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Executive Summary

Taiwan is an important market for regional and global trade and investment. Taiwan is one of the world’s top 25 economies in terms of gross domestic product (GDP) and serves as the United States’ 8th largest trading partner according to 2021 statistics. An export-dependent economy of 23.5 million people with a highly skilled workforce, Taiwan is at the center of regional high-technology supply chains due to advanced capabilities to develop products for industries such as semiconductors, 5G telecommunications, AI, and the Internet of Things (IoT). Taiwan is also a central shipping hub in East Asia. The Taiwan authorities continue to actively launch initiatives to partner with foreign investors to foster resilient, diverse supply chains in the Indo-Pacific.

Taiwan welcomes and actively courts foreign direct investment (FDI) and partnerships with American and other foreign firms. Taiwan President Tsai Ing-wen’s administration seeks to promote economic growth by increasing domestic investment and FDI. Taiwan authorities offer investment incentives and aim to leverage Taiwan’s strengths in advanced technology, manufacturing, and R&D. Some Taiwan and foreign investors regard Taiwan as a strategic location to insulate themselves against potential supply chain disruptions caused by regional trade frictions and the COVID-19 pandemic.

In January 2019, the Taiwan government launched three investment promotion programs, including a reshoring initiative to lure Taiwanese companies to shift production back to Taiwan from the People’s Republic of China (PRC). The Taiwan government extended these investment incentives to the end of 2024 to support its domestic economy and counter the adverse impact from COVID-19. Over the past few years, Taiwan has witnessed increases in greenfield investments by foreign firms, including from companies trying to reduce their over-reliance on PRC supply chains and from firms in the offshore wind sector.

Taiwan’s finance, wholesale and retail, and electronics sectors remain top targets of inward FDI. Taiwan attracts a wide range of U.S. investors, including in advanced technology, digital, traditional manufacturing, and services sectors. The United States is Taiwan’s second-largest single source of FDI after the Netherlands, through which some U.S. firms also choose to invest. In 2020, according to U.S. Department of Commerce data, the total stock of U.S. FDI in Taiwan reached US $31.5 billion. U.S. services exports to Taiwan totaled US $10.2 billion in 2021. Leading services exports from the United States to Taiwan were intellectual property, transport, and financial services.

Structural impediments in Taiwan’s investment environment include the following: excessive or inconsistent regulation; market influence exerted by domestic and state-owned enterprises (SOEs) in the utilities, energy, postal, transportation, financial, and real estate sectors; foreign ownership limits in sectors deemed sensitive; and regulatory scrutiny over the possible participation of PRC-sourced capital. Taiwan has among the lowest levels of private equity investment in Asia, although private equity firms are increasingly pursuing opportunities in Taiwan’s market. Foreign private equity firms have expressed concern over the lack of transparency and predictability in the investment approvals and exit processes and regulators’ reliance on administrative discretion when rejecting certain transactions. Private equity entry and exit challenges are especially apparent in sectors that are deemed sensitive for national security reasons, but still permit foreign ownership.

Taiwan has strived to enact relevant regulation to fight climate change. Taiwan set a goal for renewable energy sources to provide 27 gigawatts (GW) of capacity by 2025. Taiwan aims to phase out nuclear power by 2025 and derive 20 percent of its power supply from renewable sources (mainly solar and offshore wind installation). Taiwan industry continues to question the feasibility for Taiwan to phase out nuclear power by 2025 and increase the use of liquified natural gas (LNG) and renewables.

Labor relations in Taiwan are generally harmonious. The current Tsai administration made improving labor welfare one of its core priorities.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 25 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2020 N/A https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 31,544 https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 N/A https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Promoting inward FDI has been an important policy goal for the Taiwan authorities because of Taiwan’s self-imposed public debt ceiling that limits public spending, and its low levels of private investment. Despite the global economic recession caused by the COVID-19 pandemic, Taiwan’s domestic private investment registered 19 percent y-o-y growth in 2021 due to continuous reshoring of investment by overseas Taiwan companies since late 2018. Taiwan has pursued various measures to attract FDI from both foreign companies and Taiwan firms operating overseas. A network of science and industrial parks, technology industrial zones, and free trade zones aims to expand trade and investment opportunities by granting tax incentives, tariff exemptions, low-interest loans, and other favorable terms. Incentives tend to be more prevalent for investment in the manufacturing sector. In January 2019, Taiwan launched a reshoring incentive program to attract Taiwan firms operating in the PRC to return to Taiwan.

Thus far, Taiwan has received favorable responses from Information Communication Technology (ICT) manufacturers. The Ministry of Economic Affairs (MOEA) Department of Investment Services (DOIS) Invest in Taiwan Center serves as Taiwan’s investment promotion agency and provides streamlined procedures for foreign investors, including single-window and employee recruitment services. For investments over US $17.6 million (New Taiwan Dollar NTD 500 million), Taiwan authorities will assign a dedicated project manager for the investment process. DOIS services are available to all foreign investors. The Center’s website contains an online investment aid system (https://investtaiwan.nat.gov.tw/smartIndexPage?lang=eng ) to help investors retrieve all the required application forms based on various investment criteria and types.

Taiwan also passed the Foreign Talent Retention Act to attract foreign professionals using relaxed visa and work permit issuance process and tax incentives. As of December 2021, 3,927 foreigners received the Taiwan Employment Gold Card, a government initiative to attract highly skilled foreign talent to Taiwan (https://goldcard.nat.gov.tw/en/ ). The Taiwan Employment Gold Card also includes a residency permit for the applicant and his/her immediate relatives (parents, spouse, children), a work permit for three years, an alien resident certificate, and a re-entry permit. The Employment Gold Card policy helped alleviate recruiting companies’ liability in work permit applications and associated administrative expenditures. The MOEA is also in the process of drafting a proposed amendment to the Statute for Investment by Foreign Nationals, which would replace the existing pre-approval investment review process with an ex-post reporting mechanism and strengthen investment screening in industries of national security concern.

Taiwan maintains a negative list of industries closed to foreign investment in sectors related to national security and environmental protection, including public utilities, power distribution, natural gas, postal service, telecommunications, mass media, and air and sea transportation. These sectors constitute less than one percent of the production value of Taiwan’s manufacturing sector and less than five percent of the services sector. Railway transport, freight transport by small trucks, pesticide manufactures, real estate development, brokerage, leasing, and trading are open to foreign investment. The negative list of investment sectors, last updated in February 2018, is available at http://www.moeaic.gov.tw/download-file.jsp?do=BP&id=ZYi4SMROrBA=.

The Taiwan authorities actively promote a “5+2 Innovative Industries” and six strategic industries development program to accelerate industrial transformation. Target industries under this campaign include smart machinery, biomedicine, IoT, green energy, national defense, advanced agriculture, circular economy, and semiconductors. The Taiwan authorities also offer subsidies for the research and development expenses for partnerships with foreign firms. Taiwan’s central authorities take a cautious approach to approving foreign investment in innovative industries that utilize new and potentially disruptive business models, such as the sharing economy.

