2023 Investment Climate Statements: Taiwan

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 limiting public spending and its low levels of private investment. 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 aim 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.

Taiwan launched a reshoring incentive program in 2019 to attract Taiwan firms operating in the PRC to return to Taiwan and 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 services and employee recruitment. For investments over New Taiwan Dollar (NTD) 500 million (US $16.7 million), authorities will assign a dedicated project manager to facilitate the investment process. DOIS services are available to all foreign investors. The Centre’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 with a relaxed visa and work permit issuance process and tax incentives. As of December 2022, 6,571 foreigners have received the Taiwan Employment Gold Card , a government initiative to attract highly skilled foreign talent to Taiwan (https://goldcard.nat.gov.tw/en/).

Taiwan maintains a list of industries closed to foreign investment due to national security and environmental protection concerns as reported by local authorities. These exclusions apply to various sectors, including public utilities, power distribution, natural gas, postal service, telecommunications, mass media, and air and sea transportation. Railway transport, freight transport by small trucks, pesticide manufactures, real estate development, brokerage, leasing, and trading are open to foreign investment. The list of restricted investment sectors, last updated in 2018, is available at http://www.moeaic.gov.tw/download-file.jsp?do=BP&id=ZYi4SMROrBA= .

Taiwan authorities have been actively promoting the “5+2 Innovative Industries” and six strategic industries development program to accelerate industrial transformation that would boost domestic demand and external market expansion. Target industries include smart machinery, biomedicine, IoT, green energy, national defense, advanced agriculture, circular economy, and semiconductors, among other key sectors. Taiwan authorities also offer subsidies for the research and development expenses for Taiwan-foreign partnership projects. 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.

The American Chamber of Commerce in Taiwan (AmCham Taiwan) meets regularly with Taiwan agencies such as the National Development Council (NDC) to promote the resolution of concerns highlighted in the AmCham Taiwan’s annual White Paper. The authorities also regularly meet with other foreign business groups. 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 have claimed to experience lengthy review periods for private equity transactions and redundant inquiries from the MOEA Investment Commission and its constituent agencies. Some report that public hearings convened by Taiwan regulatory agencies about specific private equity transactions have appeared to advance opposition to private equity rather than foster transparent dialogue. Private equity transactions and other previously approved investments have, in the past, attracted the scrutiny of the Legislative Yuan – Taiwan’s legislative body – including committee-level resolutions opposing specific transactions.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign entities are entitled to establish entities, own business enterprises, and engage in all forms of remunerative activity as 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. For instance, Chunghwa Telecom, which controls 92 percent of the fixed-line telecom market, has a 49 percent limit on direct foreign investment and a 60 percent limit on overall foreign investment when including indirect ownership, in addition to a Taiwan identity document requirement for its Chairman position. There is also a 20 percent limit on foreign direct investment in cable television broadcasting services, and foreign ownership of up to 60 percent is allowed through indirect investment via a Taiwan entity. However, in practice, this kind of foreign 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, as well as a 49 percent limit for high-speed rail services. These foreign ownership limits also apply for 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. 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 halted in 2016.

The Investment Commission screens applications for FDI, mergers, and acquisitions. Taiwan operates a two-track inbound FDI screening mechanism: one track for screening inbound investment from the PRC (excluding Hong Kong and Macau) and another for screening inbound investments from rest of the world.  Taiwan authorities claim that 95 percent of investments are not subject to Taiwan’s list of excluded industries, and that investments, with capital less than US $17.6 million (NTD 500 million), can obtain approval at the Investment Commission staff level within two to four days. Investments between US $16.7 million (NTD 500 million) and $50 million (NTD 1.5 billion) take three to five days to screen. The approval authority for these types of transactions rests with the Investment Commission’s executive secretary. For investments exceeding NTD 1.5 billion, involving cross-border mergers and acquisitions or other special situations, screening takes at least 20-30 days, as these transactions require interagency review and deliberation at the Investment Commission’s monthly meeting.

