Sole Proprietorship

As the name indicates, a sole proprietorship in Taiwan is a for-profit business entity owned and operated by a single individual who is also the entity's "responsible person." An important difference between a company and sole proprietorship for investors is that whereas liability is limited to the amount of paid-in capital for a company (subsidiary), liability for the owner/investor of a sole proprietorship is unlimited. Foreign investors that choose to establish a sole proprietorship in Taiwan are commonly involved in business activities of limited scope and scale. Also, because the income taxes for the sole proprietorship are combined with the owner/responsible person's individual income taxes, the tax implications are significantly different than those for investors in a company. The business establishment process is similar to that for a company but is primarily handled at the local government level, with the exception of the requirement for foreign investment approval from the Investment Commission under the MOEA.

Procedures for Setting Up a Sole Proprietorship

1. Conduct Pre-screening and Reservation of Business Name and Scope

The first step in setting up a sole proprietorship is to conduct a pre-screening and reservation of the Chinese name and scope for the proposed business. The Chinese name of the business will be the official (and legal) name of the business entity, and an investor in a sole proprietorship may want to enlist the assistance of a Taiwan-based associate or professional service provider in choosing a name that is appropriate for the business and the kinds of products or services that it intends to provide. Also, there are certain restrictions on business naming that should be adhered to as they will affect whether or not the selected name will be approved. The business activities listed in the scope of the business are selected from an index of business areas and operational items published by the MOEA. The index is available online (http://210.69.121.50/~doc/cod/html/catelogo_srh.htm) in Chinese as a searchable database system.

Application Process and Required Documents
The pre-screening and reservation of business name and scope for a sole proprietorship starts at the local government level and is coordinated with the MOEA at the central government level. Using Taipei City as an example, the instructions and forms for the application process [http://ooca.dortp.gov.tw/app_online/03/index.asp?linkid=14&title=%B0%D3%B8%B9%A6W%BA%D9%B9w%ACd] indicate that the application process for reserving a business name and scope [https://eicm.moea.gov.tw/eicmapply/index.jsp] can be performed online. Or, you can download a copy of  the application request form [http://www.e-services.taipei.gov.tw/hypage.exe?HYPAGE=form_download.htm&s_uid=011154] to conduct a pre-screening and reservation of a business name and scope and file it with the Taipei Business Administration Office and the Deptartment of Commerce, MOEA. Status of the application once it has been filed can also be checked online [http://210.69.121.50/~doc/ce/].

The documents and information required for the application are:
1. application form
2. copy of Alien Resident Certificate (ARC) or notarized statement of residence

Notes: Once the name of the proposed business has been approved and reserved, the approval document should be retained for the business registration process.

Period of Reservation:  Sole proprietorship business names are reserved for a period of one month from the approval date. An application can be filed to extend the reservation period for one additional month only. If the business registration process is initiated after the reservation period or is not completed within six months of approval, then a new application for name pre-screening and reservation should be made. Applicant of approved application may not be changed during the reservation period.

Applicant:  The applicant and the responsible person (sole proprietor) of the sole proprietorship shall be one and the same. The applicant should include their full name and ID number (ARC, passport, etc.) on the application form. The applicant shall affix their personal seal to the application or sign their name in lieu thereof.

Faxed applications:  Contact telephone and fax number should be included on fax transmissions of application materials.

Processing Time:  1-2 working days

Contact Information:
Taipei Business Administration Office, Section 1
Telephone: +886-2-2725-6491
Fax: +886-2-2720-5759


2. Apply for Foreign Investment Approval

Once you have successfully reserved a company/business entity name and business scope with the local government authority, sole proprietorship investors must submit an investment approval application to the Investment Commission under the Ministry of Economic Affairs. The Investment Commission will review the application with reference to the laws and regulations governing investment by foreign nationals in Taiwan. The review process generally focuses on the business scope and planned activities in Taiwan of the proposed business entity, making sure that the business operational items are not on the negative list, that the investment meets requirements for general (unrestricted) business areas, or, if in a special industry or restricted business area, that the investment meets specific requirements for such industries or areas.

Application Process
An English "reference application form" [http://www.moeaic.gov.tw/system_external/ctlr?PRO=APFormLoad&id=35] has been created by the Investment Commission to facilitate the application process for foreign companies and individuals. However, as indicated, it is for reference only, and the official Chinese form (link provided below) is the one to file with the Investment Commission.

Required Documents
1. Application Form A (download form [http://www.moeaic.gov.tw/system_external/ctlr?PRO=APFormLoad&id=36]) - one original and two photocopies
2. Investor Information: photocopy of the identification certificate (copy of passport with shareholder's signature in margin) of investor and its translation in Chinese; original power of attorney authorizing investor's agent (and its translation in Chinese if in a foreign language); photocopy of the identification certificate (citizen's ID for ROC nationals) of the investor's agent.
3. Original copy of the Application for Reservation of Company Name and Business Scope approved by the MOEA
4. For investments in New Taiwan Dollars: documents certifying the source of funds in New Taiwan Dollars in Taiwan

One original and two carbon copies of the Investment Application Form should be prepared; the original must be duly signed/stamped and attached with all supporting documents (supporting documents need not be attached to the two carbon copies) and sent to the Investment Commission, Ministry of Economic Affairs, 8F, No. 7, Section 1, Roosevelt Road, Taipei.