Taiwan’s authorities regularly meet with foreign business groups. For example, Taiwan’s National Development Council (NDC) meets with the American Chamber of Commerce in Taiwan (AmCham Taiwan) to discuss AmCham Taiwan’s annual White Paper. Some U.S. investors have expressed concerns about a lack of transparency, consistency, and predictability in the investment review process, particularly regarding private equity investment transactions. U.S. investors claim to experience lengthy review periods for private equity transactions that involve redundant inquiries from the MOEA Investment Commission and its constituent agencies. Some U.S. investors report that public hearings convened by Taiwan regulatory agencies about specific private equity transactions appear to promote opposition to private equity rather than foster transparent dialogue. Private equity transactions and other previously approved investments have, in the past, attracted Legislative Yuan scrutiny, including committee-level resolutions that opposed specific transactions.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign entities are entitled to establish and own business enterprises and engage in all forms of remunerative activity, similar with local firms, unless otherwise specified in relevant regulations. Taiwan sets foreign ownership limits in certain industries, such as a 60 percent limit on foreign ownership of wireless and fixed-line telecommunications firms, including a direct foreign investment limit of 49 percent in that sector. State-controlled Chunghwa Telecom, which controls 92 percent of the fixed-line telecom market, maintains a 49 percent limit on direct foreign investment and a 60 percent limit on overall foreign investment, including indirect ownership. There is a 20 percent limit on foreign direct investment in cable television broadcasting services, but foreign ownership of up to 60 percent is allowed through indirect investment via a Taiwan entity. However, in practice, this kind of investment is subject to heightened regulatory and political scrutiny. In addition, there is a foreign ownership limit of 49.99 percent for satellite television broadcasting services and piped distribution of natural gas and a 49 percent limit for high-speed rail services. These foreign ownership limits also apply to all public switched telecommunications resources (“PSTN”) that use telecommunications resources. The foreign ownership cap on airport ground services firms, air-catering companies, aviation transportation businesses (airlines), and general aviation businesses (commercial helicopters and business jet planes) is less than 50 percent, with a separate limit of 25 percent for any single foreign investor. Foreign investment in Taiwan-flagged merchant shipping services is limited to 50 percent for Taiwan shipping companies operating international routes.

Taiwan has opened more than two-thirds of its aggregate industrial categories to PRC investors, with 97 percent of manufacturing sub-sectors and 51 percent of construction and services sub-sectors open to PRC capital. PRC nationals are prohibited from serving as chief executive officer in a Taiwan company, although a PRC board member may retain management control rights. The Taiwan authorities regard PRC investment in media or advanced technology sectors, such as semiconductors, as a national security concern. The Cross-Strait Agreement on Trade in Services and the Cross-Strait Agreement on Avoidance of Double Taxation and Enhancement of Tax Cooperation were signed in 2013 and 2015, respectively, but have not taken effect. Negotiations on the Agreement on Trade in Goods with the PRC were halted in 2016.

Taiwan’s Investment Commission screens applications for FDI, mergers, and acquisitions. Taiwan authorities claim that 95 percent of investments not subject to the negative list and, with capital less than US $17.6 million (NTD 500 million), obtain approval at the Investment Commission staff level within two to four days. Investments between US $17.6 million (NTD 500 million) and US $53 million (NTD 1.5 billion) in capital take three to five days to screen. The approval authority for these types of transactions rests with the Investment Commission’s executive secretary. For investment in restricted industries, in cases where the investment amount or capital increase exceeds NTD 1.5 billion, or for mergers, acquisitions, and spin-offs, screening takes 10 to 20 days and includes review by relevant supervisory ministries. Final approval rests with the Investment Commission’s executive secretary. Screening for foreign investments involving cross-border mergers and acquisitions or other special situations takes 20-30 days, as these transactions require interagency review and deliberation at the Investment Commission’s monthly meeting.

The investment screening process provides Taiwan’s regulatory agencies opportunities to attach conditions to investments to mitigate concerns about ownership, structure, or other factors. Screening may also include an assessment of the impact of proposed investments on a sector’s competitive landscape and the rights of local shareholders and employees. Screening is also used to detect investments with unclear funding sources, especially PRC-sourced capital. To ensure monitoring of PRC-sourced investment in line with Taiwan law and public sentiment, Taiwan’s National Security Bureau participates in every investment review meeting regardless of the size of the investment. Blocked deals in recent years reflected the authorities’ increased focus on national security concerns beyond the negative-list industries. Taiwan authorities also review proposals to prevent illegal PRC investment via third-areas or through dummy accounts.

Foreign investors must submit an application form containing their funding plan, business operation plan, entity registration, and documents certifying the inward remittance of investment funds. Applicants and their agents must provide a signed declaration certifying that any PRC investors in a proposed transaction do not hold more than a 30 percent ownership stake and do not retain managerial control of the company. When an investment fails review, an investor may re-apply when the reason for the denial no longer exists. Foreign investors may also petition the regulatory agency that denied approval or may appeal to the Administrative Court.

Other Investment Policy Reviews

Taiwan has been a member of the World Trade Organization (WTO) since 2002. In September 2018, the WTO conducted the fourth review of Taiwan’s trade policies and practices. Related reports and documents are available at: https://www.wto.org/english/tratop_e/tpr_e/tp477_crc_e.htm

Business Facilitation

MOEA took steps to improve the business registration process, including finalizing amendments to the Company Act to make business registration more efficient. Since 2014, Taiwan shortened the application review period for company registration to two days. Applications for a taxpayer identification number, labor insurance (for companies with five or more employees), national health insurance, and pension plans can be processed at the same time for approval within five to seven business days. Since January 2017, MOEA’s Central Region Office processes foreign investors’ company registration applications.

In recent years, the Taiwan authorities revised rules to improve the business climate for startups. To develop Taiwan into a startup hub in Asia, Taiwan authorities launched an entrepreneur visa program to permit foreign entrepreneurs to remain in Taiwan if they meet one of the following requirements: raise at least US $70,400 (NTD 2 million) in funding, hold patent rights or a professional skills certificate; operate in an incubator or innovation park in Taiwan; win prominent startup or design competitions, or receive grants from the Taiwan authorities. Since in 2019, startup entrepreneurs – including foreign investors – can use intellectual property (IP) as collateral to obtain bank loans. In July 2021, the Taiwan authorities further introduced additional tax and social security measures to attract foreign professionals to Taiwan.

Further details about Taiwan’s business registration process can be found in Invest Taiwan Center’s business one-stop service request website at https://onestop.nat.gov.tw/oss/web/Show/engWorkFlowEn.do . The Investment Commission website lists the rules, regulations, and required forms for seeking foreign investment approval: https://www.moeaic.gov.tw/businessPub.view?lang=en&op_id_one=1

Approval from the Investment Commission is required for foreign investors before proceeding with business registration. After receiving an approval letter from the Investment Commission, an investor can apply for capital verification and then file an application for a corporate name and proceed with business registration. The new company must register with the Bureau of Labor Insurance and the Bureau of National Health Insurance before recruiting employees.

For the manufacturing, construction, and mining industries, the MOEA defines small and medium-sized enterprises (SMEs) as companies with less than US $2.8 million (NTD 80 million) of paid-in capital and fewer than 200 employees. For all other industries, SMEs are defined as having less than US $3.5 million (NTD 100 million) of paid-in capital and fewer than 100 employees. Taiwan runs a Small and Medium Enterprise Credit Guarantee Fund to help SMEs obtain financing from local banks. Firms established by foreigners in Taiwan may receive a guarantee from the Fund. Taiwan’s National Development Fund has set aside NTD 10 billion (US $350 million) to invest in SMEs.