The 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 protection of 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 has participated in every investment review meeting regardless of the size of the investment. Blocked deals in recent years have reflected the authorities’ increased focus on national security concerns beyond the negative-list industries.

Foreign investors must submit an application form containing the funding plan, business operation plan, entity registration, and documents certifying the inward remittance of investment funds. In 2021, the Investment Commission tightened the definition of a “PRC Investor,” which includes any company located in any “third area” that is invested by PRC persons with a stake of 30 percent or more, or any PRC person(s) that has effective control over the company. In addition, the 30 percent shareholder threshold must be examined on each offshore holding level, rather than being calculated as the ultimate shareholder percentage in a third-area company by one or more PRC persons. Consequently, the new administrative rules have become stricter since it is increasingly possible to regard a third-area company as a PRC investor. 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 the trade policies and practices of Taiwan. Related reports and documents are available at: https://www.wto.org/english/tratop_e/tpr_e/tp477_crc_e.htm 

Business Facilitation

The Ministry of Economic Affairs (MOEA) has taken steps to improve the business registration process and has been finalizing amendments to the Company Act to make business registration more efficient. Since 2014, the application review period for company registration has been shortened 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 and granted decisions within five to seven business days. Since 2017, foreign investors’ company registration applications are processed by the MOEA’s Central Region Office. In 2021, MOEA revised certain rules to allow foreign investors to convert an existing representative office into a branch office. Further details about business registration process can be found in Invest Taiwan Center’s business one-stop service request website at https://investtaiwan.nat.gov.tw/smartIndexPage?lang=eng&menuNum=28 .

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.

In recent years, Taiwan authorities have 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 allowing foreign entrepreneurs to remain in Taiwan if they meet one of the following requirements: raise at least NTD 2 million (US $70,400) 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. Starting from 2019, startup entrepreneurs can use intellectual property (IP) as collateral to obtain bank loans, which applies to foreign investors. In July 2021, the Taiwan authorities further relaxed the criteria and introduced more tax and social security measures to attract more foreign professionals working in Taiwan. By the end of 2022, more than 6,700 people had obtained the Employment Gold Card, which 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.

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 NTD 100 million (US $3.5 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 US $350 million (NTD 10 billion) to invest in SMEs.

Outward Investment

The PRC used to be the top destination for Taiwan companies’ overseas investment given the low manufacturing costs. With rising U.S. – PRC trade tensions, Taiwan authorities have intensified their efforts to assist diversification efforts for Taiwan firms by either encouraging them to relocate back to Taiwan or move to other markets, including in Southeast Asia. The Tsai administration launched the New Southbound Policy to enhance Taiwan’s economic connections with 18 countries in Southeast Asia, South Asia, and the Pacific. In 2022, Taiwan companies’ investment in the 18 countries totaled US $5.2 billion while investment in the PRC continued to decline. The Taiwan authorities seek investment agreements with these countries to incentivize Taiwan firms’ investment in those markets. MOEA 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. In May 2022, Taiwan authorities amended the National Security Act and the Act Governing Relations between the People of the Taiwan Area and the Mainland Area to mandate prior approval for travel to the PRC if the individual had been commissioned by Taiwan authorities to engage in businesses involving Taiwan’s core technologies. The National Science and Technology Council is still reviewing comments from relevant stakeholders before it finalizes the regulations for this amendment.

Transparency of the Regulatory System

Taiwan generally maintains transparent regulatory and accounting systems that conform to international standards. Publicly listed Taiwan companies have 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 in 2016, the Taiwan authorities extended the public comment period from 14 days to no less than 60 days. 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.

