I am not a freelancer, I just design, code and sell my own applications. For example “Angry Birds” on Iphone and Android. Although I did NOT make angry birds, that is an example of what I do. I just make games and apps for smart phones specifically android.
Article 2 partially states: “For any individual having income from sources in the Republic of China, consolidated income tax shall be levied in accordance with this Act on his income derived from sources in the Republic of China.”
Article 3 partially states: “For any profit-seeking enterprise operating within the territory of the Republic of China, profit-seeking enterprise income tax shall be levied in accordance with this Act.
For any profit-seeking enterprise having its head office within the territory of the Republic of China, profit-seeking enterprise income tax shall be levied on its total profit-seeking enterprise income derived within or without the territory of the Republic of China;”
As my business head office isn’t in ROC, also my business model is not as rigid as the Taiwanese system would like it to be, I don’t need to be in Taiwan to make apps and sell them, I can be anywhere with an internet connection really, but I do like Taiwan and would like to be here legally.
That is the main reason for my question since I have dealt with Taiwanese Government agencies before and if something seems like someone will have to think for themselves its usually a problem and so I’m trying to get on this early before I find time is running out where they can stall till my time is up.
I indeed used the term freelancer a little too quickly, but the basic gist in the same–independent work or entrepreneurship.
All I can tell you for sure is that what you want to do is without a doubt stretching the legal definition of a rep office. How they want to tax you is a whole other matter, and I would be very surprised if anyone on this forum can give you some kind of dependable answer.
I can also comment, however, that it’s in your interest to file taxes for income in Taiwan every year, because if you don’t you could have trouble at the border if you stay a year or two and haven’t filed taxes. Income tax in Taiwan is ridiculously reasonable, there’s no reason not to pay it.
Last question, lol. What happens if you don’t make it, ie, the parent company isn’t making sufficient revenue from Taiwanese companies to make a living from it locally.
Especially at the start of the business… I don’t see myself making a substantial income from the business.
Is it fine to wire money from a personal account to the company, and then remit it to yourself in Taiwan ?
You can send money to your rep office bank account here in Taiwan from wherever you like, and draw it as a salary. No problem there, although I guess in theory the money should come from the parent company. Where the parent company gets the money is not anyone in Taiwan’s concern.
Thanks Lee, yeah that’s what I meant. Send money from a personal US account to the parent company and then get it back in Taiwan through the rep office, assuming my business is too weak to support myself. I was mostly wondering if that was viable, but I guess the parent company can get funds from anywhere, not just business conducted in Taiwan.
OK here’s a complicated question I’ll check with a CPA on it, but feel free to chime in.
When you have a rep office, you need to declare personal income (obviously) and also the new Alternative Minimum Tax (AMT) on overseas income - correct ?
I understand that you declare AMT on a personal level : you need to declare if it’s upwards of $NT 2 Million, but only pay for what’s upwards of 6 million.
Now, it’s my understanding that the parent company may need to pay AMT Tax in Taiwan as well ? However, if the income tax is greater than the AMT, then you are exempt.
So if I understand correctly, most people here (myself included) would probably be exempted from reporting AMT on a personal level (because making less than $NT 2M = $US 70K).
And also automatically from filing company AMT tax… Because I think the formula for company AMT is (income - 2Million NT) * 10% so it’s usually smaller than income tax, even negative.
Ah and here’s a last question for the heck of it, lol…
Do you need to wait to have your first contract between a Taiwan company and the mother company to apply for a rep office, or does the application not require this. I ask because in the original guide from Ilary (2008) was saying that in some cases you needed to present a contract upfront.
I’m following the forum since november last year, when i came with the setup a Rep office in taiwan.
Unfortunally, the registration process was broken, and i miss the opportunity to post messages when i was in Taipei.
I was looking to incorporate in HK.
Since i managed to create a private in Hong kong by them self, but i’m sure that your comment will have been a greta assistance.
What’s done is done, let see the futur.
So,
I often read a remaining question about the NTD 42000 minimum wage to pay as salary for foreign workers moving .
Seems it 's over:
Gouvernement is loosing rules on foreign job seekers, lowering the nearly NT$48,000 minimum wage to about the same as entry-level salaries for Taiwanese university graduates."
Rep office director can now get a lower income and still be legit .
Am i correct ?
Does anyone know of a consultant/consultancy who can advise on the best methods for establishing a presence in Taiwan based on the specific goals and business model of my company? Or would a US-based TECO office be able to help with this?
Would appreciate any individual contacts or companies you would recommend.
Thanks for this valuable post. It is certainly a good resource for most of people trying to start up an office here in Taiwan. I, however, have a couple of questions since I haven’t read anything similar to what I need neither on this nor on the original post.
