitlements not covered by the LSA, will come under the Taiwan Civil Code. Basic information that must be detailed in the contract includes full details of both parties; work location and type of employment; working hours and breaks; wages and payment schedule; disciplinary procedures; entitlements such as vacations.

The LSA does not stipulate a particular language for contracts, but in the case of legal disputes, notarised translations must be provided in Mandarin. The contract must equal or improve entitlements, benefits and safeguards as stipulated by the
LSA, even if the contract does not explicitly refer to them.

Commercial Laws in
Taiwan

Payroll in Taiwan

Individual Income Tax (IIT): A tax allowance of TWD 124,000 (EUR 3,765 – USD 4,088) applies to individual taxpayers with five bands from 5% to 40%. A tax allowance of TWD 248,000 EUR 7,527 applies to spouses filing joint returns.

Income Basic Tax (IBT): Foreign-sourced income is included if the individual is a tax resident and/or the foreign-sourced income exceeds TWD one million (EUR 30,352 – USD 32,973), and basic income exceeds TWD 6.7 million (EUR 203,356 – USD 220,922). Liability can be offset against foreign taxes paid on the foreign-sourced income. Under the Income Tax Act, Taiwan imposes IBT of 20% on tax residents, including foreigners residing in Taiwan for 183 days or more in a tax year.

Corporate Income Tax: Resident companies are taxed at 20% on worldwide income above TWD 120,000 (EUR 3,643 – USD 3,957). Non-resident companies are generally taxed on income sourced in Taiwan but are treated as resident companies if they have a permanent, fixed place of business.

Value-Added Tax (VAT): 5% VAT applies to the sales of general industries. Gross Business Receipts Tax (GBRT): Rates of 1%, 2% or 5% apply to specified business categories.

Commodity Tax: This varies from 8% to 30% on categories specified by the Commodity Tax Act. Other Taxes: These include Property Tax, Land Value Increment Tax, Real Property Transfer Tax, Deed Tax, Stamp Tax, Securities Transaction Tax and Luxury Tax.

The National Taxation Agency (NTA) of the Ministry of Finance: The Agency comprises six divisions for income tax, consumption tax, property tax, inspection and corruption prevention, auditing and tax collection.

The National Taxation Bureau of Taipei (NTBT): The NTBT collects taxes on behalf of the NTA. The NTA levies business tax. The NTBT collects taxes for enterprise income, personal income tax, commodity tax, estate tax, gift tax, securities transaction tax, futures transactions tax, tobacco and alcohol tax, and specially selected goods and services tax.

The National Taxation Bureau of the Northern Area (NTBNA), the National Taxation Bureau of the Central Area (NTBACA), and the National Taxation Bureau of the Southern Area (NTBASA): These regional authorities collect taxes on behalf of the NTA in the same categories as those collected by the Taipei Taxation Bureau. Additionally, the three regional authorities also collect the following taxes: Agricultural land tax, land value increment tax, house tax, vehicle license tax, deed tax, stamp tax and amusement tax. The NTA collects contributions towards social insurance funds from employers, who also deduct and remit contributions on behalf of their employees. The funds include the Labour Insurance Program (LIP), the National Health Insurance Program (NHIP) and the Labour Pension Program (LPP).

The Labour Standards Act (LSA) prescribes the terms and conditions of written employment contracts, which are standard, but not mandatory for Taiwanese citizens but compulsory for foreign workers. The LSA does not recognise oral contracts. Any terms of employment, such as benefits and entitlements not covered by the LSA, will come under the Taiwan Civil Code. Basic information that must be detailed in the contract includes full details of both parties; work location and type of employment; working hours and breaks; wages and payment schedule; disciplinary procedures; entitlements such as vacations.

The LSA does not stipulate a particular language for contracts, but in the case of legal disputes, notarised translations must be provided in Mandarin. The contract must equal or improve entitlements, benefits and safeguards as stipulated by the
LSA, even if the contract does not explicitly refer to them.

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