Doing Business In.. 2024 Comparisons

Taiwan is a civil law country. Legal matters are governed by statutory laws and regulations. Different administrative authorities are in charge of different sectors of laws and regulations. The civil courts, criminal courts and administrative courts handle civil litigation, criminal litigation and administrative litigation in accordance with their jurisdiction and the nature of the cases. A specialised Intellectual Property and Commercial Court adjudicates intellectual property-related litigation and complex commercial cases. Typically, a legal dispute is heard first by a district court. Appeals can be made to the high courts and the Supreme Court.

Foreign investments in Taiwan require approval, although Taiwan in general imposes no restrictions on foreigners entering the Taiwan market. A foreign investor, including investors from Mainland China, Hong Kong and Macau, needs to acquire advance approval for the foreign investment from the Investment Commission of the Ministry of Economic Affairs (MOEAIC). For example, if a foreign investor would like to acquire shares in a Taiwanese company or to establish an entity in Taiwan, approval is required beforehand. Due to political and national security concerns, reviews of investment from Mainland China are stricter than those from other countries.

Taiwan allows foreigners to invest in all sectors except for specific industries in which foreign investments are prohibited due to national security concerns, environmental protection or other stipulated policy reasons. The prohibited sectors include water and gas supply and basic metal manufacturing, among others. There are also limits on foreign shareholders and control over the board of domestic companies in certain industries. These restrictions are set out in the Negative List for Investment by Overseas Chinese and Foreign Nationals. This list is updated from time to time. It is always prudent for a foreign investor to conduct compliance checks when planning its investments in Taiwan.

To obtain foreign investment approval, the foreign investor is required to submit an application to the MOEAIC. The applicant needs to illustrate its investment plan, for example, whether the transaction is an incorporation, capital increase, or cross-border merger or acquisition, among others. The MOEAIC will review the application and may ask for supporting documents where it deems necessary. After foreign investment approval is granted, the applicant has to carry out the investment accordingly within the period indicated, including remitting the funds into Taiwan. 

Investing without advance foreign investment approval may result in sanctions such as fines, revocation of investment approval or confiscation of invested capital, or may even trigger criminal sanctions if it involves national security issues. Compliance review and professional advice before making such investments is almost always recommended.

There are usually no specific conditional commitments required by the authority concerning a foreign investment application. However, as foreign investment requires prior approval, the MOEAIC may raise its concerns regarding the proposed investment plan while reviewing the application. For example, the applicant may need to explain the source of funds and the ultimate beneficiaries, and so on. The applicant can liaise with the MOEAIC officer in order to find an acceptable resolution and revise the investment plan accordingly. Once the revised investment plan is approved, the investor needs to follow the plan made, or file for another revision with the MOEAIC. 

The authority’s rejection of an investment approval may be appealed to the Petitions and Appeals Committee of the Executive Yuan. If the Committee dismisses the investor’s appeal, the investor may bring the matter before the Administrative High Court and the Administrative Supreme Court, requesting proper remedies from the judicial branch. While an investor is always entitled to seek judicial review of the authority’s refusal to grant an approval, in practice, very few choose to challenge the authorities, due to concerns about the time and effort required for appeals. 

The closing of a foreign investment is usually time-sensitive. The applicants usually will not appeal; rather, an applicant will adopt a co-operative approach to communicating and negotiating with the authority before a decision is made, to the extent that a plan acceptable to the authority can be concluded. If the authority ends up not authorising an investment, the plan will usually be abandoned and the investment team, including its legal counsel, will make efforts to tailor a new plan and file another application.

There are four types of companies under Taiwan’s Company Act:

• unlimited company;
• unlimited company with limited liability shareholders;
• limited company; and
• company limited by shares.

Unlimited companies and unlimited companies with limited liability shareholders are rarely used in practice; companies limited by shares and limited companies are the most common forms of business for foreign investors in Taiwan.

There are no minimum capital requirements set by the Company Act, but in practice the capital must be sufficient to cover the company’s costs and expenses. The share structure of a company can be customised in many ways depending on the plans and needs of the company. A limited company places restrictions on share transfers. For this reason, it is easier for the shareholders to control a limited company or a close company limited by shares. If the company plans to go public, then it needs to become a general company limited by shares at the time it goes public. Foreign investors usually decide on a preferred business vehicle in Taiwan based on their funding, business and strategic needs.

