Taiwan - Market Entry and Business Opportunities

Taiwan, located in East Asia, boasts a rich tapestry of culture, language, and history. With its capital in Taipei, the island nation is home to a diverse population of approximately 23.5 million people as of 2022. Mandarin Chinese serves as the official language, while Taiwanese Hokkien, Hakka, and indigenous languages such as Atayal and Amis contribute to the linguistic landscape. Predominantly inhabited by Han Chinese, Taiwan also embraces ethnic diversity, with Hoklo, Hakka, and Mainland Chinese constituting significant subgroups, alongside indigenous Taiwanese aborigines comprising about 2% of the population. Despite its relatively modest population growth, around 0.2% in 2021, Taiwan's vibrant society thrives within an area spanning approximately 36,193 square kilometres. Situated off the south-eastern coast of China, Taiwan is separated from the mainland by the Taiwan Strait, bordered by the East China Sea to the north, the Philippine Sea to the east, and the South China Sea to the southwest. The New Taiwan Dollar (TWD) serves as the nation's currency, reflecting its dynamic economic presence in the region.

Economic Overview

Over the past five years, Taiwan has seen substantial growth in its trade sector, particularly amidst the pandemic, marked by notable increases in both imports and exports. Key partners such as the United States, China, Hong Kong, Japan, and ASEAN countries have played pivotal roles in this growth. While trade volumes surged during the peak of the pandemic in 2022, reaching levels significantly above pre-pandemic averages, 2023 figures indicate a return to more stable levels. Despite projections for 2024 suggesting a similar trajectory to 2022, global economic forecasts, including for major trading partners and regions, indicate a cautious outlook for international trade due to slower economic growth. Nevertheless, other drivers of Taiwan's economy, such as investment and consumption, show positive trends for 2024. Surveyed companies express intentions to maintain or increase investments, while increased tourism activities are expected to boost consumption. Furthermore, economic issues such as housing costs and wages, which were prominent in recent elections, show more favourable prospects in 2024, with expectations for decreased inflation and relatively high household earnings.

Bilateral Relations between India-Taiwan

The diplomatic and economic relations between India and Taiwan have steadily strengthened over the years, marked by the establishment of various bilateral organizations and agreements aimed at fostering cooperation and mutual benefit. The Taipei Economic and Cultural Centre in New Delhi, along with its counterpart in Chennai, serves as a platform for representing Taiwanese interests in India's southern states, Sri Lanka, and the Maldives. In turn, the India-Taipei Association facilitates non-governmental engagements between the two nations, focusing on areas such as business, tourism, science, and culture. Significant agreements on Double Taxation Avoidance and Customs Cooperation, as well as the Bilateral Investment Agreement, underscore the commitment to enhancing bilateral trade and investment ties. Annual Bilateral Economic Consultation Meetings have consistently yielded positive outcomes, aligning with initiatives like "Make in India," "Digital India," and "Start-up India" to promote collective growth. India's "Look East" foreign policy further reinforces its efforts to nurture robust relationships with Taiwan across various domains, reflecting a shared commitment to progress and cooperation.

Taxation

Taiwan operates under a progressive income tax system with rates ranging from 5% to 40%, applied to segmented brackets of taxable income. The initial portion incurs a 5% tax, followed by a 12% rate for the subsequent range, while earnings surpassing a certain threshold face the highest rate of 40%. Additionally, a 3% tax on wages and salaries is withheld by employers and remitted directly to the government. Despite relatively high income tax rates compared to regional peers, Taiwan's strong economy and advanced development sustain a high standard of living. The corporate tax rate stands at 20%, with corporations required to report profits annually between May 1 and May 31. For fiscal years not aligning with the calendar year, reporting should occur within five months following the fiscal year's end. Deductions for income tax paid in other countries can be made from the total corporate tax payment, subject to certain limitations, ensuring fair treatment in cross-border income situations.

Financing Business in Taiwan

In Taiwan, entrepreneurs have access to various funding sources to support their business ventures. Taiwanese banks, such as Taipei Fubon Bank and Chinatrust Commercial Bank, offer loan products like term loans and lines of credit to businesses for various purposes, including equipment purchases. Additionally, the government provides grants and subsidies through agencies like the Small and Medium Enterprise Administration (SMEA) to support innovation and industry-specific initiatives. Venture capital and private equity firms, such as WI Harper Group and AppWorks Ventures, invest in promising start-ups across different sectors, while crowdfunding platforms like FlyingV and zeczec enable entrepreneurs to raise funds from the public for product development and marketing campaigns. Furthermore, angel investor networks like Angels Club and Taiwan Angel Club offer capital and mentorship to early-stage start-ups, facilitating their growth and development in the Taiwanese business landscape.

