Foreign entities are entitled to establish and own business enterprises and engage in all forms of remunerative activity as local companies. However, Taiwan maintains a negative list of industries closed to foreign investment for reasons related to national security and environmental protection (e.g. public utilities, power distribution, natural gas, postal service, telecommunications, mass media, and air and sea transportation).
Acquisition of Holdings
A majority holding interest in the capital of a Taiwanese company is legal. However the foreign ownership limit on wireless and fixed line telecommunications firms is 60%, including a direct foreign investment limit of 49%. A foreign ownership cap of less than 50% applies on airport ground services firms, air-catering companies, aviation transportation businesses (airlines), and general aviation businesses (commercial helicopters and business jet planes), with a separate limit of 25% for any single foreign investor. Foreign investment in Taiwan-flagged merchant shipping services is limited to 50% for Taiwan shipping companies operating international routes. Furthermore, there is a foreign ownership limit of 49.99% for satellite television broadcasting services and piped distribution of natural gas, and a 49% limit for high-speed rail services. Specific restrictions apply to Chinese investors.
Obligation to Declare
The Investment Commission screens applications for FDI, mergers, and acquisitions. Foreign investors must submit an application form containing the funding plan, business operation plan, entity registration, and documents certifying the inward remittance of investment funds. If an investment fails review, an investor may re-apply once the reason for the denial has been removed.
All investments are subject to screening, with the approval time generally ranging between two to four days for small investments (under TWD 500 million) to 20-30 days for foreign investments involving cross-border mergers and acquisitions or other special situations. The screening process may also include an assessment of the impact of proposed investments on a sector’s competitive landscape and protection of the rights of local shareholders and employees.
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