You’ve made the decision to live and work in Taiwan and are starting to plan out your journey to launching a business there. Before you proceed, here are some factors to take into consideration.

Deciding if Taiwan is the Right Fit for Your Business

As a major hardware manufacturing hub, Taiwan is a popular choice for large companies like Apple, Google, and HP seeking partners and suppliers.

However, startups may find it more challenging to harness Taiwan’s strengths effectively. Given Taiwan’s expertise in tech manufacturing, small and medium enterprises (SMEs) producing physical products such as electric bicycles or 3D printers are more likely to thrive.

Conversely, businesses focused on consumers or relying on scale, such as introducing a new product like kombucha or craft beer to the Taiwanese market, may need to reassess their strategies. Likewise, companies looking to use Taiwan as a gateway to China might encounter additional obstacles.

Securing a Government Grant in Taiwan

Taiwan promotes government support for startups extensively. Many entrepreneurs visiting Taiwan inquire about government grants for their businesses.

It’s important to note that government grants are awarded to companies registered in Taiwan, not individuals. As a foreign entrepreneur with a non-Taiwanese company, you must establish a Taiwanese entity to be eligible for a government grant.

Branch offices and representative offices are not eligible for grants. While foreign workers with Taiwanese residency cards can receive subsidies, remote workers outside Taiwan are not eligible. Detailed information on applying for a government grant in Taiwan can be found here.

Understanding Accounting Practices in Taiwan

Assuming accounting practices are consistent globally can lead to surprises. Taiwan’s accounting procedures differ from those in other countries.

For instance, in the US, business expenses are treated with an “innocent-until-proven-guilty” approach, allowing deductions with proper documentation. In Taiwan, however, expenses must be supported by a Fa-Piao (a Uniform Invoice), with the vendor requiring your tax ID number on the receipt for it to be a valid deduction.

These differences mean that payments to foreign companies for services or to freelancers may not be recognized as valid expenses by Taiwanese authorities. Understanding these nuances is crucial for startups operating in Taiwan.

Navigating the Regulatory Landscape in Taiwan

While startups are designed for cross-border operations, managing different jurisdictions can be complex. Taiwan’s regulatory environment, though relatively open, can be conservative in business matters.

The Taiwanese government has significant oversight over daily business operations. Taiwanese labor laws, for example, take precedence over private agreements between employers and employees. Foreign business owners may need to engage with multiple agencies to address business-related queries. Services like 11th Fleet can simplify this process.

11th Fleet’s outsourced CFO/COO services help startups anticipate and avoid potential pitfalls in Taiwan. By aiding clients in navigating regulatory complexities, these services save time and prevent costly setbacks.

Breaking the Language Barrier in Taiwan

English fluency in Taiwan is closer to that of Japan and South Korea than Singapore or Hong Kong. While Taiwan is aiming to become bilingual by 2030, Mandarin remains the primary language for business transactions and documentation.

Foreign investors without Mandarin proficiency must translate official documents and contracts when registering their businesses in Taiwan. Having team members who understand the local language and culture is essential for navigating business operations effectively.

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This article was originally published on May 9, 2022.

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