Outward Investment

The PRC used to be the top destination for Taiwan companies’ overseas investment given the low cost of factors of production there, such as wages and land. Since rising trade tensions between the United States and the PRC in 2018, the Taiwan authorities have intensified their efforts to assist Taiwan firms to diversify production by either relocating back to Taiwan or to other markets, including in Southeast Asia. The Tsai administration launched the New Southbound Policy to enhance Taiwan’s economic engagement with 18 countries in Southeast Asia, South Asia, and the Pacific. In 2021, Taiwan companies’ investment in the 18 countries totaled US $5.8 billion. The Taiwan authorities seek investment agreements with these countries to incentivize Taiwan firms’ investment in those markets. Invest Taiwan Center provides consultation and loan guarantee services to Taiwan firms operating overseas. Taiwan’s financial regulators have urged Taiwan banks to expand their presence in Southeast Asian economies either by setting up branches or acquiring subsidiaries.

According to the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, all Taiwan individuals, juridical persons, organizations, or other institutions must obtain approval from the Investment Commission to invest in or have any technology-oriented cooperation with the PRC. The Taiwan authorities maintain a negative list for Taiwan firms’ investment and have special rules governing technology cooperation in the PRC. The Taiwan authorities, Taiwan companies, and foreign investors in Taiwan are increasingly vigilant about the threat of IP theft and illegal talent poaching in key strategic industries, such as the semiconductor industry.

2. Bilateral Investment and Taxation Treaties

Taiwan concluded economic cooperation (free trade) agreements with El Salvador, Guatemala, Honduras, Panama, Singapore, and New Zealand and concluded 26 bilateral investment protection agreements. The updated bilateral investment agreement between Taiwan and India took effect in February 2019. The updated investment protection agreement with Vietnam also entered into force on May 24, 2020. Due to the termination of the diplomatic ties with Nicaragua, Taiwan will cease the implementation of its FTA with Nicaragua (including the investment chapter) on July 1, 2022. The complete list and full text of Taiwan’s bilateral investment treaties, both enforced and signed, can be found at https://investtaiwan.nat.gov.tw/showBusinessPagechtG_Agreement01?lang=cht&search=G_Agreement01&menuNum=92 

Taiwan does not have a bilateral taxation treaty with the United States, and Taiwan companies cite this as a key barrier to investing more in the United States. Taiwan has 34 bilateral income tax agreements in force, available online at https://www.mof.gov.tw/Eng/singlehtml/191?cntId=63930 . In November 2021, the Taiwan-Saudi Arabia tax agreement entered into force, and the agreement with the U.K was amended to meet the requirements of the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) actions. Taiwan signed a taxation agreement with the PRC in August 2015, but it has not yet taken effect. An agreement on the avoidance of double taxation between Taiwan and the Czech Republic came into effect in May 2020.

Under the Taiwan Relations Act, the terms of the 1948 Friendship, Commerce, and Navigation Treaty between the Republic of China and the United States remain in force. U.S. investors are guaranteed national treatment and are provided several protections, including protection against expropriation. Representatives of the United States and Taiwan signed a Trade and Investment Framework Agreement (TIFA) in 1994 to serve as the basis for consultation on trade and investment issues and convened the last TIFA Joint Council in 2021.

Taiwan is not a member of the OECD’s Inclusive Framework on BEPS but voluntarily implements international tax measures. With the increasing global demand for anti-tax avoidance and greater tax information transparency, Taiwan’s legislature passed a series of anti-tax-avoidance laws since 2016, aiming to establish the legal basis for the automatic exchange of financial information for tax purposes. Starting in 2019, the Taiwan authorities implemented the OECD Common Reporting Standard (CRS) and commenced the exchange of information with other OECD members in 2020. Taiwan began exchanging financial account information with Japan and Australia in 2020 and with the U.K in 2021. In 2017, Taiwan also passed amendments to its Income Tax Act; thus, a foreign, profit-seeking enterprise with “effective management” in Taiwan will be deemed a domestic tax resident subject to corporate income tax reporting. Taiwan will adopt a 15 percent minimum corporate tax rate effective from January 1, 2023 to comply with the OECD Pillar Two global minimum tax rules. Taiwan started to collect taxes for goods and services provided by offshore e-commerce companies in May 2017.

3. Legal Regime

Transparency of the Regulatory System

Taiwan generally maintains transparent regulatory and accounting systems that conform to international standards. Publicly listed Taiwan companies fully adopted International Financial Reporting Standards (IFRS) IFRS 16 in 2019. Taiwan’s Financial Supervisory Commission (FSC) has affirmed that Taiwan will begin implementing IFRS 17 in January 2026. Ministries generally originate business-related draft legislation and submit it to the Executive Yuan for review. Following approval by the Executive Yuan, draft legislation is forwarded to the Legislative Yuan for consideration. Legislators can also propose legislation. While the cabinet-level agencies are the primary contact windows for foreign investors before entry, foreign investors also need to abide by local government rules, including those related to transportation services and environmental protection, among others.

Draft laws, rules, and orders are published on The Executive Yuan Gazette Online for public comment. Beginning December 29, 2016, the Taiwan authorities instituted a 60-day public comment period for new rules. All draft regulations and laws are required to be available for public comment and advanced notice unless they meet specific criteria allowing a shorter window. While welcomed by the U.S. business community, the 60-day comment period is not uniformly applied. Draft laws and regulations of interest to foreign investors are regularly shared with foreign chambers of commerce for their comments.

These announcements are also available for public comment on the NDC’s public policy open discussion forum at https://join.gov.tw/index. Foreign chambers of commerce and Taiwan business groups’ comments on proposed laws and regulations, and Taiwan ministries’ replies, are posted publicly on the NDC website. In October 2017, the NDC launched a separate policy discussion forum specifically for startups, which can be found online at https://law.ndc.gov.tw/ProcessFlowNewLaw.aspx, serving as the central platform to harmonize regulatory requirements governing innovative businesses and startups operation.

The Executive Yuan Legal Affairs Committee oversees the enforcement of regulations. Ministries are responsible for enforcement, impact analysis, draft amendments to existing laws, and petitions to laws pursuant to their respective authorities. Impact assessments may be completed by in-house or private researchers. To enhance Taiwan’s regulatory coherence in the wake of regional economic integration initiatives, the NDC in 2017 released a Regulatory Impact Analysis Operational Manual as a practical guideline for central government agencies.

Taiwan authorities place a high priority on promoting socially responsible investment. Both the regulators and investors are gearing up to integrate environmental, social, and corporate governance (ESG) into investment processes. Taiwan authorities mandate that publicly listed companies with more than US $180 million (NTD 5 billion) in capital and firms in sectors with direct impact on consumers, such as food processing, restaurants, chemicals, and financial services, etc., prepare annual social responsibility reports. A total of 586 of Taiwan’s publicly listed companies issued annual social responsibility reports, and nearly half of the reports are prepared voluntarily. In April 2021, Taiwan’s Public Service Pension Fund announced that it will target to fund a total of US $400 million to two foreign asset managers for its “Global Quality ESG Indexed Equity” mandate.

Taiwan regularly discloses government finance data to the public, including all debts incurred by all levels of government. Past information is also retrievable in a well-maintained fiscal database. Taiwan’s national statistics agency also publishes contingent debt information.