Taking a limited company as an example, if a foreign company wants to establish a limited company subsidiary in Taiwan, the main steps would be:

• to request a company name search and reservation;
• to request approval for foreign investment;
• to open the preparatory bank account and inject the capital;
• to request a business registration;
• to register for tax; and
• to transfer the capital from the preparatory bank account to the official bank account.

It usually takes approximately eight to 12 weeks in practice to successfully set up a limited company subsidiary. 

Companies registered in Taiwan are required to make annual reports of major equity holders (defined as persons holding 10% or more of the company’s outstanding equity), directors and officers. In addition, there is an ongoing reporting requirement with respect to basic company information. Any change in relation to the company’s registered information must be filed with the relevant authority within 15 days. Such changes include, for example, changes to:

• legal representatives, directors or supervisors;
• capital; or
• articles of incorporation, company address or company name.

Public companies are subject to more stringent reporting obligations. As of 10 May 2024, any individual or group that acquires more than 5% of a public company’s total issued shares must report the acquisition to the competent authority and make a public announcement.

The basic management of a corporation in Taiwan is a two-tier structure: the shareholders, and the board of directors. Shareholders, by shareholders’ meeting, elect director(s) of the board and supervisor(s). The board of directors holds discretionary powers from the delegation of shareholders and performs the functions of management in the company’s daily operation. Shareholders retain the power to remove any director who abuses the delegated discretionary power. Supervisor(s) monitor directors and also audit the managerial execution of business activities.

Directors and officers have fiduciary duties to the company and its shareholders, and they may be held liable for damages caused by their negligence, breach of duty or illegal acts. In addition, directors and officers may face criminal charges or administrative sanctions for violating certain laws or regulations related to corporate governance, financial reporting, insider trading or market manipulation.

The amendments to the Company Act in 2013 and 2018 incorporated the principle of piercing the corporate veil. If a shareholder abuses the company’s status as a juristic person resulting in the company having certain debts that it cannot settle, the shareholder will be held personally liable for such debt to the extent necessary if the abuse is of a severe nature.

The employment relationship in Taiwan is mostly governed by laws and regulations and agreements, including collective bargaining agreements and individual employment agreements. Although the employer and the employee are free to enter into employment agreements with the terms and conditions they want, the labour laws and regulations serve as a floor for the employment relationship. Labour laws and regulations should prevail if there is a contradiction between them and the employment agreements. 

The Labour Standards Act (LSA) sets up the basic terms and conditions and the minimum standards for the employment relationship. Employment contracts can be made verbally or in writing. An employment contract may specify the workplace, working time for each working day, rest periods, holidays, leave and shift changes, wage payment, termination and retirement, severance pay, pension, allowance, bonuses, expenses, health and safety, labour education and training, welfare, compensation and remedy for an occupational accident, work discipline, awards, rights and obligations. If an employment contract is made without stipulating these details, the terms and conditions set forth in the LSA govern. 

The term of an employment contract should be indefinite, with four exceptions which make a definite term of less than a year permissible:

• temporary work;
• short-term work;
• seasonal work; and
• specific work of a non-continuous nature. 

Though a probationary period is common in practice, it is not foreseen in the LSA. Therefore, an employee in the probationary period shall be entitled to the same rights and benefits as stipulated in the LSA with an additional clause that puts work performance in a probationary period satisfactory to the employer as a condition to continue the employment relationship. 

The regular working time of salaried employees may not exceed eight hours a day or 40 hours a week. With the consent of a labour union (or labour-management conference as an alternative), an employer engaged in certain types of business as designated by the competent authority may change the working time from eight hours a day to ten hours a day. 

An employee shall have regular days off every seven days. One day is a regular day of leave and the other one is a rest day. If an employer changes the working time, an employee shall at least have a minimum of one regular leave day every seven days. An employer shall never request employees to work on their regular leave days unless a natural disaster, accident or unexpected event requires a continuation of work. 

An employer has an obligation to keep employee attendance records for five years. The attendance record shall register the attendance of employees on a daily basis to the minute.

Termination

Taiwan is not an employment at will jurisdiction. Except for a mutually agreed termination, any termination by employers requires a cause stipulated in the LSA. 

An employer may unilaterally terminate the employment with advance notice and severance pay to the employee under Article 11 of the LSA. For example, this might occur if the business suffers huge losses or is suspended, for which the cause is not attributable to the employee. If the employee is at fault, an employer may terminate their employment under Article 12 of the LSA without advance notice or severance pay. The most common cause thereunder is a material breach of the employment contract or of the work rules.

