A few questions on setting up an online company

Business Money
1

Early next year I will be setting up an online company in a small office in Taipei. I have a few questions, any advice or contacts would be really great.

I am from England and am teaching with an ARC at the moment.

Although I’ll be based in Taipei the business I will be doing is with mainland China and all payments will be paid into my bank account in China, which will then be transferred here. I may do business in Taiwan in the future though. I will be looking to hire 2 or 3 local staff.

1, Having read other posts I believe there a few options in terms of which license I can apply for. What are the pro’s and con’s in applying for a) Foreign Investment Approval b) Chinese Investment Approval? Is there much of a difference other than the fact that one requires funds to be transferred from abroad?

2, I have an accountant willing to complete the entire process for 15,000NT. Is this reasonable?

3, What is the situation with paying tax if the business I do is with mainland China and is paid in mainland China, but my office is based in Taiwan?

4, I’ve heard I would need 200,000 US dollars to get a work permit, otherwise I would need an ARC from another company (school) to live here. Is this correct? Are there any other options other than marrying a Taiwanese woman?! Would I attract any trouble if teaching while running a company from an office and hiring staff?

5, After reading Llary’s post on rep. office registration I’m still unsure if this would work for me. I will not be doing any business in Taiwan (for now anyway), even though I will be based here. Setting up a company abroad seems like a lot of hard work. Is there anything I am missing here?

6, What is the situation with minimum revenue in the first year needed to extend the work permit?

7, How complicated are the monthly accounts and tax returns that have to be submitted? I assume it is possible to do this myself for a small (3-man company)? Any links or info on this would be appreciated.

Many thanks in advance.

2

For a start if you are going to hire staff in Taiwan then you should do everything properly and get NHI, labor insurance etc. There are several types of entity you could set up to do that. Once you start getting other people involved it’s best not to ‘wing it’ with visas etc. because if you piss someone off they just have to report you.

I think you might be confused about the procedure for setting up a company in Taiwan, you don’t really need to worry about any of the above. There is inward foreign investment approval but that is completely procedural and handled by your accountant as part of the setup process.

If you speak Chinese and he’s just registering a company for you then that’s overpriced but if you need them to speak English then the going rate is much higher. $5,000 for some useless CPA would be overpriced, $100,000 for a hotshot lawyer would be cheap.

That depends on how both offices are registered and could be quite complex. Generally if you had no legal presence in China and only sold to individuals based there then you would only have to concern yourself with taxes in Taiwan. Many countries such as the UK have enacted laws that require internet based services selling to customers in their country to register for payment of sales tax, but in practice it is almost impossible to regulate. I have no idea about taxation in China. You should discuss that with your accountant.

A rep. office setup does not require any minimum capital or sales at all but there are restrictions on what you can do. Since you are only making sales abroad that might be the perfect option for you. If you are working with China then it would be quite logical to set up an HK company, then set up a Taiwan rep. office of that company. You would have to pay corporate tax on your profits in HK.

In theory you could register a company without any ARC at all (and could legitimately do so, for example if you own the company but reside in another country while other people run it for you). It’s up to you how much risk you want to take. If you are going to bother building up a company to the point where people might start getting jealous or you step on some toes is it really worth it not to do things right from the start?

It actually seems like the best option for you.

Someone else should field that, it changes all the time.

Get someone to do the accounts for you, that is not something you want to waste time on and eventually fuck up for the sake of saving $3,000 every 2 months on a bookkeeper.

3

There’s also the option of registering your company through a HK firm (which handles all paperwork) on the lovely and tax-free British Virgin Islands. PM me if you want more info.

4

Thanks very much for the replies, much appreciated.

I met with James Lin and Bob Tseng who also helped to clear up a lot of my questions. It does seem that a rep office would be most suitable for what I plan to do. I have a few more follow-up questions I hope you can help with:

1, From what I understand, setting up a rep office would secure me a visa for between 1 and 2 years depending on how the application process goes. After that I’ve heard the visa office would want to see evidence that I am purchasing products or services from Taiwan in order to extend the visa. What kind of numbers would they be expecting to see here? How strict are they in practice?

2, I’m told that setting up a company in British Virgin Islands or Bermuda can be handled for me for around 90,000NT all up and then after the first year 30,000NT per year to keep it going. Is this a reasonable rate? Does anyone know if it can be done cheaper or the steps needed to do it myself?

3, If I had a company in British Virgin Islands, a rep office in Taiwan and have companies in mainland China transferring funds into a Taiwanese bank account would I have to pay tax in Taiwan?

4, With regards to the previous question, I’ve heard I could set up an offshore bank account with a Taiwanese bank. Would this get round the issue of paying taxes in Taiwan?

5, How difficult is it for a Chinese company to make bank transfers to Taiwan in terms of time, fees, paperwork?

Thanks again for any help.

5

A contract justifying why you need to be in Taiwan is sufficient. For example, you might have a contract with a Taiwanese company that says you will provide local support for your products/services here in Taiwan.

Someone else would have to field that.

Only personal income tax. If you have employees at your Taiwan rep. office then NHI, labor insurance and withholding tax all have to be paid just like any regular Taiwanese company. You will also need to maintain your NHI through your rep. office.

Since a rep. office does not have any legal ability to make sales there is no tax to pay. You cannot avoid personal income tax.

Again someone else would have to field that. Couldn’t you take payments by credit card?

6

Thanks for the answers. A few more related questions if I may:

It seems like there are 2 options for renewing a rep office ARC, a contract with a local company or purchasing goods and services from a Taiwanese company.

1, Would a having that contract mean indefinite renewal of the ARC?

2, What kind of activities would fall under ‘local support’’?

3, Roughly how much would the visa guys be expecting to see in terms of purchased products / services by the rep office from Taiwanese companies in order to extend the ARC?

4, Can anyone provide me with contact details of rep offices that have successfully renewed their ARCs here. It’s quite important that I understand this area fully as I wouldn’t want to put 2 years of hard work in just to be denied an ARC later on.

Great idea with the credit card payments, I had not thought of that!