I will tell you a little bit about what we are doing. Our company is manufacturing our designs in a couple of local factories. However, we’ve had some issues with our customers due to delays in the customs processes back home. Also, in the last few years, we have managed to get some foreign clients and their orders have increased significantly. Thus, it makes a lot of sense to start up an office here to avoid delays and unnecessary taxes.
My main worry is to find a legal way to ship out the goods together with our company invoice. We are not planning to issue any local fa piao since our clients are not in Taiwan. Therefore, my initial thought is that a representative office would be more than enough. Am I right at this point? Can I just get the goods from the factory, and give them to my forwarder together with my company’s invoice? Or do I necessarily need to start up a branch office in order to do this?
If I have a representative office, should all the payments to our local suppliers be made from a bank account abroad? or can I get the money wired to the TW account first and then transfer it to our factory?
Looking forward to your input. Thanks in advance!!
There was a post on here a few months back about running into trouble applying for an ARC extension. I think the poster said that they were required to produce proof of their activities in Taiwan. Was there ever an update on this? Or has anyone else run into similar problems? It would be great to know what kind of thing we would be expected to produce as proof, so we could start preparing now!
After successfully setting up a representative office, what else needs to be done? (and how easy is it to do…)
A representative office has no income, so I’m assuming that it does not have to pay taxes as a business entity.
But it might still have to file taxes as an entity. Just wondering if anyone knows about this.
Second, the representative office is paying me (the representative) a salary.
I assume the representative office must report wages paid to employees (similar to a Form W-2 in the US).
Anyone know how to do this?
Finally, I need to get health insurance from my representative office.
Again, anyone know how to do this?
These services are often provided by an accountant.
A representative office does not seem to need traditional accounting services (like booking revenue and expenses),
but it still needs some government filings. Anyone know of an English-speaking accountant that can provide these services?
I have a rep office in Taiwan and Company in HK.
I have already had a first extension since 2011 as a Rep.
Next year I will have to apply again for extension my ARC as a rep.
I have read in various places you have to show some sort of proof why the Company needs a rep in taiwan.
a. What is that proof supposed to be? Does anyone have an example or so?
b. Does it help if my rep salary in taiwan is higher - say around 100K a month - meaning I would be paying more taxes here? Or does it make no difference whether I have 50K or a 100 K in monthly salary?
c. Right now someone else is the Director of the HK Company - but since this person is leaving I have heard I can do that myself too; would I get in to trouble with my rep status? Does it have any influence at all on that?
d. What do you guys know about restrictions on hiring foreign white collar employees? Are there any? If so, what are they - or where can I find that information?
e. If I were to change my rep office to a local limited company
[ul] 1. would that make it easier for me to retain my ARC?
2. would that make it easier to hire foreign white collar employees?
3. what kind of requirements would apply to a limited Company[/ul]
f. What would be better for these issues: a branch office or a local limited company?
I know a lot of questions, but I am hoping someone can help out!
Thanks a lot
One question : does anyone know where and when we do the Rep Office Withholding Tax Filling ( to declare Rep office manager salaries I have been told) ?
Beginning of the year ? January ?
Thanks!
TO Taiwan rocks :
a) best proof is purchasing contracts, invoices, PI, or quotation, communications, even factory audit pictures ok…
b) should not be too low I guess. after no difference…
c)yes you can be director too. actually it’s faster to set up the rep. i do not know which paper work to announce you become HK director…did not hear any trouble issue also…
d) there is a minimum salary just updated to as near as local’s.
e-1) i do not know
e-2) I do not see any differences.
e-3) if it’s just for ARC, keep the rep…with local ltd, you pay taxes on Ltd activities, more paper work also…
Income tax for rep office employees, including the representative, must be done in January of each year. Otherwise you may be liable for a fine (I was cited NT$750, still waiting to see the actual bill…)
A rep office will not let you perform export. You need a local company for that, or go under your own name. The latter may incur trade taxes, however. Not clear on the details.
A local company will NOT let you keep your ARC. Local companies have capital and revenue requirements in order to hire foreign managers or workers.
Extension requires documentation showing that you’ve been active as a rep. The person in charge of your case at the CLA will have discretion here. As Nicotaipeisa said, any documents showing you’ve been busy and have been in contact with local companies, and especially regarding transactions with local companies (either sales or purchases), on a regular basis, will probably be enough. You will have the chance to provide further documents if your initial application isn’t complete enough. I was also told by the CLA help desk that a recent sample of documents should be enough. You don’t need the whole year’s worth. But as I say, it’s up to the 承辦人’s discretion…
None that I know of. I think you just need one line saying the landlord’s name and that they grant permission, with the address and landlord’s signature. And your name and company name.
I’ll check with a CPA on it, but feel free to chime in.