Forming a local company - process


#1

We don't seem to have a clear guide to doing this anywhere obvious yet. I saw a post recently with the outline, but can't find it. [url=http://tw.forumosa.com/t/setting-up-a-limited-company-in-taiwan/50375/1 also some chat here[/url], but no procedure. Company formation is outlined here, but not the foreigner-specific rules.

Am I right in the following? Can someone fill in the blanks? I talked to an accountant a few days ago, so this is up-to-date but by no means reliable.

My situation: I have won a small grant (NT$350k) from the government, with a Taiwanese partner. We don't need to form a company to get the money, but if we do then we're in the running for a larger (up to NT$1m) prize in six months. The money hasn't been paid yet, and my partner has no capital. So we can't put money down, but we do have capital/income in the pipeline - if the government ever gets it's act together. (They're three months late making payment, with no clear date yet.) Just to make things more fun, I'm supposed to give up my offical job to start this company. So I need the company to provide a work permit.

First, if you're a foreigner, you need permission to start.
- I've not heard of anyone having trouble getting this. Is it just a rubber stamp?
- MOEA told me to go to the Immigration agency for this. Immigration looked at me blankly and told me to go somewhere else. My accountant said (uncertainly) that I should talk to MOFA.
- According to my accountant, you need to have the cash in the bank before applying for permission. ie you apply for permission to invest the money you have here, you don't apply for permission in principle and then produce the money.
- You have to either transfer the money in from overseas, or explain how you earned it in Taiwan. I assume this means tax records. (see below)

Then you go to MOEA and check that the name you want to use is available. They have computers in their offices you can use to do a search, and I guess it can also be done online. You fill in a form to reserve your company name (NTD300). I think you have to wait ~24hrs to get the name certificate and then you are able to open a company-in-formation bank account.

NB Banks (at least in Taipei, especially Chinatrust) seem to have a new policy of telling you to go to the branch closest to your home/office instead of the one that is most convenient for you. They can be persuaded to stfu if you try hard.

Then you can begin the process of forming the company. They have now removed the minimum capital requirement, which means you can form a company with just NT$1 - which means if you just need a paper entity then you don't have to worry about explaining where your cash came from or transferring it out of/back into the country.
- NT$1 is not enough to get you a work permit, which is a different matter (see below)
- The accountant I met kept insisting that you need to show enough capital to pay the company's costs during the start-up phase. Her estimate was NT$200,000 as a minimum or run the risk of having your application rejected. I dug into this, and it seems that the MOEA will ask questions about the viability of your company if it seems 'odd'. This doesn't worry me, but she didn't seem to want to deal with it. She was also worrried that she would have to sign her name during the process. According to this source, although the minimum capital requirement was removed, according to the Ministry of Economic Affairs, in place of the minimum capital requirement there will now be a requirement to submit a CPA audit report showing that the amount of capital invested would be sufficient to cover the costs of establishing the company.

You also have to state which categories (from a list) your business activities will come under. As far as I know this is crucial to get right because you can't do anything later that is not covered under your business license. I believe you can choose as many categories as you want, but presumably you can't just tick everything. Does anyone know more about this? c/an you discuss with the MOEA when you register?
** Someone else, a government official who should know what they're talking about, told me that small-cap companies are regulated at local level. In Taipei you should go to Taipei City government, not the MOEA. I'll let you know as I find out more.**

You also need a place to register your company. Apparently the rules have just been relaxed and any residential address is now OK for service businesses that don't have lots of customers coming in and out. In theory, freelance designers, translators, teachers, import/export agents, programmers, and the like can now register their own companies at their homes. Obviously, you may need your landlord's permission for this.

The process should take about four weeks, so I'm told.

I got a quote, I think it was for NT$25K to take care of all this, from Jusregal a while ago when I first started toying with the idea. If they're more pro-active about getting the registration done than the lady I spoke to last week, it might be worth it. Llary reported getting done for NT$6,000 in Taizhong. Maoman reports paying NT$25K in Taipei.

If you also need a work permit, then it's a bit messier. Based on llary's experience getting an investor visa, it seems to be a dance between MOEA and MOFA. You need to convince both of them that your company needs to employ you.