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 by 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) in the investment processes. In 2021, the Taiwan Stock Exchange (TWSE) included environment issues as a disclosure item in the former Corporate Social Responsibility Report and renamed it the Sustainability Report required for all Taiwan listed companies. Taiwan authorities mandate that publicly listed companies in sectors with direct impact on consumers, such as food processing, chemicals, financial services, and those with more than 50 percent of revenues from food and beverage, as well as those with paid-in capital of US $ 67 million (NT$2 billion) to prepare annual sustainability reports. The mandatory sustainability indicators disclosure requirement was expanded to companies that are significant to the industries and of interest to investors, including 14 industries such as cement, plastics, steel, oil, electricity and gas, semiconductor industry, and ICT industries. In 2021, 487 of the TWSE’s 959 listed companies have issued annual sustainability reports. In 2022, Taiwan’s Public Service Pension Fund announced that it outsourced another US $1billion of assets for its “Global Quality ESG Equity” mandate.

Taiwan regularly discloses official finance data to the public, including all debts incurred by all levels of administration. 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 in the area of finance, such as IFRS. Taiwan’s standards are based primarily on international standards such as those developed under the International Standards Organization (ISO), the International Electro-technical Commission (IEC), and the International Telecommunications Union (ITU). As a WTO member, Taiwan’s standards also comply with the Agreement on Technical Barriers to Trade (TBT) and other WTO agreements. Taiwan is a signatory to the Trade Facilitation Agreement (TFA) and has 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 has a codified system of law. In addition to the specialized courts, Taiwan has 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 Act, the Business Registration Act, 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 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 (Taiwan expatriates). 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.

There were no major changes to Taiwan’s inbound investment review framework in 2022. Amendments the Legislative Yuan passed in 2015 to the Merger and Acquisition Act clarified investment review criteria for mergers and acquisition transactions. 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. The MOEA published 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 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 intermediaries, expanded the scope of investment subject to the authorities’ approval, and forbid PRC investment with any political or military affiliation. In May 2022, the Legislative Yuan passed the amendment to the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area that will penalize PRC investors illegally investing in Taiwan through a third area and enhanced penalties for persons or entities that help conceal the identities or funding sources of illegal PRC investors. For those engaging in unauthorized business in Taiwan, the penalties have been increased to up to three year-imprisonment and a fine up to US $830,000 (NT $25 million).

All foreign investment-related regulations, application forms, and explanatory information can be found on the Investment Commission’s website at:
https://www.moeaic.gov.tw/businessPub.view?lang=en&op_id_one=1 .
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

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. Main arbitration institutions in Taiwan include the Chinese Arbitration Association, Taipei, Taiwan Construction 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. The Arbitration Act enacted in 1998 took specific references from the 1985 United Nations Commission on International Trade Law (UNCITRAL) model and relevant laws of other major jurisdictions at that time. In 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.

Bankruptcy Regulations

Taiwan has a bankruptcy law that 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.

Investment Incentives

The Statute for Industrial Innovation provides the legal basis for offering tax credits for companies’ R&D expenditures. In 2022, Taiwan authorities revised the Statute to create new tax incentives for high tech companies investing in Taiwan. Taiwan companies and foreign companies’ Taiwan subsidiaries engaging in technical innovation, situated in a key position in the international supply chain, and making R&D contributions to the semiconductor industry will enjoy a 25 percent credit against corporate income tax and five percent on new equipment acquired for “advanced processes.” The effective tax threshold for eligible companies is set at 12 percent for 2023 and 15 percent for 2024-2029. MOEA also launched the A+ Industrial Innovation R&D program to attract foreign firms setting up R&D centers in Taiwan. Foreign investors can receive tax incentives for investing in free trade zones, industrial zones, export processing zones, and science parks. Local authorities 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. Taiwan also offers non-tax incentives, such as subsidies for expenses related to technology research and development and provides support to foreign companies and Taiwan companies that jointly invest in cutting-edge technologies. 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 authorities have 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 operating early stage start-ups.

To promote 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. As of the end of 2022, Taiwan’s domestic banks have provided special loans of over US $81 billion to green energy projects. Taiwan’s installed solar PV capacity increased from 1.25GW in 2016 to reach 9 GW in 2022 since Taiwan authorities 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 including higher FIT rates.

