And thus it begins…
Any idea what the tax amounts to? No wonder our customers are hot for a local payment option.
This doesn’t make a lot of sense though. If this was the case, then you’d get taxed on money you transferred in from your own company abroad as well.
Why then even allow a rep office to have a bank account in the first place, as apparently it’s not allowed to have any money transferred into it.
There really is no logic to things here and none of this seems to add up to make any sense…
Since when did this kind of thing make sense? Haha
I guess the question is, is receiving money part of “營利行為”?
The rep office is allowed to have funds transferred in. It can use those funds to pay its staff and pay for promotional activities. But receiving payment is one half of ‘doing business’ (yingye) and is therefore prohibited because rep offices are not supposed to be doing business–i.e providing goods or services in Taiwan.
Lee, do you provides goods or services? If a Taiwanese person received the benefit of services provided by an overseas service provider (for example the overseas service provider designs a label that will be used to sell goods in Taiwan), then the Taiwanese person has to withhold 20%. If he does not and the overseas service provider does not file to pay Taiwanese income tax, the Taiwanese person will be liable for the unpaid tax.
But if the benefit of the services are conferred overseas (for example, a Taiwanese firm retains a French law firm to file a trademark application in France), no withholding is necessary.
This is going to get off topic real fast…
The deal is, my Canadian company does a variety of online services targeting Taiwanese and other Asian businesses. Sales and service, etc., are performed 100% in Canada.
We’d like Taiwanese customers to be able to pay locally in Taiwan.
That’s it. 
Presently at the tax office trying to get a tax account for the Canadian company so we can open an account here.
But what if my foreign company provides a service for another foreign company and they pay into the rep office account here? Then none of it has anything to do with local tax law as far as I’m concerned, or?
Maybe I misunderstood my accountant, but that was the way I thought things worked based on his explanation.
[quote=“Lee Kohl”]This is going to get off topic real fast…
The deal is, my Canadian company does a variety of online services targeting Taiwanese and other Asian businesses. Sales and service, etc., are performed 100% in Canada.
We’d like Taiwanese customers to be able to pay locally in Taiwan.
That’s it.
Presently at the tax office trying to get a tax account for the Canadian company so we can open an account here.[/quote]
Where do the Taiwanese customers receive the benefit of your service? In Taiwan or in Canada?
I can’t quite believe that received benefit thing. How does one determine where benefit is received? It also makes no economic sense to place the onus on Taiwanese business people to guarantee their foreign vendors etc. are behaving themselves in Taiwan.
[quote=“TheLostSwede”]But what if my foreign company provides a service for another foreign company and they pay into the rep office account here? Then none of it has anything to do with local tax law as far as I’m concerned, or?
Maybe I misunderstood my accountant, but that was the way I thought things worked based on his explanation.[/quote]
Why would your foreign company client pay the funds into your foreign company’s rep office? Why doesn’t the foreign client pay your foreign company overseas. Then your foreign company can pay into your rep office’s account without any tax consequences, right?
The real question is what kind of service you are providing. A rep is recognized in Taiwan so that a company that does not want to do business in Taiwan can perform legal acts such giving price quotes or signing contracts. Once you start providing services in Taiwan you may be violating the Employment Service Act or, evne worse, the Company Act (there is criminal liability in Taiwan for doing business without establishing a company). There is a lot of grey area here, and in practice this works well for many people.
Thanks everyone for your input.
If we have a local payment option, it will be all that much easier to attract clients. Especially since many don’t need more than a few thousand NT worth of service per month. The 20~30 USD transfer charge is a huge barrier for us.
Anyway I think it’s safe to say receiving payments into the rep office account could possibly lead to some unpleasantness at tax time. I’m shifting gears and opening a foreign corporation account, which the bank is happy to do. I’ll have to look into the tax implications of that. We don’t mind paying some tax is it’s going to help us do business.
Btw do accountants get malpractice insurance? They sound even more liable than doctors!
[quote=“Feiren”][quote=“TheLostSwede”]But what if my foreign company provides a service for another foreign company and they pay into the rep office account here? Then none of it has anything to do with local tax law as far as I’m concerned, or?
Maybe I misunderstood my accountant, but that was the way I thought things worked based on his explanation.[/quote]
Why would your foreign company client pay the funds into your foreign company’s rep office? Why doesn’t the foreign client pay your foreign company overseas. Then your foreign company can pay into your rep office’s account without any tax consequences, right?
