For foreign investors entering the Taiwan market, one of the first steps in company registration is selecting the appropriate business activity codes while reserving the company name. Taiwan’s Ministry of Economic Affairs has established standardized industry classifications and business activity codes for various industries. Selecting the correct business activity code is not merely ad administrative requirement, it also has a significant impact on the company’s future operations and regulatory compliance. The key areas affected include:
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Foreign Investment Approval
Taiwan imposes foreign ownership restrictions or qualification reviews on certain industries, such as financial services and specific regulated service sectors. If an incorrect business activity code is selected, the foreign investment approval process may be delayed or rejected.
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Special License Applications
Certain industries in Taiwan are classified as regulated businesses and require special permits. These business activity codes typically end with the digit “1”, such as those for medical device wholesalers and travel agencies. Companies must obtain approval from the relevant competent authority before or after incorporation, as required, before they can complete the company registration process.
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Tax Incentives and Applicable Tax Benefits
To promote the development of strategic industries, Taiwan offers various tax incentives for sectors such as research and development(R&D), green energy, low-carbon technologies, and biotechnology. Foreign invested companies should select the correct and appropriate business activity codes to ensure eligibility for applicable tax benefits, including R&D investment tax credits, industry-specific tax incentives, and corporate income tax reductions.
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Uniform Invoice Issuance and Accounting Compliance
After a company commences operations, the descriptions of goods or services stated on uniform invoices should generally fall within the scope of the company’s registered business activities. Issuing invoices for transactions outside the registered business scope may trigger tax audits and expose the company to potential non-compliance with Taiwan's tax regulations and business registration requirements.
Taking the above factors into consideration, Kaizen recommends that investors first identify the core business activities that are expected to generate revenue immediately after the Taiwan company is established. In addition, it is advisable to include any potential business activities the company may expand into over the next five years to minimize the need for frequent amendments to the company’s registration.
Furthermore, Taiwan’s regulations permit companies to register the business activity code “ZZ99999- Business activities not prohibited or restricted by law, except those requiring special approval." This allows companies, in addition to their registered core business activities, to engage in any lawful business that is not otherwise prohibited or subject to licensing requirements, providing investors with greater operational flexibility in Taiwan.
If you have any questions, please do not hesitate to contact us. Our professionals are ready to provide professional advice and support to ensure your company registration process is completed smoothly and efficiently.
See also:
Taiwan Company Registration Procedures and Costs
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