Foreign Trade Zones/Free Ports/Trade Facilitation

There are seven free trade/free port zones: 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. The Ministry of Transportation and Communications established the Taiwan International Ports Corporation (TIPC) in 2012 to manage the 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 port 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

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. 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 cross-border data. The authorities may, subject to strict legal proceedings based on Personal Data Protection Act, examine financial crime data from service 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. Under the guidance of Taiwan’s new Ministry of Digital Affairs (stood up in August 2022), Taiwan is investigating further mechanisms for data resiliency via cloud storage platforms.

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 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

The Taiwan Intellectual Property Office (TIPO) is responsible for policy formulation, drafting laws, 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 (via 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 heard in both District Courts and the specialized IP Court.

In April 2022, Taiwan’s Legislative Yuan ratified amendments to existing laws (Copyright Act, Patent Act, and Trademark Act) to protect IPR including to support for Taiwan’s bid for the Comprehensive and Progressive Agreement for Trans-Pacific (CPTPP). The Executive Yuan has not yet announced the implementation date for these amendments.

• The Copyright Act amendment 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 in higher penalties.
• The Trademark Act amendment expands counterfeiting crimes from originally defined as “knowingly” to “intentional” and “negligent.” Criminal liabilities are now included in the amended legislation. As of March 2023, these two amended regulations are still pending implementation by the Executive Yuan.
• This Patent Act amendment 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 March 2023, the draft is still in the Legislative Yuan for review.

• The Trade Secrets Act was amended in January 2020, by adding that (1) foreigners may file complaints, or institute civil suits against trade-secrets violations; and (2) prosecutors are authorized to issue confidentiality protective orders while investigating trade secret cases.

In 2022, Taiwan’s National Police Agency investigated 4,191 IP (including trademark, copyright, and trade secrets) infringement cases, with seizures totaling US $927 million (NTD 27 billion). Taiwan Customs prosecuted 232 IP-infringement import cases, with 51,353 items of trademark infringement and 500 items of copyright infringement. The majority of those items were bags, pharmaceuticals, and clothing. The Prosecutors’ Offices of the District Courts handled down verdicts on 6,888 IP infringement cases in 2022, with 57 percent of them not indicted.

Although some industries lobbied for Taiwan’s inclusion in the 2023 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 interagency enforcement efforts, AIT argued that Taiwan not be included. AIT also provided input for the Notorious Market Report, concluding that Taiwan-based U.S. stakeholders and law enforcement do not have significant concerns about brick-and-mortar markets. As for online markets, Taiwan agencies have pledged to put more effort into combating infringing websites with servers outside of Taiwan through mutual legal assistance agreements with other nations, including the United States.

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/ 

Capital Markets and Portfolio Investment

Taiwan authorities welcome foreign portfolio investment in the Taiwan Stock Exchange (TWSE) and Taipei Stock Exchange, with foreign investment accounting for approximately 39.4 percent of TWSE capitalization in 2022. Taiwan allows the establishment of offshore banking, securities, and insurance units to attract a broader investor base. The Financial Supervisory Commission (FSC) utilizes a negative list approach to regulating local banks’ overseas business not involving the conversion of the NTD.