I keep seeing differing figures for the minimum capital (and turnover) required to employ a foreigner, ie yourself. I know it used to be in the millions, but I've also been told that it's now NT$250K - in fact, Jusregal seemed confident they could get me a work permit on the basis of the gov't money I'm waiting for. Has anyone ever actually done this for real? I believe the going rate for having an acocuntant take care of this is NT$15K.

Has anyone done this for anything other than a buxiban?


How Can I Create a Company in Taiwan?
#2

Thanks for this detailed description. About the company registered at your home, where can we get more detailed information about that?
Apparently, a virtual office address costs between NT$ 3000 and 4500 per month.


#3

/bump

moderators, could we make this a sticky?


#4

I used James Lin, at CLIN & Co CPA's on Keelung Rd. (about a block from 101). He speaks English, and has many foreign clients. I spoke with 11 different CPA's over the course of 2 months, and James was definitely the right choice. I am also doing our company's virtual address through him and he is doing all of our books for an extremely low price. He charges per month for a virtual address, not 13 months up front like most CPA's. James was able to create our company in about 4 weeks and got me a two year ARC in about 6 weeks. He was the most friendly and least expensive accountant I found in Taipei.

The MOEA changed the law to $1 NT minimum capital requirements, but this may raise a lot of red flags for your business. I simply had to transfer the $250,000 NT from my American bank account to my Taipei bank account, but for me it was no problem because I needed that startup money to begin my business anyway.

If you visit him, tell him that Tom G sent you.

His office is:

台北市110信義區基隆路二段15號10樓
10F, 15 Keelung Rd., Sec. 2, Taipei Taiwan 110

Tel:+886-2-77180809 Ext. 101

If you are having any legal issues with your company formation that are outside the scope of an accountant, I highly recommend Bob Tseng. I wrote about Bob in a different post already. He studied at the University of Washington and graduated from NTU Law School. Bob speaks English, and has helped us out enormously with writing, revising, and translating all of our contracts in both Chinese and English. He was very reasonably priced. He also does negotiation, and may be able to help you get that government grant money faster. He has a lot of experience in negotiating with government branches.

His office is near Chang Kai Shek Memorial Hall. Bob's email address is abob11110@gmail.com, and his mobile number is 0910210370. You should also tell him that Tom G sent you.

Feel free to PM me with more questions.

Tom


#5

Do you mind telling me how much James charged you?

Thx


#6

Any update on turnover required to employ a foreigner?


#7

If you are owner and director of the company you can hire yourself as a manager of the company and get an ARC for at least 1 year also if the company say only has a capital of NT$ 250k, after the one year you need to comply with the minimum capital and turnover requirements, somewhat I heard the capital should be over USD 200K. But we are in Taiwan, you may go on Monday and it's NT$ 6m or on Tuesday it's USD 200k. For registration you need both be registered as director (dongshi) and manager (jingli) of the company. Of course need to apply for a work permit, which is no problem since you are the owner and for that there is also no minimum salary requirement. With that work permit can apply for ARC with your local immigration office. Benefit as investor: no medical test, no police record or anything. If you need your ARC for longer you can increase the capital later. To setup a second company to stay in Taiwan longer on a small budget is maybe not possible since you can only be manager (jingli) of one company. Maybe it's possible to change the status of a manager to another company, but for this need to pay some fees.

For the CPA for establishing a company I paid NT$ 12K (Taipei County). But need Chinese to communicate.


#8

An accountant recently told me that if you get your ARC thru your own company, then you need to make 5 times the initial investment after 1 year.

So, getting ARC thru your registered company with initial investment 250,000 NT, then after 1 year, the company must have grossed 1,250,000 NT.

I'm considering the "teacher ARC" route to start, then I don't have a minimum gross for the registered company.


#9

Thanks!


#10

[color=#FF0000]My accountant has never heard of such a thing and nor has the Taipei City Investment Appraisal Office which she rang (the "tou shen hui").

Is there any reason in particular to set up a limited company? Why not set up a Hang Hao? Much simpler and easier but there is no limited liability. It seems similar to a Sole Proprietorship (UK) to me. If you are the Fu Ze Ren and the capital is over NT$200k then I am told there should be no major problem getting a 3-year work permit, and therefore a 3-year investor's ARC.[/color] I haven't done it yet, but I'll post back here when the process is complete. As we all know, there is many a slip 'twixt cup and lip. I have been through the first stage though, which is business name, scope, and investment amount approval... so far so good....