The real question is what kind of service you are providing. A rep is recognized in Taiwan so that a company that does not want to do business in Taiwan can perform legal acts such giving price quotes or signing contracts. Once you start providing services in Taiwan you may be violating the Employment Service Act or, evne worse, the Company Act (there is criminal liability in Taiwan for doing business without establishing a company). There is a lot of grey area here, and in practice this works well for many people.[/quote]
Because it would cost me more, as I’d have to transfer the money twice and as such lose out on bank fees twice and considering I’m not exactly making a mint on what I’m doing, that’s a lot of money being lost in bank fees.
I don’t provide services in Taiwan, but I have to be located here as I’m a freelance tech journalist and as such I cover the local market. My only option was to set up a rep office as it would be impossible for me to get a journalist visa here.
As such I don’t provide services to local companies, although I guess technically I do perform some kind of work here by attending events hosted by local companies as well as visit their offices here, but I don’t get paid by anyone in Taiwan for doing it so then again, technically it’s not work.
It’s an unusual situation, but the publications I write for are in fact hiring me on a freelance basis because I’m located in Taiwan and as such I have my own legit company back home and set up a rep office here so I could stay here legally.
Yes, it might not be the perfect way of doing things, but I can’t afford to set up a branch office here as I just don’t have that kind of money and it doesn’t really make sense for the type of business I have.
Sure, I completely understand. Many people do variations of this. It’s just that you are probably stretching the rep office beyond what it was intended for as a creative way of staying in Taiwan. So it shouldn’t be too surprising that you are running into restrictions that don’t really fit your system.
I strongly agree. Alas, the tax authorities do not.
Well, thanks, but that doesn’t really help my situation and I don’t really see what I’m stretching.
I’m not doing any kind of business in Taiwan, the only thing that I guess is a grey area is that my clients are paying money into a bank account here rather than in my home country and me transferring the money from there to here. I don’t really see what the problem with that is, except me bypassing a step of banking costs.
I’ve also explained my situation clearly to my accountant and he doesn’t seem to see a problem with it, so I dunno…
Guys (and gals), there is nothing stopping you from incorporating a regular Taiwanese company when you also have a rep. office. Then you can have the best of both worlds. I’ve said this many times before but for some reason it never seems to hit home and I just get a bunch of PMs asking for a detailed explanation.
That still wouldn’t help me in my situation though, as I couldn’t pay myself from the local company, I’d have to pay myself from the funds that the rep office has, right?
I guess I’m in an usual situation, but none of the options available would make the least bit of a change to my situation as far as I can tell.
Ilary since I just completed the process last week, totally unaided except by your post here, a buddy and friendly Taiwanese people staffing a dozen govt offices, I’m planning on posting a slimmed down update of this now epic post. I’ll cover this, hopefully that will put an end to the questions.
LostSwede, going on your description of your work it sounds like you have several ok options here. You could A. Receive money in an account in your home country and make atm withdrawals here as needed, or B. Open a bank account in the name of your foreign company and receive funds directly in Taiwan–my current plan, I’ll let you know how it goes, or, C. Register a local Taiwanese company and open an account under its name.
The last two would have some tax implications, your accountant should know.
And as always file taxes yearly, for at least some amount, so you can renew your work permit, and avoid serious unpleasantness if there’s ever any irregularity at the border. Or something.
Ah, all is revealed. This is an especially attractive option now that minimum capital requirements have been effectively removed.
[quote=“Lee Kohl”]
LostSwede, going on your description of your work it sounds like you have several ok options here. You could A. Receive money in an account in your home country and make atm withdrawals here as needed, or B. Open a bank account in the name of your foreign company and receive funds directly in Taiwan–my current plan, I’ll let you know how it goes, or, C. Register a local Taiwanese company and open an account under its name.
The last two would have some tax implications, your accountant should know.
And as always file taxes yearly, for at least some amount, so you can renew your work permit, and avoid serious unpleasantness if there’s ever any irregularity at the border. Or something.[/quote]
Already doing option B, but someone here said that’s not legal so…
My accountant said it was fine a year and a half ago, but maybe things have changed since then.
And of course I have to pay some kind of tax, but in the past year I’ve made very little money due to it all being a new business and I’ve only really worked for one company, but things are starting to look up a bit now with more work coming in. Option C doesn’t allow me to pay myself, unless it’s legal to transfer money from a local company to a rep office, by that doesn’t seem to be the case or? And if so, would I be taxed on anything beyond profit? A is not an option due to the extra bank charges that would be incurred which would take to big of a percentage cut out of what I make at the moment.
You’re not doing option B, read it again 
My Canadian bank charges 5 USD per overseas ATM withdrawl, the max at most Taiwanese ATMs is 20k NTD so… tolerable. Maybe you should switch banks back home!
Good point about the local company, you wouldn’t be allowed to work for it in Taiwan, so getting paid by it might take some creative thinking…