Taiwan: Legal Regulations
Investment Laws and Regulations
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Investment laws and regulations in Taiwan include mainly "Statute for Investment by Foreign Persons" and "Statute for Investment by Overseas Chinese". These two statutes are virtually identical, apart from a few items in which investment is permitted for overseas Chinese but forbidden or restricted for foreign persons.
- Definition of Investment (Article 4 of the Statute for Investment by Foreign Persons)
- Holding shares issued by a Taiwan company or contributing to the capital of a Taiwan company or a Taiwan limited partnership.
- Establishing a branch office of a foreign company or a foreign limited partnership, a sole proprietorship or a partnership in Taiwan.
- Providing loan(s) to an invested business entity as referred to in the preceding two items for a period of at least one year.
- Kinds of Investment (Article 6 of the Statute for Investment by Foreign Persons)
- Machinery and equipment or raw materials for own use.
- Patent rights, trademark rights, copyrights, rights for technical knowledge or other intellectual property rights.
- Other property which may be invested under the competent authority's approval (such as credit through reorganizations, mergers and acquisitions, procurement or stock splits).
- Prohibited or Restricted Areas of Investment (Article 7 of the Statute for Investment by Foreign Persons)
- Investment is forbidden in industries that may negatively affect national security, public order, good customs and practices, or national health, and those that are prohibited by law.
- Investors who apply to invest in an industry in which investment is restricted by a law or by a regulation promulgated under a law shall obtain approval thereof or consent thereto from the competent authority in charge of the industry in question.
- In line with the previous two items, the Executive Yuan has adopted the "Negative List for Investment by Foreign Persons".
- Guarantee of Exchange Settlement (Article 12 of the Statute for Investment by Foreign Persons)
- An investor may apply for exchange settlement against the interest accrued on his/her annual income or against the profit surplus distributed to him/her from his/her investment.
- An investor transferring his/her shares or withdrawing or decreasing his/her investment may apply for exchange settlement, in a lump sum, of the total amount of his/her investment as approved. This rule is also applicable to the capital gains realized from the investor's investment.
- An investor's application for exchange settlement against the payment of principal and interest on his/ her loan investment shall be governed by the agreed terms and conditions.
- Protection Against Expropriation (Articles 13 and 14 of the Statute for Investment by Foreign Persons)
- When foreign investment accounts for 45% or more of the total capital amount of an enterprise, the invested enterprise shall not be subject to requisition or expropriation for a period of 20 years after the commencement of business of the invested enterprise as long as the said capital contribution rate of the investor remains unchanged.
- In case that the government requisites or expropriates an invested enterprise for national defense reasons, a foreign investor whose investment is less than 45% of the total capital amount of the invested enterprise shall be entitled to a reasonable compensation.
- Investment Incentives (Articles 15 of the Statute for Investment by Foreign Persons)
- Provisions of the Company Law requiring that cash capitalization increases retain a certain proportion of shares for purchase by company employees do not apply to investments which account for more than 45% of the total capital.
- Where an invested enterprise is organized as a company under the Company Law, an investor thereof who serves as a supervisor may be exempt from the requirement to have residence in Taiwan.
- Protection of Rights (Articles 17 of the Statute for Investment by Foreign Persons)
Except as otherwise provided for in other laws, an enterprise in which the investor has invested shall be accorded the same rights and obligations to which an enterprise operated by local persons is entitled.