Top 10 Companies in Taiwan – 2023

Rank	Company	Industry	Revenue in 2023 (USD)
1	Foxconn	Electronics	$ 202.01 B
2	TSMC	Semi-Conductors	$ 73.86 B
3	Pegatron	Electronics	$ 40.95 B
4	Quanta Computer	Technology	$ 36.16 B
5	Wistron Corporation	Electronics	$ 28.99 B
6	Formosa Petrochemicals	Oil & Gas	$ 22.91 B
7	ASE Group	Semi-Conductors	$ 19.26 B
8	Uni President Enterprises	Food	$ 18.66 B
9	Asus	Technology	$ 15.72 B
10	MediaTek	Semi-Conductors	$ 13.94 B

Business Clusters in Taiwan

• Hsinchu Science Park: Premier tech hub in Hsinchu City, focusing on semiconductors, electronics, and ICT.
• Taichung Precision Machinery Park: Major manufacturing cluster in Taichung City, specializing in precision machinery.
• Nankang Software Park: Taiwan's largest software industry cluster in Taipei City, emphasizing software development and digital content creation.
• Kaohsiung Export Processing Zone (KEPZ): Economic zone in Kaohsiung City, promoting export-oriented industries with tax incentives.
• Central Taiwan Innovation Campus (CTIC): Emerging innovation cluster in Taichung City, focusing on advanced manufacturing and biotechnology.
• Taiwan Biomedical Industrial Park: Dedicated to biotechnology and medical devices in Taoyuan City, offering specialized infrastructure and support.
• Tainan Technology Industrial Park: Focused on technology innovation in Tainan City, including semiconductor and green energy industries.
• Southern Taiwan Science Park: Major industrial complex spanning Tainan and Kaohsiung, specializing in high-tech sectors like semiconductors and biotechnology.
• Yunlin Technology-Based Industrial Park: Promotes technology-intensive industries like precision machinery and smart manufacturing in Yunlin County.
• Changhua Coastal Industrial Park: Strategic hub along Changhua County's western coast for industries such as renewable energy and logistics.
• Hualien Tourism and Leisure Industry Park: Focuses on tourism-related businesses and leisure activities in Hualien County.
• New Taipei Software Park: Software industry cluster in New Taipei City, fostering digital innovation and collaboration.

Starting a Business in Taiwan

• Initiate Company Name Search and Reservation
• Obtain Approval for Foreign Investment
• Prepare for Bank Account Opening and Capital Injection
• Apply for Business Registration
• Complete Tax Registration
• Transfer to Official Bank Account

Best Locations to Set-Up Business in Taiwan

• Taipei: Capital city offering dynamic business environment, extensive transportation networks, and modern infrastructure. Ideal for technology, finance, and healthcare industries.
• New Taipei City: Adjacent to Taipei, similar advantages with potentially lower operating costs. Industrial parks suitable for manufacturing, logistics, and service-oriented businesses.
• Taoyuan: Taiwan's aerotropolis with main international airport and excellent global connectivity. Attractive for logistics, aviation, and international trade.
• Hsinchu Science Park: Taiwan's Silicon Valley, hub for technology and innovation in Hsinchu City. Ideal for semiconductor, electronics, and ICT sectors.
• Kaohsiung: Largest port city with access to international shipping routes. Suitable for manufacturing, maritime logistics, and petrochemicals.
• Taichung: Major manufacturing and commercial hub in central Taiwan. Strategic for machinery, automotive, and biotechnology sectors.
• Tainan: Strong manufacturing base, particularly in aerospace and renewable energy industries. Relatively lower operating costs compared to northern cities.
• Chiayi: Important transportation hub with growing industrial sector, particularly in agriculture and food processing. Attractive for domestic and international markets.
• Yunlin: Burgeoning industrial scene with focus on agriculture, aquaculture, and renewable energy sectors. Appealing for businesses capitalizing on natural resources and strategic location.
• Miaoli: Blend of industrial development and natural beauty, home to various manufacturing industries. Proximity to Taipei and Taichung, attractive for businesses and employees.
• Pingtung: Diverse agricultural resources and growing tourism industry. Opportunities for agribusinesses, food processing, and eco-tourism ventures.
• Yilan: Renowned for natural landscapes and cultural heritage, thriving tourism industry. Increasingly attracting investment in leisure and hospitality businesses.

Visa and Immigration

• Visitor Visa (B-1): Short-term visa for business visits to Taiwan, allowing activities like meetings, conferences, and negotiations. Duration varies from 30 to 90 days, requiring supporting documentation such as invitation letters and financial proof.
• Resident Visa for Investment (For Foreign Investors): Long-term visa for foreign investors establishing business presence in Taiwan. Allows residence to manage investments and business operations. Requires submission of comprehensive business plans and meeting specific investment criteria.
• Investor Visa (For Entrepreneurs and Start-ups): Visa for entrepreneurs launching innovative ventures in Taiwan. Provides authorization to establish and operate businesses, promoting entrepreneurship and innovation. Applicants must demonstrate viability of business ideas and commitment to Taiwan's economic development.

In conclusion, Taiwan offers abundant opportunities for business expansion, supported by its resilient economy, strategic location, skilled workforce, and pro-business policies. Despite challenges like intense competition and cultural nuances, success in Taiwan requires careful planning, innovation, and understanding of local dynamics. With the right strategy and execution, businesses can thrive in Taiwan's dynamic and rapidly growing market.

To know more about the Taiwanese market, request a Free Detailed Taiwan Market Entry Report.