International Regulatory Considerations

Taiwan is not a member of any regional economic agreements but is a full member of international economic organizations such as the WTO, APEC, ADB, and Egmont Group. Although Taiwan is not a member of many international organizations, it voluntarily adheres to or adopts international norms, including with finance, such as IFRS. Taiwan is a signatory to the Trade Facilitation Agreement (TFA) and met some of the customs facilitation requirements specified in the TFA, such as single-window customs services and preview of the origin. In 2018, citing tax parity for domestic retailers and the risk of fraud, Taiwan lowered the de minimis threshold from US $150 (NTD 3,000) to US $70 (NTD 2,000), an approach regarded as contrary to facilitating customs clearance and trade, especially for small- and medium-sized U.S. businesses. NDC is drafting a proposed amendment to the Personal Information Protection Act and related regulations to meet the European Union’s General Data Protection Regulation (GDPR) standards and obtain adequacy status.

Legal System and Judicial Independence

Taiwan maintains a codified system of law. In addition to the specialized courts, Taiwan maintains a three-tiered court system composed of the District Courts, the High Courts, and the Supreme Court. The Compulsory Enforcement Act provides a legal basis for enforcing the ownership of property. Taiwan does not have discrete commercial or contract laws. Various laws regulate businesses and specific industries, such as the Company Law, the Commercial Registration Law, the Business Registration Law, and the Commercial Accounting Law. Taiwan’s Civil Code provides the basis for enforcing contracts.

Taiwan’s court system is generally viewed as independent and free from overt interference by other branches of government. Taiwan established its Intellectual Property Court in July 2008 in response to the need for a more centralized and professional litigation system for IPR disputes. There are also specialized labor courts at every level of the court system to deal with labor disputes. Foreign court judgments are final and binding and enforced on a reciprocal basis. Companies can appeal regulatory decisions in the court system.

Laws and Regulations on Foreign Direct Investment

Regulations governing FDI principally derive from the Statute for Investment by Foreign Nationals and the Statute for Investment by Overseas Chinese. These two laws permit foreign investors to transact either in foreign currency or the NTD. The laws specify that foreign-invested enterprises must receive the same regulatory treatment accorded to local firms. Foreign companies may invest in state-owned firms undergoing privatization and are eligible to participate in publicly financed R&D programs.

Amendments the Legislative Yuan passed in 2015 to the Merger and Acquisition Act clarified investment review criteria for mergers and acquisition transactions. The Investment Commission is drafting amendments to the Statute for Investment by Foreign Nationals to simplify the investment review process. Included is an amendment that would replace a pre-investment approval requirement with a post-investment reporting system for investments under a certain threshold. Ex-ante approval would still be required for investments in restricted industries and those exceeding the threshold. The new proposal would also allow the authorities to impose various penalties for violations of the law. Guidance that previously required special consideration of the impact of a private equity fund’s investment has been folded into the set of general evaluation criteria for foreign investment in important industries. In 2016, the MOEA released a supplementary document to clarify required certification for different types of investment applications. This document, which was last revised in August 2021 and in Chinese only, can be found at https://www.moeaic.gov.tw/download-file.jsp?do=BP&id=k/wXjgwG3BM=

In December 2020, Taiwan authorities amended the Regulations Governing the Approval of PRC Investment in Taiwan to ensure the complex structure of foreign investments by investors from the PRC do not circumvent the investment control through any indirect investment structure. The new PRC investment rules introduced stricter criteria for identifying PRC investment through third-area intermediary, expanded the scope of investment subject to the authorities’ approval, and forbid PRC investment with any political or military affiliation.

All foreign investment-related regulations, application forms, and explanatory information can be found on the Investment Commission’s website, at http://run.moeaic.gov.tw/MOEAIC-WEB-SRC/OfimDownloadE.aspx . The Invest in Taiwan Portal also provides other relevant legal information of interest to foreign investors, such as labor, entry and exit regulations, at https://investtaiwan.nat.gov.tw/showPageeng1031003?lang=eng&search=1031003 

Competition and Antitrust Laws

Taiwan’s Fair Trade Act was enacted in 1992. Taiwan’s Fair Trade Commission (TFTC) examines business practices that might impede fair competition. Parties may appeal a TFTC decision directly to the High Administrative Court. After the High Administrative Court issues its opinion, either party may file an appeal to the Supreme Administrative Court, which will only review decisions to determine if the lower court failed to apply the law.

Expropriation and Compensation

According to Taiwan law, the authorities may expropriate property whenever it is deemed necessary for the public interest, such as for national defense, public works, and urban renewal projects. The U.S. government is not aware of any recent cases of nationalization or expropriation of foreign-invested assets in Taiwan. There are no reports of indirect expropriation or any official actions tantamount to expropriation. Under Taiwan law, no venture with 45 percent or more foreign investment may be nationalized, as long as the 45 percent capital contribution ratio remains unchanged for 20 years after establishing the foreign business. Taiwan law requires fair compensation must be paid within a reasonable period when the authorities expropriate constitutionally protected private property for public use.

Dispute Settlement

ICSID Convention and New York Convention

In part due to its unique political status, Taiwan is neither a member of the International Centre for the Settlement of Investment Disputes (ICSID) nor a signatory to the 1966 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). It also is not a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).

Investor-State Dispute Settlement

Foreign investment disputes with the Taiwan authorities are rare. Taiwan resolves disputes according to its domestic laws and based on national treatment or investment guarantee agreements. Taiwan’s bilateral investment agreements serve to promote and protect foreign investments. DOIS is not aware of investment disputes involving U.S. investors, although there have been reports of disputes between U.S. investors and their local Taiwan partners.

International Commercial Arbitration and Foreign Courts

Parties to a dispute may pursue mediation by a court, a town or city mediation committee, and/or the Public Procurement Commission. Mediation is generally non-binding unless parties agree otherwise. Civil mediation approved by a court has the same power as a binding ruling under civil litigation. The Judicial Yuan has been promoting alternative dispute resolution, one of its judiciary reform goals. Arbitration associations in Taiwan include the Chinese Arbitration Association, Taiwan Construction Arbitration Association, Labor Dispute Arbitration Association, and Chinese Construction Industry Arbitration Association in Taiwan.

A court order on recognition and enforcement must be obtained before a foreign arbitral award can be enforced in Taiwan. Any foreign arbitral award may be enforceable in Taiwan, provided that it meets the requirements of Taiwan’s Arbitration Act. In November 2015, the Legislative Yuan amended the Arbitration Act to stipulate that a foreign arbitral award, after a court has granted an application for recognition, shall be binding on the parties and have the same force as a final judgment of a court, and is enforceable. Taiwan referred to the United Nations Commission on International Trade Law (UNCITRAL) model.

Bankruptcy Regulations

Taiwan’s bankruptcy law guarantees creditors the right to share a bankrupt debtor’s assets on a proportional basis. Secured interests in property are recognized and enforced through a registration system. Bankruptcy is not criminalized in Taiwan. Corporate bankruptcy is generally governed by the Company Act and the Bankruptcy Act, while the Consumer Debt Resolution Act governs personal bankruptcy. The quasi-public Joint Credit Information Center is the only credit-reporting agency in Taiwan. In 2020 (latest data available,) there were 200 rulings on bankruptcy petitions.

