In general, aside from representative offices, most types of business activities are permissible except those prohibited under the Negative List for Investment by Overseas Chinese and Foreign Nationals. The following outlines for what uses are specific types typically employed.
Incorporated companies are typically used for general trading, sales, and manufacturing, but can be used for any business type that is not prohibited. When investing in Taiwan, subsidiaries are often used in order to obtain the tax incentives Taiwan provides, such as R&D incentives discussed in Sec. 10.4.
They are also usually established over other entity types to provide liability protection for the parent company. A company limited by shares is mostly used by small to medium-sized companies and the most commonly established as subsidiaries. Limited companies are used when offering shares publicly.
Like incorporated companies, branch offices are typically used to engage in general trading, sales, and manufacturing, but can be used for any business type that is not prohibited. But unlike incorporated companies, branch offices pass through liability to the parent company. A key advantage of branch offices is the lack of remittance taxes.
Rep. Offices are used to conduct in liaison activities in Taiwan on behalf of the parent company. Activities can include negotiating and signing contracts on the parent company's behalf, providing quotations, negotiating prices, and doing tendering and procurement work in Taiwan.
As with incorporated companies and branch offices, partnerships and sole proprietorships can engage in most business types as long as they are not prohibited. They are only used by natural persons.
In addition Taiwan recognizes two partnership types, business and professional. Business partnerships are those used for conducting general business, while professional partnerships are for medical doctors, lawyers, accountants, etc. Business partnerships are treated as separate taxable entities while professional partnerships are not.
Joint ventures are used by companies looking to jointly employ resources to conduct business in Taiwan. They can be used for most business types except those that are prohibited under the Negative List for Investment by Overseas Chinese and Foreign Nationals.