Branch/subsidiary in Hong Kong or Taiwan?

Question

A research and consulting company, we have started doing business in Taiwan and want to employ a local consultant in Taipei, therefore opening an office. We are aware of the authorisation process in Taiwan. But many people in Taiwan have advised that trading from Hong Kong would be a better option. We have further development opportunities in Hong Kong and Mainland China, therefore there could be a rationale to be based in Hong Kong. But given the local regulations for doing business in Taiwan, I am wondering if we will need to have branch/subsidiary in Taiwan anyway so to support our operations and being able to employ people. I would welcome advice / past experiences, of setting up operations in Taiwan, or operating from Hong Kong / Taiwan in the wider Asia. Thank you

Answer

Marine,

Based on my long experience, it may be best to have Hong Kong as a hub, you can easily reach both Taiwan and the mainland using frequent flights and regional airlines to suit your schedule.

Culturally this has been the best way, avoiding any issues of tension between Taiwan and the mainland.

Separately, yes you may well be advised to have a ‘rep office’ in Taiwan for any local hires but with all invoicing etc coming from HK. Most countries have a 6 month rule, ie if the individual can be seen to be working for a day over 6 months on a consistent basis then they should be treated as a local and also be liable for income tax etc.

For the latter best to get some independent advice from both a local accountant and also the UKTI Taipei office.

Answer

My name is Julia Chang, Commercial Officer at British Trade & Cultural Office in Taipei, Taiwan, who works for UKTI here. We will be very happy to assist if you considr of establishing an office here.

Here are general websites providing background info about Taiwan business –
– Invest in Taiwan, http://investtaiwan.org/library/main_eng_general.jsp
– British Chamber of Commerce in Taipei, www.bcctaipei.com
– Price Waterhouse, www.pwc.com

Actually, Taiwan has signed the bi-lateral economic agreement with China which allows Taiwanese business to be entitled of tax-free on certains items/sectors, such as texitile, machinery and agricultural foods; this is to say, the economic co-operative framework agreement, ECFA. The Taiwan government is striving hard to be positioned as a spring board of the cross-link trade.

Please contact me at julia.chang@fco.gov.uk, if there is anything else we can help.

Answer

Hi Marine,

Thank you for your interest in the Hong Kong market. Hong Kong offers many benefits to overseas countires wishing to explore the S E Asia and China markets. Further details can be found at http://www.ukti.gov.uk/export/countries/asiapacific/fareast/hongkongsar/doingbusiness.html

In addition, Hong Kong’s Closer Economic Partnership Arrangement (CEPA) with China opens up huge opportunities for Hong Kong’s goods and services. This covers trade in goods and services. The latter should be applicable for research and consulting services which BOP Consulting specialises in. Full details of CEP can be found at
http://www.tid.gov.hk/english/cepa/

With regards to using Hong Kong as a hub to support your operations in Taiwan, I suspect you will still need to set up a branch there. If you do not wish to do so, one option is to partner with a company there whereby this partner takes care of the employment and other operations. This partnership model works similiar to a distributor / agent agreement in which the partner carries out the necessary research and consulting services on behalf of BOC Consulting and gets a share of the profits.

I hope you will find the above useful.

Best regards,

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