4. Industrial Policies

Investment Incentives

The Statute for Industrial Innovation provides the legal basis for offering tax credits for companies’ R&D expenditures. MOEA also operates several R&D subsidy programs for target industries including the IoT, smart machinery, biotechnology and biopharmaceuticals, green energy, national defense, the circular economy, 5G equipment, and agriculture. Investors can receive tax incentives for investing in free trade zones, public construction, and biotechnology or biopharmaceuticals. Investment support from the central authorities may be available for priority projects. Industrial zones, export processing zones, science parks, and local governments offer various subsidies, financing, and tax deductions. Investors may receive low-interest loans or subsidies for participating in industrial R&D and industry revitalization programs. R&D tax credits, equivalent to 15 percent of total R&D expenditures, are available only to companies who file corporate income taxes in Taiwan. The Act for the Recruitment and Employment of Foreign Professionals of 2018 offers relaxed visa requirements and high-earner tax deductions to foreign professionals. For a detailed list of investment incentives programs, please refer to the Invest in Taiwan website at https://investtaiwan.nat.gov.tw/showPage?lang=eng&search=1031001 . Taiwan government has various programs to support underrepresented entrepreneurs, including the Phoenix Micro Start-up Loan and interest subsidies for women, offshore island residents and the middle-aged and senior citizens at the early stage of start-up.

In promotion of Taiwan’s green energy industry, Taiwan’s National Development Fund and local banks collectively provided US $3.4 billion in financial guarantees to steer continued green investment into offshore wind projects and other major infrastructure projects in Taiwan. Since 2018, international renewable energy companies have rushed to set up offshore wind farms in Taiwan because of the 20-year power purchase agreement and generous feed-in tariffs (FIT) pricing scheme. Taiwan’s domestic banks have provided special loans of over US $42 billion to green energy companies and nearly US $9.1 billion to offshore wind businesses. Taiwan’s installed solar PV capacity had tripled over the past four years to reach 7.8 GW since Taiwan authorities in 2016 announced the 2025 installed solar capacity target of 20 GW. Investors have been drawn to Taiwan’s streamlined application process for solar PV projects and incentives such as higher FIT rates.

Foreign Trade Zones/Free Ports/Trade Facilitation

There are seven free trade/free port zones in Taiwan: Anping, Kaohsiung, Keelung, Suao, Taichung, Taipei, and Taoyuan International Airport. The authorities have relaxed restrictions on the movement of merchandise, capital, and personnel into and out of these zones. As part of a broader restructuring and to increase the competitiveness of Taiwan’s ports, the Ministry of Transportation and Communication established the Taiwan International Ports Corporation (TIPC) in 2012 to manage commercial activities of Taiwan’s ports and free trade zones. TIPC facilitates cooperation with foreign shipping operations and related businesses. In addition to preferential tariffs and fees, the foreign labor ceiling for manufacturers in the free ports zones is 40 percent. Kaohsiung Port also serves as a London Metal Exchange (LME) delivery port of primary aluminum, aluminum alloy, copper, lead, nickel, tin, and zinc.

Performance and Data Localization Requirements

With one prominent counterexample, Taiwan does not mandate any forced localization or performance requirements and does not ask software firms to disclose their source code nor access to encryption. In this counterexample, the National Communications Commission prohibited a local telecom carrier from contracting a PRC cloud services company due to concerns over personal data protection. Positive examples of data mobility include new businesses such as Uber and Food Panda and mobile payment firms like Apple Pay, all of which are freely transmitting data cross-border. The authorities may, subject to strict legal proceedings based on Personal Data Protection Act, examine financial crime data from services providers. In September 2019, the Taiwan FSC amended rules to allow banks to store data on overseas cloud servers, as long as the FSC can obtain information for such operations and maintain the right to execute on-site examinations.

5. Protection of Property Rights

Real Property

Property interests are enforced in Taiwan, and it maintains a reliable recording system for mortgages and liens. Taiwan law protects the land use rights of indigenous peoples. Taiwan’s Land Act stipulated that forests, fisheries, hunting grounds, salt fields, mineral deposits, water sources, and lands lying within fortified and military areas and those adjacent to national frontiers may not be transferred or leased to foreigners. Based on the Ministry of Interior’s (MOI) Operational Regulations for Foreigners to Acquire Land Rights in Taiwan, foreigners coming from countries that provide Taiwan residents the same land rights will be allowed to acquire or set the same rights in Taiwan. In May 2015, the Cadastral Clearance Act was passed to promote better land registration management. As in other investment categories, Taiwan has specific regulations governing property acquisition by PRC investors.

Intellectual Property Rights (IPR)

Taiwan’s laws to protect IPR include: the Patent Act, Trademark Act, Copyright Act, and Trade Secrets Act. Taiwan established the pharmaceutical Patent Linkage system in mid-2019. The Taiwan Intellectual Property Office (TIPO) is responsible for policy formulation, laws drafting, and inter-agency enforcement coordination. The Intellectual Property Rights Protection Corps. Of the Criminal Investigation Brigade (CIB) and National Police Administration (NPA) receive IP infringement reports (through toll free direct line of 0800-016-597; and email: 0800016597@iprp.spsh.gov.tw ), and then provide them to the Ministry of Justice for investigations. IP cases are tried in both District Courts and the specialized IP Court.

In January 2022, the Executive Yuan (EY) approved draft amendments to the Copyright Act and Trademark Act to prepare for Taiwan’s ascension to the Comprehensive and Progressive Agreement for Trans-Pacific (CPTPP). The draft amendment on Copyright Act proposes that illegal digital piracy, distribution, and public transmission be deemed as actionable-without-compliant offenses (same as indictable crimes); and pirated optical discs shall be included in the scope of digital piracy, resulting to higher penalties. The draft amendment on the Trademark Act expands counterfeiting crimes from originally defined as “knowingly” to “intentional” and “negligent.” Criminal liabilities are included in the draft, which as of late March 2022, is in the Legislative Yuan (LY) for review. In April 2021, the EY approved the draft amendment of the Copyright Act. This draft covers a wide range of changes, including: (1) the protection from simultaneous further communication to the public (e.g. a retailer plays a YouTube video inside its store); (2) fair use applies to distance learning, libraries and other archival institutions, museums, and regularly held non-profit events; (3) online advertisement of pirated goods deemed as copyright infringement; and (4) minimum six-month imprisonment. This draft amendment is meant to counter the development of digital technology and the internet. As of late March 2022, the draft is in the LY for review.

In 2021, Taiwan’s National Police Agency investigated 3,672 IP (including trademark, copyright, and trade secrets) infringement cases, with seizures totaling US $35.5 billion (NTD 103.0 billion). Taiwan Customs prosecuted 228 IP-infringement import cases, with 2.23 million items of trademark infringement and three items of copyright infringement. The majority of those cases were related to bags, pharmaceuticals, and clothing. The Prosecutors’ Offices of the District Courts handled down verdicts of 6,258 IP infringement cases in 2021, with 53 percent of them not indicted.

Although some industries lobbied for Taiwan’s inclusion the 2022 301 Report, AIT recommended not including Taiwan on the watch list based on consultations with related agencies as well as Taiwan-based stakeholders. Given Taiwan’s progress in recent years, on both regulations and also the inter-agency efforts on enforcement, AIT concluded that Taiwan’s conclusion would be counterproductive. Another assessment made by AIT for the Notorious Market List concluded that Taiwan-based U.S. stakeholders and law enforcement do not have concerns about brick and mortar markets. As for online markets, local investigation agencies confirmed that the infringing sites allegedly hosted in Taiwan were actually hosted outside of Taiwan.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/. 