Taiwan’s capital markets are mature and active. At the end of 2022, 971 companies were listed on the TWSE, with a total market trading value of US $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 dropped to 110.4 percent as the TWSE Capitalization Weighted Stock Index (TAIEX) plunged 22.4 percent in 2022. 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 40 banks including three online-only banks and the Export-Import Bank servicing the market. In 2022, the FSC designated six banks as domestically systemically important banks (D-SIBs) and required these banks to raise their two percent internal management capital over four years from 2022 to 2025. The sector’s non-performing loan ratio has remained below 1 percent since 2010, with a sector average of 0.15 in December 2022. Capital-adequacy ratios (CAR) are generally high, and several of Taiwan’s leading commercial lenders are controlled by the authorities, enjoying implicit state guarantees. The sector had a CAR of 14.7 percent as of December 2022, 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 134.6 percent in December 2022. Taiwan’s banking system is primarily deposit-funded and has limited exposure to global financial and 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 continued to decline to USD 47.8 billion in the third quarter of 2022, trailing the United States’ USD 134.8 billion. Taiwan’s largest bank in terms of assets is the wholly state-owned Bank of Taiwan, which had USD 205.9 billion of assets as of December 2022. Taiwan’s eight state-controlled banks (excluding the Export- Import Bank) jointly held nearly US $994.5 billion, or 47 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 for detailed information regarding various types of bank services for foreigners in Taiwan:
https://www.ba.org.tw/PublicInformation/BusinessDetail/10?returnurl=%2F  .

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 New Taiwan Dollar (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 has advocated for one. Taiwania Capital Management Company, a partially authorities-funded investment company, was established in 2017 to promote investment in innovative and other target industries. As of 2022, Taiwania raised US $658 million for five funds investing in early-stage companies in the U.S. and Taiwan in IoT, biotech, digital health, 5G and networking, electric vehicles, and advanced manufacturing. Taiwania also manages the US $200 million Central and Eastern Europe (CEE) Investment Fund set up by the National Development Council in 2022 with prioritized investment in the Czech Republic, Lithuania, and Slovakia.

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 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 the utility company’s power distribution from its power generation business.

Climate Issues

Taiwan has a climate strategy in place for enhancing energy efficiency, environmental protection, and biodiversity, yet it is not aligned with the UN System of Environmental-Economic Accounting. Taiwan authorities announced the Climate Change Response Act  in 2022, formally adopting 2050 as Taiwan’s net-zero deadline, establishing a carbon pricing scheme for large emitters and setting goals along the way to reach net-zero carbon emissions by 2050.  The scheme targets an estimated 300 companies that produce more than 25,000 tons of carbon per year across the semiconductor, cement, petrochemical, steel, and pulp and paper sectors, accounting for 80 percent of Taiwan’s carbon emissions.

In December 2022, Taiwan announced actions and pathways to achieve the 2050 net-zero goals – increasing renewable energy to 60-70 percent, and hydrogen energy by 9-12 percent, and reducing thermal power to 20-27 percent. The government plans to boost renewable energy development, phase out coal-fired generators, increase combined cycle gas-fired generators adopting biomass and carbon capture, storage, and unitization (CCUS) technologies, while aiming to make all new cars and scooters electric by 2040, and all new buildings to be near-zero emitters by 2050.  Taiwan authorities will invest about USD $32 billion by 2030 in renewables and hydrogen energy development, grid resilience and energy storage, low carbon, and CCUS technologies, energy-saving equipment and boiler replacement, green transportation, resource recycling, and nature conservation and forest carbon sinks to boost private sector investments.

Taiwan has a strategy to protect biodiversity and maintain sustainable ecosystems. The ecological network was established in 2018 and has compiled ecological survey over the past five years to identify key biodiversity areas and promote ecofriendly land production.

Taiwan authorities are in discussion with industry and business to promote voluntary greenhouse gas emissions reduction, decarbonized energy systems, higher energy efficiency, green transportation, and negative emissions technologies to achieve relevant 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 plan 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 in order 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.

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 +886-0800-286-586; Fax:+886-2-2381-1234
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
Room M513, 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 has 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 service officials and their immediate family members. In 2022, the Control Yuan found 31 violations and imposed a total of US $276,300 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 US $3.3 million (NTD 100 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 second annual report in April 2022.

Guidance titled Ethical Corporate Management Best Practice Principles for all publicly listed companies was revised in 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 Executive Yuan is reviewing a draft Whistle Blowers Protection Act to effectively combat illegal behaviors in both government agencies and the private sector. The Anti-money Laundering Act 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.