Foreign-owned companies and the proposed lifting of capital/revenue restrictions

Business Entrepreneurship
1

According to my understanding of current regulations, if a foreign citizen starts a limited company (有限公司) and wishes to become an employee of that company (in order to qualify for an ARC), then the company must meet minimum capital and revenue requirements:

However, over the past week, several media outlets have reported that the Ministry of Labor is about to revise the regulations on the employment of foreign workers:

As a freelancer, I’m interested in starting a company so that I can do business with local individuals and companies, and also so that I can obtain an ARC. The current revenue restrictions are giving me pause for thought. :2cents:

Does anyone know whether the proposed change will affect the capital/revenue restrictions in place for foreigner-owned companies that wish to hire foreigners? (So I could open a business and hire myself?)

2

I am not sure those are related. Hopefully the 3M revenue number is revised though.

For one you would have to hire yourself at your company at a wage of 48k/mo and pay all the taxes, NHI and other costs. That really isn’t an altogether bad value for an ARC and NHI even if the company has no real revenue. Hypothetically is it a bad thing if a foreigner pays the taxes of a full time employee simply to obtain an ARC.

I really doubt that they are going to rewrite the laws allowing foreigners to open a shell company that doesn’t actually do anything and receive residency and benefits like NHI.

3

Just to clarify, opening a shell company is not my intention. I intend to do real work, and consequently I’m looking for a way to do this legally.

My hesitation comes from the requirement that the company’s revenue would have to meet a target of 3 million NTD per year. For example: what would happen if the company failed to meet this target, but was otherwise profitable? Should this happen, would I have to wind up the company and start a new one in order to reacquire an ARC? That is a situation I’d like to avoid, if possible. :slight_smile:

4

The revenue requirements should give you pause for thought.

The new rules appear to be a major change and eliminating the NT$3 million revenue requirement is said to be part of them. We don’t know because the rules have not been issued yet. They are supposed to be issued later this month. I suspect January is more likely. You should never make business plans in Taiwan relying on what the government says it is going to do. Wait for the rules to come out and then wait a few more months and seek advice on how they are being applied.

However, you may not need to wait in this case because it is possible to apply for an exception to the minimum capital/revenue requirements using the 'consultation mechanism.

You can get an exemption if your employer initiates the Consultation Mechanism and the agencies agree.

[quote]There is now a detailed explanation of the process (in Chinese) here. See p. 44. [/quote].

There is another potential issue. The work you do has to be considered ‘professional or technical’ work. That is a fairly expansive category but there is still quite a bit of work that is simply off limits to foreigners (retail sales, working in bars etc).

5

Hi Feiren

Many thanks for your response.

[quote=“Feiren”]However, you may not need to wait in this case because it is possible to apply for an exception to the minimum capital/revenue requirements using the consultation mechanism.

You can get an exemption if your employer initiates the Consultation Mechanism and the agencies agree.
[/quote]

Assuming I become my own employer (i.e.: first I start the company and then I employ myself):

If I decide to initiate the consultation mechanism, then with which agency (or agencies) would I need to seek approval, and when?

[quote=“Feiren”]
There is another potential issue. The work you do has to be considered ‘professional or technical’ work. That is a fairly expansive category but there is still quite a bit of work that is simply off limits to foreigners (retail sales, working in bars etc).[/quote]

Are you aware of a definition anywhere of what constitutes “profession or technical” work?

I am a software engineer, but I’m also interested in performing translation, proofreading and editing of academic texts in my field. I get many requests for such work, and I’d like to advertise and be able to do it legitimately without breaking any laws.

Many thanks again.

6

You initiate the consultation mechanism with the Ministry of Labor. You won’t need to do this until your original 1 year work permit is set to expire. I’d do it at least a couple months in advance.

For the definition of professional and technical work, see these regulations §4, §31.

You may also be able to get away with being the ‘manager’ of the company. That’s actually the work permit you get for NT$500k in the first year. You’d need to check with a lawyer though about whether you can do what you want to do as employee or as a manager. It gets a bit complicated.

[quote=“lostalien”]Hi Feiren

Many thanks for your response.

[quote=“Feiren”]However, you may not need to wait in this case because it is possible to apply for an exception to the minimum capital/revenue requirements using the consultation mechanism.

You can get an exemption if your employer initiates the Consultation Mechanism and the agencies agree.
[/quote]

Assuming I become my own employer (i.e.: first I start the company and then I employ myself):

If I decide to initiate the consultation mechanism, then with which agency (or agencies) would I need to seek approval, and when?

[quote=“Feiren”]
There is another potential issue. The work you do has to be considered ‘professional or technical’ work. That is a fairly expansive category but there is still quite a bit of work that is simply off limits to foreigners (retail sales, working in bars etc).[/quote]

Are you aware of a definition anywhere of what constitutes “profession or technical” work?

I am a software engineer, but I’m also interested in performing translation, proofreading and editing of academic texts in my field. I get many requests for such work, and I’d like to advertise and be able to do it legitimately without breaking any laws.

Many thanks again.[/quote]

7

It’s good to see that they are finally going to do something about some of their institutional racism. Having a diverse workforce can only contribute to the local economy. I think in Taiwan foreigners have a lot going against them since most of those rules were designed with an anti-china invasion in mind.

8

Does this apply for people who want to open an online store and already have a APRC? How does that work? Do you still need the upfront capital?

9

I am a minority shareholder in a Taiwanese company co-invested and run by another foreigner. The company sponsors Bob’s ARC. The company will likely not make NT$3 mil. in revenue this year, so we think the right way to proceed is to initiate the ‘consultation mechanism’ to make sure Bob can get a new work permit and extend his ARC.

Has anyone gone through the consultation mechanism recently and/or could point me in the right direction to understand how the mechanism works and how to initiate it?

1 Like
10

You sit down and drink tea with a fat old guy from the MOL, he gets you to sign some paperwork, you sing some 卡拉OK，and you bring his piece of paper in to the NIA to apply for your next ARC.