6. Financial Sector

Capital Markets and Portfolio Investment

Taiwan authorities welcome foreign portfolio investment in the Taiwan Stock Exchange (TWSE), with foreign investment accounting for approximately 43.5 percent of TWSE capitalization in 2021. Taiwan allows the establishment of offshore banking, securities, and insurance units to attract a broader investor base. The FSC utilizes a negative list approach to regulating local banks’ overseas business not involving the conversion of the NTD.

Taiwan’s capital market is mature and active. At the end of 2021, 959 companies were listed on the TWSE, with a total market value of US $2.2 trillion (including transactions of stocks, Taiwan Depository Receipts, exchange-traded funds, and warrants). Foreign portfolio investors are not subject to a foreign ownership ceiling, except in certain restricted companies, and are not subject to any ceiling on portfolio investment. The turnover ratio in the TWSE rose to 205.3 percent in 2021 as the TWSE Capitalization Weighted Stock Index (TAIEX) soared 23.7 percent in 2021. Payments and transfers resulting from international trade activities are fully liberalized in Taiwan. A wide range of credit instruments, all allocated on market terms, is available to domestic- and foreign-invested firms alike.

Money and Banking System

Taiwan’s banking sector is healthy, tightly regulated, and competitive, with 39 banks including three online-only banks servicing the market. The sector’s non-performing loan ratio has remained below 1 percent since 2010, with a sector average of 0.17 in December 2021. Capital-adequacy ratios (CAR) are generally high, and several of Taiwan’s leading commercial lenders are government-controlled, enjoying implicit state guarantees. The sector had a CAR of 14.82 percent as of September 2021, far above the Basel III regulatory minimum of 10.5 percent required by 2019. Taiwan banks’ liquidity coverage ratio, which was required by Basel III to reach 100 percent by 2019, averaged 134.2 percent in September 2021. Taiwan’s banking system is primarily deposit-funded and has limited exposure to global financial, wholesale markets. Regulators have encouraged local banks to expand to overseas markets, especially in Southeast Asia, and minimize exposure in the PRC. Taiwan Central Bank statistics show that Taiwan banks’ PRC net exposure on an ultimate risk basis was USD 70.8 billion in the third quarter of 2021, trailing the United States’ USD 110.2 billion. Taiwan’s largest bank in terms of assets is the wholly state-owned Bank of Taiwan, which had USD 198.2 billion of assets as of December 2021. Taiwan’s eight state-controlled banks (excluding the Export and Import Bank) jointly held nearly US $1,015.6 billion, or 48 percent of the banking sector’s total assets.

The Taiwan Central Bank operates as an independent agency and state-owned company under the Executive Yuan, free from political interference. The Central Bank’s mandates are to maintain financial stability, develop Taiwan’s banking business, guard the stability of the NTD’s external and internal value, and promote economic growth within the scope of the three aforementioned goals.

Foreign banks are allowed to operate in Taiwan as branches and foreign-owned subsidiaries, but financial regulators require foreign bank branches to limit their customer base to large corporate clients. Foreigners holding a valid visa entering Taiwan are allowed to open an NTD account with local banks with passports and an ID number issued by the immigration office. Please refer to the Taiwan Bankers’ Association’s webpage: https://www.ba.org.tw/PublicInformation/BusinessDetail/10?returnurl=%2F  for detailed information regarding various types of bank services for foreigners in Taiwan.

Foreign Exchange and Remittances

Foreign Exchange

There are few restrictions in place in Taiwan on converting or transferring direct investment funds. Foreign investors with approved investments can readily obtain foreign exchange from designated banks. The remittance of capital invested in Taiwan must be reported in advance to the Investment Commission under the Ministry of Economic Affairs, but the Commission’s approval is not required. Funds can be freely converted into major world currencies for remittance, but to retain funds in Taiwan, they must be held in currency denominations offered by banks. In addition to commonly used U.S. dollar, euro, and Japanese yen-denominated deposit accounts, most Taiwan banks offer up to 15 foreign currency denominations. The exchange rate is based on the market rate offered by each bank. The NTD fluctuates under a managed float system.

Remittance Policies

There are no restrictions on remittances deriving from approved direct investment and portfolio investment. Prior approval is not required if the cumulative amount of inward or outward remittances does not exceed the annual limit of US $5 million for an individual or US $50 million for a corporate entity. Declared earnings, capital gains, dividends, royalties, management fees, and other returns on investment may be repatriated at any time. For large transactions requiring the exchange of NTD into foreign currency that could potentially disrupt Taiwan’s foreign exchange market, the Taiwan Central Bank may require the transaction to be scheduled over several days. According to law firms servicing foreign investors, there is no written guideline on the size of such transactions but amounts more than US $100 million may be affected. Capital movements arising from trade in merchandise and services, as well as from debt servicing, are not restricted. No prior approval is required to move foreign currency funds not involving conversion between NTD and foreign currency.

Sovereign Wealth Funds

Taiwan does not have a sovereign wealth fund, although the American business community continues to advocate for one. Taiwania Capital Management Company, a partially government-funded investment company, was established in October 2017 to promote investment in innovative and other target industries. As of August 2021, Taiwania raised US $490 million for four funds investing in IoT, biotech, digital health, and early startups in automation, 5G and networking, and advanced manufacturing.

7. State-Owned Enterprises

Taiwan has 17 SOEs with stakes by the central authorities exceeding 50 percent, including official agencies such as the Taiwan Central Bank. Please refer to the list of all central government, majority-owned SOEs available online at https://ws.ndc.gov.tw/Download.ashx?u=LzAwMS9hZG1pbmlzdHJhdG9yLzEwL3JlbGZpbGUvMC8xMjk1LzM3NGExNjVjLWM5MzAtNDYxZS1iYjViLTA3ODkzYjNlNWVhMi5kb2M%3d&n=M2ZjMzZmMDItZjVjOC00ZjU2LThiMTctZmM3Y2EzMTE1MDRhLmRvYw%3d%3d&icon=.doc Some of these SOEs are large in scale and exert significant influence in their industries, especially monopolies such as Taiwan Power (Taipower) and Taiwan Water. CPC Corporation (formerly China Petroleum Corporation) controls over 70 percent of Taiwan’s retail gasoline market. The most recent privatization took place in 2014, when the Aerospace Industrial Development Corporation (AIDC) was successfully privatized through a public listing on the TWSE. Taiwan authorities retain control over some SOEs that were privatized, including managing appointments to boards of directors. These enterprises include Chunghwa Telecom, China Steel, China Airlines, Taiwan Fertilizer, Taiwan Salt, CSBC Corporation (shipbuilding), Yang Ming Marine Transport Corp., and eight public banks. In 2020 (latest data available), the 17 SOEs together had a net income of NTD 258 billion (US $9.2 billion), down 21 percent from the NTD 325 billion (US $11.6 billion) in 2019. The SOEs’ average return on equities continued to decline from a recent peak of 11.13 percent in 2015 to 6.67 percent in 2020. These 17 SOEs employed a total of 120,606 workers.

Taiwan has not adopted the OECD Guidelines on Corporate Governance for SOEs. In Taiwan, SOEs are defined as public enterprises in which the government owns more than 50 percent of shares. Public enterprises with less than a 50 percent government stake are not subject to Legislative Yuan supervision. Still, authorities may retain managerial control through senior management appointments, which may change with each administration. Each SOE operates under the supervising ministry’s authority, and government-appointed directors should hold more than one-fifth of an SOE’s board seats. The Executive Yuan, the Ministry of Finance, and MOEA have criteria for selecting individuals for senior management positions. Each SOE has a board of directors, and some SOEs have independent directors and union representatives sitting on the board.

