Tighter Control Measures Proposed to Regulate the Establishment of Businesses by Mainland Chinese in Taiwan

The Ministry of Economic Affairs (“MOEA”) proposed to introduce measures to ensure that certain criteria be met by mainland Chinese businesses before they establish a branch office and/or a representative office in Taiwan.  The purpose of the newly proposed measures is to increase better regulation, and the proposed amendment to the existing law is summarized as follows:-

1. To establish a branch office in Taiwan, the mainland Chinese corporation should have been in existence for a period of at least 3 years and should have a paid up capital of at least 6 million NT dollars (approximately US$200,000); (Article 5-1)
2. An application to establish shall not be allowed if the purpose or its business activity (i) would be politically, socially and/or culturally sensitive, or would have an impact on national security or (ii) would have an adverse effect on the economic development or the financial stability of Taiwan, or if the business is invested by the military of the mainland China or has a military purpose; (Article 6)
3. To establish a representative office, among the regular establishment documents to be submitted, there shall be an additional work plan; (Article 9)
4. The work plan mentioned in the foregoing paragraph shall be prepared and filed every year at the beginning of a new year along with a budget of expenses, and within 2 months after the end of a year a work report and the final accounts of the expenses shall be filed for record, which shall be made available for inspection by the authority upon request; (Article 13-1)
5. A Taiwan attorney at law or a certified public accountant shall be retained in the initial applications for the establishment of a branch office or a representative office.