[color=#FF0000]EDIT: please note the bit in red turned out to be bunkum... read on ....[/color]


#11

This would be interesting - when are you going to register your company and get this ARC?


#12

If you got a "Manager ARC" , your company need to have revenue at least 5 times of capital for extend your ARC. see regulation below.

and , there is no minimum capital now, you can setup a company with NT$100,000 or NT$50,000 and apply for one "manager ARC" for yourself.

Qualifications and Criteria Standards for foreigners undertaking the jobs specified under Article 46.1.1 to 46.1.6 of the Employment Service Act ( 2005.05.24 Amended )
Article 38
The job titles of foreigners workers to be hired for management work in a business entity invested by overseas Chinese or foreigners as specified in Article 46.1.2 should be as following:
1. Managers of a company that is invested by overseas Chinese or foreigners, which has been approved based on the investment guidelines in this country.
2. Managers of a branch office of foreign companies.
3. Representatives of the representative offices that have been approved by the authority concerned at the central government level.

Article 39
Employers have to be qualified for one the following when hiring foreigners for work specified in the Previous Article:
1. [color=#BF0000]Have established for more than one year and the latest yearly revenue or the average revenue of the last three years amounts to five times to the capital amount[/color] or NT$5,000,000 ( five million New Taiwan Dollars),
2. Have established for more than one year and the average import/export performances of the latest year or the average of the last three years reaches US$500,000 ( five hundred thousand U.S. Dollars) or average (agent) commission reaches US$200,000 ( two hundred thousand U.S. Dollars.)
3. Representative offices of foreign companies that have been approved and established for more than one year by the authority concerned at the central government level and are actually operating in Taiwan.
4. Those who have proven contribution to the economic development in this country or have been recognized by the central competent authorities along with authorities concerned at the central government level.
Those companies who have established no more than one year, their qualifications are exempt from the restriction prescribed in the Subparagraph 1 to 3 of the preceding Paragraph.


#13

Is it possible to legally start your own company here while having a teacher ARC?


#14

Yes. The ARC just allows you to stay in the country. Forming a company is an investment - most countries allow non-citizens to invest in them.


#15

Thanks Groo


#16

I've been pursuing this since mid-January. I've succeeded in establishing my business and am in the stage in which I apply for a work permit. Recently my accountant informed me that the Taiwan government without advance notice abruptly changed its capital requirements from none to NT$500,000. This may or may not be a deal-killer for me. I was also informed that the new rule requires revenues of 6x initial capital investment ($NT3M) per year (?) in order to extend the ARC.

Am checking with my accountant, but does anyone know whether you can use your initial investment for personal expenses (rent, groceries, etc.) or whether it all has to be for business expenses?

I saw a posting relating this this post-CNY rule change, but I can't seem to find it right now.


#17

You can't spend company money on personal expenses, you need receipts for spent cash. However, you can pay yourself a salary out of that cash for example (if you have a work permit which allows you to work in your company that is....).


#18

Here you go: http://www.forumosa.com/taiwan/viewtopic.php?f=88&t=86258


#19

Has anyone any experience in owning a company with just a teacher's arc? I'm wondering if you run out of the office when authorities come around or keep your name off the business cards etc.? Or does it not matter about being on location so long as you have a hired manager?


#20

My accountant said I could set up a sole proprietorship and get a work permit as the Fu Ze Ren of the foreign invested enterprise. Then after I got it set up, she rings back to say I can't. It needs to be a limited company and and the amount needs to be NT$500k. I can't change my Hang Hao into a Ltd company so now I am sole investor in a NT$200k foreign-invested enterprise which I can't actually operate or do anything with. Cool eh?

Obviously my accountant was completely incompetent and I will be asking for my money back and compensation. It is of course very Taiwanese that I can set up a foreign-invested enterprise that I can't work in.

And people ask why everyone's gone to China!!!

The five-times or six-times rule appears to apply to companies employing foreigners. I am not employing foriengers. I am the company, the sole person and investor in a foreign-invested enterprise. What do I need a work permit for? Surely by operation of logic I am allowed to work in my own business???

In Llary's thread about setting up a rep office it was suggested that the foreign investor in a 100% foreign-invested enterprise simply needs to get a letter from MOEA to allow them to stay in Taiwan. Is this true?

Any advice appreciated. Looks like I'll be getting a new accountant - one that actually knows what he/she is doing. The problem is, every one you talk to has a different version of the rules.