Taiwan’s central and local government entities, and SOEs are all covered by the WTO’s Agreement on Government Procurement (GPA.) Except for state monopolies, SOEs compete directly with private companies. SOEs’ purchases of goods or services are regulated by the Government Procurement Act and are open to private and foreign companies via public tender. Private companies have the same access to financing as SOEs. Taiwan banks are generally willing to extend loans to enterprises meeting credit requirements. SOEs are subject to the same tax obligations as private enterprises and are regulated by the Fair Trade Act as private enterprises. The Legislative Yuan reviews SOEs’ budgets each year.

Privatization Program

There are no privatization programs in progress. Taiwan’s most recent privatization of AIDC in 2014 included the imposition of a foreign ownership ceiling of 10 percent due to the sensitive nature of the defense sector. In August 2017, Taiwan authorities identified CPC Corporation, Taipower Company, and Taiwan Sugar as their next privatization targets. Following the passage of the Electricity Industry Act amendments in January 2017, MOEA has stated that Taipower’s privatization will not occur in the near future, but plans to restructure it as a new holding company after separating Taipower’s distribution business from power generation.

8. Responsible Business Conduct

The Taiwan public has high expectations for and is sensitive to responsible business conduct (RBC), in part due to concerns about such issues as food safety and environmental pollution. Taiwan authorities actively promote RBC. MOEA and the FSC issued guidelines on ethical standards and internal control mechanisms to urge businesses to take responsibility for the impact of their activities on the environment, consumers, employees, and communities. Although not a member of the United Nations, Taiwan pledged on its own initiative to uphold international human rights conventions. In December 2020, Taiwan’s Cabinet released the National Action Plan on Business and Human Rights (NAP) in an aim to provide better protections for human rights in the workplace. Taiwan’s labor law provides a minimum age for employment of 15 but has an exception for work by children younger than 15 if they have completed junior high school and the competent authorities have determined the work will not harm the child’s mental and physical health. The law prohibits children younger than 18 from doing heavy or hazardous work. Working hours for children are limited to eight hours per day, and children may not work overtime or on night shifts. There is no reported RBC related to forced labor or child labor issues.

The TWSE conducts an annual review of the corporate governance performance of all publicly listed companies. To promote more profit-sharing with employees, Taiwan’s Securities and Futures Act mandates that all publicly listed companies establish a compensation committee. In November 2018, the Act was amended to require all publicly listed companies to disclose average employee compensation and wage adjustment information. Taiwan Depository & Clearing Corporation, a government-run securities depository of Taiwan, in 2020 launched Taiwan ESG Dashboard to encourage sustainable investing and enhance companies’ performance on ESG issues. In 2021, 30 Taiwan companies were included in the Dow Jones Sustainability World Index. Taiwan ranks fourth among 12 Asian markets in the Corporate Governance Watch 2020 report, behind only Australia, Hong Kong, and Singapore. There are also independent NGOs and business associations promoting or monitoring RBC in Taiwan.

In August 2020, the FSC announced that it will implement the “Corporate Governance 3.0–Sustainable Development Roadmap” for the TWSE listed companies. All TWSE-listed companies are required to appoint a chief corporate governance officer. They must complete the carbon footprint verification and disclosure by 2027, and all the certification by 2029. Starting in January 2022, 42 listed petrochemical companies and 44 financial institutions were required to obtain third-party assurance for sustainability reporting. The FSC also mandates greenhouse gas emissions disclosure in annual reports beginning in 2023 for all steel and cement companies, as well as listed companies with paid-in capital of over US $360 million (NTD 10 billion).

Taiwan does not participate in the Extractive Industries Transparency Initiative. Taiwan authorities encourage Taiwan firms to adhere to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas, and many Taiwan-listed companies have voluntarily enclosed conflict minerals free statement in their annual social responsibility reports. Taiwan has a private security industry. Taiwan is not a signatory of The Montreux Document on Private Military and Security Companies, nor a participant in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA.)

Climate Issues

Taiwan’s Greenhouse Gas Reduction and Management Act in 2015 includes long-term reduction goals in its official legislation to combat climate change and maps out general guidelines in the 2017 National Climate Change Action Guidelines for greenhouse gas mitigation and climate change adaptation. Taiwan has a national strategy to protect biodiversity and maintain sustainable ecosystems. Taiwan established a national ecological network in 2018 and compiled ecological survey data over the past five years to identify key biodiversity areas and promote ecofriendly land production. The Cabinet is amending the ‘Greenhouse Gas Reduction and Management Act’ into the ‘Climate Change Response Act (CCRA)” and will strengthen climate management by appointing cabinet-level authorities to enhance Taiwan’s overall capacities for climate change mitigation through emission controls and incentive mechanisms to facilitate carbon reduction and adopting a carbon pricing mechanism with levies on Taiwan’s carbon-intensive emitters and imported commodities.

Taiwan authorities are in discussion with industry and business to promote voluntary greenhouse gas emissions reduction, decarbonized energy systems, higher energy efficiency in industry, green transportation and negative emissions technologies to achieve relevant targets/goals. The Taiwan Alliance for Net-Zero Emissions, a group comprised of local traditional manufacturing, technology, finance, and service industries, supports Taiwan authorities’ efforts to attain net-zero carbon emissions at office sites by 2030 and production sites by 2050. Another consortium, the Taiwan Climate Alliance, formed by eight ICT companies in Taiwan, plans to use 100 percent renewable energy in their manufacturing processes by 2050.

Taiwan’s Environmental Protection Administration (TEPA) adopted a carbon emission offset program in 2015. TEPA initiated a Green Mark product labeling as a voluntary scheme of environmental performance certification in Taiwan beginning from 1992. In 2011, TEPA mandated the post-market verification for green products. Subsidies are also available for renewable energy-use generators. TEPA also subsidizes new motorcycles to phase out motorcycles made before June 2007.

Taiwan’s Government Procurement Act authorizes central and local authorities and other public institutions to give preference in tenders to products with a government-approved eco-label, as well as those that increase social benefits or reduce social costs. Taiwan central authorities set annual green procurement targets and require that the public sector procurement prioritizes environmentally friendly products. Since the program started in 2012, Taiwan’s green procurement rate increased from 30 percent to 95 percent.

Additional Resources

Department of State

Department of the Treasury

Department of Labor

9. Corruption

Resources to Report Corruption

Agency Against Corruption and Northern Investigation Office, Ministry of Justice
No.166, Bo’ai Rd., Zhongzheng District, Taipei
Anti-corruption Hotline opens 24 hrs: +886-0800-286-586
https://www.aac.moj.gov.tw/7170/278724/ 

TI Chinese Taipei, TICT
https://www.transparency.org/en/countries/taiwan
http://www.tict.org.tw/ 

Wang Shen-jieh
Specialist
TI Chinese Taipei
5F, No.111 Mu-Cha Road, Section 1, Taipei, Taiwan 11645
Tel: +886-2-2236-2204
Email: tict@tict.org.tw; transparencytaiwan@gmail.com

Taiwan implemented laws, regulations, and penalties to combat corruption, including in public procurement. The Act on Property Declaration by Public Servants mandates annual property declaration for senior public services officials and their immediate family members. In 2021, the Control Yuan discovered 29 violations and imposed a total of US $485,000 in fines. The Corruption Punishment Statute and Criminal Code contain specific penalties for corrupt activities, including maximum jail sentences of life in prison and a maximum fine of up to NTD 100 million (US $3.5 million). Laws provide for increased penalties for public officials who fail to explain the origins of suspicious assets or property. The Government Procurement Act and the Act on Recusal of Public Servants Due to Conflict of Interest both forbid incumbent and former procurement personnel and their relatives from engaging in related procurement activities. Although not a UN member, Taiwan voluntarily adheres to the UN Convention against Corruption and published its first country report in March 2018.

