Complete Guide to Setting Up a Sole Proprietorship in Taiwan

Taiwan is a small East-Asian country situated in close proximity to the Chinese market. With a moderate population of around 23,196,000, the small country has turned the heads of many global countries with affordable talent and abundant resources. 

The country enjoys a high literacy rate of 98.5%, a lucrative benefit further amplified by easy company incorporation. China and Japan are some of the neighbors who have signed a free-trade agreement with Taiwan. With China and Japan as manufacturing and IT infrastructure leaders, Taiwan made its way into the global market, gaining the attention of countless businesses. 

Setting up a sole proprietorship in Taiwan is a hassle-free process with a sound knowledge of business visas, police clearance certificates, and many more. All the must-know information necessary to register and set up the said business type is given below.  

Who Can be a Sole Proprietor in Taiwan?

Taiwanese citizens over 18 years are allowed to conduct business legally in Taiwan. Anyone can choose from several legal entities, from a private company to a sole proprietorship in Taiwan. 

Non-residents can also open a sole proprietorship in Taiwan. They must have an Alien Resident Certificate (ARC) and ensure a certain Mandarin proficiency across their ranks, per the Taiwanese government. 

Benefits of Sole Proprietorship in Taiwan

Setting up a sole proprietorship in Taiwan is accompanied by highly lucrative benefits apart from allowing brands to hire and leverage dedicated experts for an affordable price. These benefits include:

• Easy setup: Taiwan is considered the 15th easiest country to do business in, per the World Bank’s ease of doing business index 2020. Setting up a sole proprietorship is comparably more straightforward than in other countries. 
• Taxation: The corporate tax rate in Taiwan for any business is capped at 20%. Furthermore, the mentioned sole proprietorship tax rate in Taiwan is only applicable if a non-resident firm makes a profit from a Taiwanese source of income. 
• Hassle-free regulatory compliance: Sole proprietorship in Taiwan has negligible filing requirements. Furthermore, unlike other business types in the country, they are not required to hold annual meetings. 
• Liability: Sole proprietorship in Taiwan has no legal distinction between the owner and the business. This indicates that creditors of the business and individuals with other claims against the owner can claim corporate and personal assets. 
• Free-trade agreement: A business owner can leverage the free-trade agreement Taiwan has with countries like China, Japan, Singapore, and more. Since China is the world’s manufacturing hub, and Japan is home to innovative IT solutions, a company’s scope of growth due to the abundance of resources skyrockets. 
• I.P. protection: Taiwan has a rigorous legal framework that protects such IP rights. Taiwan ranks 21st among all the countries per the list maintained by the International Intellectual property index for the strongest IP protection. 

Documents Required for Registering Your Business in Taiwan

Residents and non-residents looking to incorporate a sole proprietorship in Taiwan should present the listed documents to the

• Filled business registration application form
• Business name registration certificate 
• Business address proof can be a lease or a rental agreement 
• Tax registration certificate 

Residents opting to open registration for a business must also provide a legal document that proves their citizenship. On the other hand, non-residents must provide a passport, an ARC, or a permanent resident certificate (PRC), along with the list of mentioned documents.

Additional documentation might be required for specific companies. The concerned government agencies might request documents like Police Clearance Certificates, health and safety certifications, and environmental impact assessment certificates for a manufacturing plant if needed. 

Other Criteria for Registering a Sole Proprietorship in Taiwan

Registering a business name and address might be the tip of the iceberg for certain businesses, as there are several other requirements an owner must know. 

If the owner is a non-resident, they must have a valid work visa or a residence permit. Obtaining an ARC might be an easy way of establishing credibility. However, a non-resident can also opt to acquire a work visa.

1. A residence visa in Taiwan for a non-resident is only applicable for 180 days. As owning a visa is a criterion, the sole proprietor must ensure its renewal after that period. 
2. The R.O.C. issues ARC certificates and the maximum validity of these certificates is one year. 

Name registration criteria

The chosen business name should be unique and must be registered with the Taiwanese Intellectual Property Office. 

Regulations and scope

The business must abide by the Taiwanese sole proprietorship Taiwanese laws, such as labor and zoning regulations.  

Licenses

For certain business, companies require a business license

1. Occupational license – For professional services such as civil engineering, construction and architecture
2. Special license – For business related to travel agencies and foreign work employment agencies. 

How to Register a Sole Proprietorship Company in Taiwan

Registering a sole proprietorship in Taiwan can be accomplished with a step-by-step systematic approach listed below. 

Business name and address registration:

1. The business name should be unique, and registered with the Department of Commerce and their trademark should be further registered with the Taiwan Intellectual Property Office. 
2. For address registration, a non-resident must provide a rent or lease agreement. Citizens can use their permanent address, but they must ensure that commercial buildings are allowed for the provided address. 

Bank accounts:

1. A bank account for a sole proprietorship in Taiwan is a must-have for businesses in every industry. 
2. The primary use of the bank account is to process employee payments. 
3. The tax payments must be made from the registered bank account. 

Tax registration:

1. Taxation for sole proprietorship in Taiwan is categorized into four parts – corporate tax, income tax, profit retention tax, and tonnage tax system. 
2. One must register their business with the Taiwan National Taxation Bureau and obtain a tax ID. 
3. As there are several industries and business types in Taiwan, the company head should enquire with the mentioned organization to identify the applicable taxes. 

Required insurance registrations:

1. The necessary insurance is mandatory per a company’s operations. Every owner must opt for an insurance policy for their company before its incorporation. 

How Multiplier Can Help You

Opening a sole proprietorship in Taiwan is comparably less complicated than in other countries for employers looking to access abundant resources and talents. However, talent management and setting up a payroll encompass a new and different infrastructure altogether. Multiplier allows one-click pay management and payment processing to every brand in Taiwan without needing to set up and follow the payment processing rules. You can manage your payroll and freelancers’ payment with our one-click payroll services.