Locating in the center of Asia Pacific, Taiwan has been the top choice for more and more international non-governmental organizations (INGOs) to set up their offices. This has to do with the fact that, in recent years, Taiwan has gradually improved relevant laws and regulations and established one-s
By Terry Tu, Senior Consultant of Formosan Brothers, CAMS
Locating in the center of Asia Pacific, Taiwan has been the top choice for more and more international non-governmental organizations (INGOs) to set up their offices. This has to do with the fact that, in recent years, Taiwan has gradually improved relevant laws and regulations and established one-stop information service stations and dedicated advising contacts, providing incentives and convenience for INGOs.
To attract INGOs to set up offices in Taiwan, Taiwan amended the “Directions for Foreign Civil Institutions and Organizations to Apply to Set up and Register Offices in Taiwan,” removing many restrictions. The earlier restrictions that no secretariate may be set up and that an organization is limited to one office have been relaxed, allowing INGOs to decide more flexibly the number and levels of offices they need. In addition, INGOs are no longer required to report to the local police authorities after their registration is approved. The earlier requirement that the foreign responsible person of an INGO needs to have obtained his/her Alien Resident Certificate (“ARC”) at the time of applying to set up an office has also been relaxed, allowing responsible persons of INGOs to have up to six months after the registration of the INGO to provide proof of an ARC. Moreover, the amendment to the Directions also added a legal basis for Hong Kong and Macao-related institutions to set up offices in Taiwan, which was the first time Taiwan officially opened the door for Hong Kong and Macao-related institutions to set up offices in Taiwan.
There is also the newly enacted “Regulations for Foreign International Cooperation Foundations Applying with the Ministry of Foreign Affairs for Recognition,” which allows INGOs that are in the form of a foundation and engaged in activities involving democracy and freedom, human rights and justice, peace and tolerance, and other types of international cooperation activities approved by the competent authority to submit an application for recognition of its status as a foundation. The threshold for total assets in the territory of Taiwan for foreign foundations applying for recognition has been lowered to NT$15 million, with the total cash ratio being at least 50 percent. However, if an INGO has obtained general or special consultative status in the United Nations Economic and Social Council or has been classified by MOFA as a world-renowned international nongovernmental organization, its total assets threshold within the territory of Taiwan is NT$5 million.
INGOs may apply for subsidies for part of the start-up expenses and part of the rent for the first year (not exceeding 30% of the start-up expenses and 30% of the total rent for the first year, and each INGO may apply for subsidy only once) when setting up offices in Taiwan. If an INGO’s office meet relevant tax provisions, they may also enjoy tax deductions and exemptions.
After an INGO completes the set-up of an office, it may open NTD or foreign currency (or multiple currencies) bank accounts in Taiwan. In principle, there is no restrictions regarding transfers in and out of the account; the only requirement is that transactions of NT$500,000 or above need to be reported. At the time of account opening, a Taiwanese financial institution would conduct customer identity verification in accordance with money laundering prevention guidelines. When necessary, it would ask the customer to explain the source of the fund and provide related documents. For the operation of its offices in Taiwan, an INGO may hire Taiwanese and foreign employees. Even for foreigners, labor and health insurance are offered and their children’s right to schooling in Taiwan is also protected. If an INGO desires to set up a presence in Taiwan, be it an office, a global or regional branch, or a headquarter, in the preliminary stage, it is recommended to set up an office first because the procedure is the simplest and there is no minimum requirement on the total amount of assets in Taiwan. However, it should be noted that an INGO office in Taiwan cannot recruit volunteers, conduct fundraising campaigns or accept donations.
Taiwan is actively establishing a friendly environment to attract INGOs. More information may be found on the website “Setting up an INGO in Taiwan” (in both Chinese and English). If necessary, one may also call the advising hotline set up by the Ministry of Foreign Affairs, or consult professionals for their opinions on legal, tax-related, or subsidy-related matters.
(This article was published in the Expert’s Commentary Column of the Commercial Times：https://view.ctee.com.tw/legal/32434.html）
