The capital is supposed to be sufficient to operate the company. If the capital investment is too small, when the accumulated net loss exceeds the capital, the company needs to announce its insolvency or inject additional capital. And the procedure for injecting additional capital is almost the same as setting up a new company. It takes time, effort, and money.
- When the company in Taiwan is to engage in a highly regulated business, and under certain other conditions.
- The company in Taiwan will hire foreign employees within one year.
- The company in Taiwan takes part in the immigrant investor program.
The capital needs to be wired from the foreign parent company to the Taiwanese entity’s bank account. It will be audited by both the investment committee and the CPA. Withdrawing capital after the audit can lead to criminal charges. The capital is only meant for operating the Taiwanese entity.
Long-term loans from the investor
Loans from the parent company or shareholders lasting over one year are also regarded as investments, just like the capital. They also require the investment committee’s approval in advance.
Audit of financial statements
In Taiwan, if the capital size is over TWD 30 million, the annual audit of financial statements will become mandatory.
Capital amount has nothing to do with tax treatment.