Guidance titled Ethical Corporate Management Best Practice Principles for all publicly listed companies was revised in November 2014. It asks publicly listed companies to establish an internal code of conduct and corruption-prevention measures for activities undertaken with government employees, politicians, and other private sector stakeholders. The Ministry of Justice is drafting a Whistle Blowers Protection Act to effectively combat illegal behaviors in both government agencies and the private sector. The Anti-money Laundering Act implemented June 2017 requires the mandatory reporting of financial transactions by individuals listed in the Standards for Determining the Scope of Politically Exposed Persons Entrusted with Prominent Public Function, Their Family Members and Close Associates, and by the first-degree lineal relatives by blood or by marriage; siblings, spouse and his/her siblings, and the domestic partner equivalent to a spouse of these politically exposed individuals. The U.S. government is not aware of cases where bribes have been solicited for foreign investment approval.

10. Political and Security Environment

Taiwan is a young and vibrant multi-party democracy. The transitions of power in both local and presidential elections have been peaceful and orderly. There are no recent examples of politically motivated damage to foreign investment.

11. Labor Policies and Practices

The Tsai Ing-wen administration has made improving labor welfare one of its core priorities. Minimum monthly wage has been consistently raised since 2017 and reached US $890 (NTD 25,250) in 2022. Affected by the global pandemic, Taiwan’s unemployment rate in 2021 edged up to 3.64 percent. Taiwan Ministry of Labor (MOL) data show that 53 percent of Taiwan’s population aged above 15 years is at least college-educated. Taiwan’s female worker participation rate is 51.4 percent, similar to neighboring countries’ figures. According to the MOL, informal employment hit a record high at 799,000 labors in 2020, accounting for 7.0 percent of total employment.

The size of Taiwan’s labor force is decreasing as the society ages. Taiwan transitioned from an “aging society” to an “aged society” in 2018. In 2020, 15.8 percent of its population were 65 years old or above, up from 10.6 percent in 2009. Taiwan’s total fertility rate in 2020 was 0.99, marking the first time it went under one and remaining one of the lowest in the world. As of December 2021, there were 669,992 foreign laborers in Taiwan, of which 443,104 were working in the industrial sector. The Labor Standard Act and the Act of Gender Equality in Employment are universally applied to both domestic and foreign workers, with the exception that domestic foreign helpers are not covered by the Labor Standard Act.

MOL data indicated that, while labor shortage rates remained stable at around three percent in the manufacturing industry, the rates have been increasing over past few years in services industries such as food and accommodation, information and communication, art and entertainment, recreation, and real estate activities. Industry groups have long claimed that the lack of blue-collar workers is one of the major issues facing manufacturers operating in Taiwan and have urged the authorities to increase the ceiling on foreign workers. To attract Taiwan businesses to relocate back to Taiwan, Taiwan authorities lifted the foreign workers ceiling for specific industries, but across the board, the ceiling remained at 40 percent of total employees. Taiwan businesses consistently urge the authorities to ease work visa requirements to recruit foreign professionals, especially the skilled white-collar labor in the ICT sector. However, wage growth in Taiwan, compared with neighboring economies, poses a challenge for talent recruitment and retention. Taiwan issued 40,993 working permits to foreign professionals in 2021, with 20 percent to individuals from Japan, followed by 15.9 percent from Malaysia, and 8.3 percent from the United States. 26.7 percent of foreign professionals work in the manufacturing industry.

Private companies are not required to hire nationals. Employers may institute unpaid leave with employees’ consent but must notify the labor authorities and continue to make health insurance, labor insurance, and pension contributions. Due to the global pandemic, 58,731 employees suffered from unpaid leave in 2021. Taiwan provides unemployment relief based on the Employment Insurance Law, vocational training allowances for jobless persons, and employment subsidies to encourage hiring. Labor laws are not waived to attract or retain investment.

Labor relations in Taiwan are generally harmonious. Although Taiwan is not a member of the International Labor Organization (ILO), it adheres to ILO conventions on the protection of workers’ rights. Taiwan law protects the right to join independent unions, conduct legal strikes, and bargain collectively. Labor unions have become more active in Taiwan over the past decade, and the Collective Agreement Act outlines the negotiation mechanism for collective bargaining to protect labor’s interests in the negotiations. The majority of labor unions exist in the manufacturing sector. The authorities provide financial incentives to enterprise unions to encourage negotiation of “collective agreements” with employers that detail their employees’ immediate labor rights and entitlements. No strike has initiated/conducted in 2020-21 due to the stringent economic impact by the global pandemic. Taiwan’s labor authorities have announced the increasing frequency and coverage of labor inspections. Since 2019, government incentives for business growth and industrial development have incorporated the labor inspection record as a core evaluating item for the applying entities. Violating employers will not be eligible for tax reduction or grants. The Labor Incident Act of 2020 mandates the establishment of special labor courts, which helps accelerates dispute resolution and reduces financial cost for labor filing employment lawsuits. In December 2020, Taiwan implemented the Middle-aged and Elderly Employment Promotion Act to promote employment opportunities for employees aged above 45 years.

12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs

Taiwan and the United States have an agreement with DFC’s predecessor agency the Overseas Private Investment Corporation (OPIC). The agreement, signed in 1952, is called the Agreement Dealing with Guaranty of American Investment of Private Capital in Taiwan. There are no active DFC projects in Taiwan. In 2019, OPIC/DFC collaborated with Taiwan’s International Cooperation and Development Fund (ICDF) for the first time to support a development project in Paraguay. In December 2020, DFC and ICDF announced credit enhancing support for the Women’s Livelihood Bond Series (WLB Series) managed by the Singapore-based Impact Investment Exchange (IIE). The WLB blends in both public and private resources, which empowers underserved women in the Indo-Pacific region.

13. Foreign Direct Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2021 $774,793 2021 $785,590 www.imf.org
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 $24,876 2020 $31,544 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2020 $22,159 2020 $13,746 BEA data available at https://apps.bea.gov/international/factsheet/

 

Total inbound stock of FDI as % host GDP 2020 28.0% 2020 16.4% UNCTAD data available at

https://unctad.org/topic/investment/world-investment-report

* Source for Host Country Data: GDP: Directorate General of Budget, Accounting, and Statistics; FDI: Investment Commission, Ministry of Economic Affairs

Table 3: Sources and Destination of FDI
Data not available.

14. Contact for More Information

Arati Shroff
Deputy Chief, Economic Section, American Institute in Taiwan
100 Jinhu Road, Taipei, Taiwan
+886-2-2162-2000
ShroffA@state.gov

2022 Investment Climate Statements: Taiwan
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