The application status can be checked online from the Investment Commission's website.

Processing Time:  Approximately 5-7 working days for non-restricted business areas; 7-30  working days for restricted business areas or special industries.

Contact Information:
Investment Commission, MOEA
Telephone: +886-2-3343-5700
Fax: +886-2-2396-3970
Website: www.moeaic.gov.tw


3. Apply for Business Registration

After receiving investment approval from the Investment Commission, a sole proprietor investor must prepare and file an application for a business license with the local city or county government. Each city and county have their application processes for business licenses, but they generally follow a similar pattern of requiring an application with the city or county government's business administration or business development agency, local office of the national tax authority for the issuance of a business tax ID (tong-yi-bian-hao) and General Uniform Invoices (fa-piao) (see information on Taxation) and the building administration unit of the local government to ensure zoning and other safety rules.

Continuing with the business registration application process for Taipei City as an example, investors or their agents must apply for a business license by way of the Taipei Business Administration Office's Combined Services Window. This window serves as a business license application clearinghouse for three government agencies involved in the local business establishment process and includes the Taipei Business Administration Office, Taipei National Tax Administration under the Ministry of Finance, and the Taipei Building Administration Office. The application process can be conducted by mail (send to: Taipei City Hall, 1st Floor, Northern Wing, No. 1 Shifu Road, Xinyi District, Taipei City) through the combined services window. However, if applicants wish to conduct the application process in person, they should take their application materials to the local district tax office of the Taipei National Tax Administration with jurisdiction over the area in which the business is to be located. If, for example, the business is located in Taipei's Daan District, the Daan Tax Office would be where the application materials should be initially filed. Once the application materials have been received by the local tax office and after they review the application materials, the tax office will send on the remaining relevant application forms and materials to the Taipei Business Administration Office's Combined Services Window for further review and processing by the two other agencies.

Documents and Procedures
The forms required for filing a business license application for a sole proprietorship in Taipei can be found on the Taipei City Government's online application and procedures server [http://www.e-services.taipei.gov.tw/hypage.exe?HYPAGE=form_download.htm&s_uid=011182]. The following is a list of forms and documents required for the application process.

Documents required by the Taipei Business Administration Office:
1. One copy of the Application Form for the Establishment/Change of Information for Business ID
2. Two copies of the business registration card
3. Approved application form for pre-screened and reserved business name
4. Photocopy of responsible person's ID (Alien Resident Certificate or notarized statement of residence)
5. Copy of letter of Foreign Investment Approval from the Investment Commission
6. Power of Attorney authorizing an agent (if applicable)
7. Photocopy of authorized agent's ID (citizen's ID for ROC nationals, passport for foreign nationals)
8. Accounting Balance Sheet, or Photocopy of the Deposit Passbook, or CPA Certification of Capital Balance (applies to entities capitalized at NT$500,000 or more only)
9. One copy of all other documents required for proposed businesses in special industries

Documents required by the Taipei National Tax Administration under the Ministry of Finance
1. One copy of the Application Form for the Establishment/Change of Information for Business ID
2. Photocopy of responsible person's ID (Alien Resident Certificate or notarized statement of residence)
3. Copy of letter of Foreign Investment Approval from the Investment Commission

The building administration authorities have a separate application form to be used to check zoning, safety, and other documentation related to the business premises.

Documents required by the Taipei Building Administration:
1. Building Site Inspection Application Form
2. Photocopy of building use license or receipt
3. Housing tax payment receipt
4. Land use zoning documentation

Please note that:
• Stated building use should be in accordance with the use officially designated for the premises by local building registration authorities
• Official business activities index codes (see business activities and operational items index information in step 1 above) are used for the list of business activities
• Listed business activities are within the business scope approved by the Investment Commission
• Proof of insurance coverage for public accident liability insurance in accordance with local regulations are submitted for businesses engaged in retail sales where consumers will have access to the premises
• Applications for dance halls, dance clubs, bars/pubs, hostess bars, hostess coffee/tea shops, KTVs, etc. must also submti a copy of the permitted building use floor plan
• Applications for dance halls, dance clubs, bars/pubs, hostess bars, hostess coffee/tea shops must also submit: a declaration that the responsible person, his/her spouse, and their direct relations has not operated a similar business within the last three years that has been ordered to close by authorities; all household registration forms for the responsible person, spouse, parents, and children; proof of a clean criminal record.

Fee: NT$2,000 (NT$1,000 for registration and NT$1,000 for license)

Processing Time: 14 days for most applications; however, if the application requires special review or coordination with external government agencies, the application could take up to two months.

Contact Infomation:
Taipei Business Administration Office, Section 1
Telephone: +886-2-2725-6491
Fax:: +886-2-2720-5759
Taipei National Tax Administration: +886-2-2725-6493
Taipei Building Administration Office: +886-2-2725-6495, +886-2-2725-6496
Service Window Hours: Monday-Friday, 8:50 am to 4:10 pm (no closure at noon)
Telephone Inquiry Hours: Monday-Friday, 8:30 am to 12:30 pm and 1:30 pm to 5:30 pm

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