An employee may terminate the employment without advance notice if an employer makes a false representation regarding the working conditions, materially breaches the employment contract or seriously violates labour laws, and other causes stipulated under Article 14 of the LSA. 

Among the above, the advance notice should be given:

• at least ten days in advance when the employee has worked for three months or more but less than one year;
• at least 20 days in advance when the employee has worked for one year or more but less than three years; or
• at least 30 days in advance when the employee has worked for three years or more.

Mutual termination usually, in practice, will come with a mutually agreed payment; such amount is no less than the severance pay required by law. 

Collective Redundancies

The Act for Worker Protection of Mass Redundancy lays out the definition, process and obligations with which the employer must comply regarding mass redundancy. Generally, the total number of employees, time limitations, and the number of employees who are being terminated are the three main factors that trigger the regulatory scheme of a mass redundancy. For example, in a company or factory where the total number of employees is less than 30, if such company or factory decides to terminate more than ten employees within 60 days, the company or factory must adhere to the process and report to the competent authority. 

The Act requires employers to notify the union, employee representatives and the employees being terminated at least 60 days prior to the termination with a redundancy plan detailing:

• the cause;
• the department to be affected;
• the scheduled effective date;
• the number of employees to be terminated;
• the criteria for selecting the subjects of such mass redundancy;
• the method for calculating the severance pay; and
• the job transition assistance project.

Both employer and employees shall commence a negotiation within ten days of receipt of the redundancy plan. During the negotiation, the employer shall not for any reason terminate or transfer the employees to be terminated. 

According to the LSA, an employer shall hold a labour-management conference on a regular basis. The details and process of the labour-management conference, including the eligibility of the employee representatives, is further stipulated in the Regulations for Implementing Labour-Management Meeting, which apply to an employer with 30 employees or more. Others may hold the labour-management conference according to their own arrangements. 

Further, under the Regulations for Implementing Labour-Management Meeting, the labour-management conference should be held every three months with the attendance of both the management representatives and the employee representatives. The management representatives shall be designated by the employer from persons who are familiar with the business’s operations or labour affairs. The employee representatives shall be elected either through the general meeting of the union members or by all employees. 

The role of the employee representatives is to attend the labour-management conference and negotiate with the management representative on behalf of all employees regarding working conditions. Among other things, changes to the working hours, including the sum of the additional permissible hours for overtime work and adjustment to the regular working hours, are required by law to be negotiated and determined through the labour-management conference. 

In Taiwan, an employee is entitled to statutory benefits which include:

• labour insurance;
• national health insurance (NHI); 
• labour pension; and 
• supplementary NHI. 

The government, employer and employee are required to contribute to the benefits and thus are each allocated a specific allotment rate. To calculate the premiums, one should look to the Table of Grades published by each competent authority to find out the grade for an employee’s monthly wage as the ceiling for each insurance varies. 

An employer should be responsible for 70% of the labour insurance premium, 60% of the NHI premium, and 6% of the insured’s monthly wage for labour pension. Once the sum of bonuses or rewards given to an employee is greater than four times the employee’s monthly wage, the employer is required to deduct the supplementary NHI premium from such bonuses or rewards in advance on behalf of the employee. 

An employee should pay their own income tax (current progressive tax rates 5% to 40%), and be liable for 20% of the labour insurance premium and 30% of the NHI premium. It is optional for an employee to deduct 6% of the monthly wage to put it into their labour pension. Once the sum of bonuses or rewards exceeds four times the monthly wage, an employee should be fully liable for the supplementary NHI premium. 

A company is obligated to pay:

• value added business tax (VAT, current rate 5%) for any sale of goods or services within the territory of Taiwan and import of goods except for goods in the bonded zone, payable every two months;
• profit-seeking enterprise income tax (current rate 20%) except for very small-scale businesses, payable every May;
• additional profit-seeking enterprise income tax (current rate 5%) applied to undistributed surplus earnings, payable every May; and 
• withholding tax on dividends/interest to a non-resident of Taiwan (current rate 21%). 

As Taiwan is not an OECD member and does not take part in the Agreement to Address the Tax Challenges Arising from the Digitalisation of the Economy, Taiwan has not implemented Pillar Two of the OECD Two Pillar Solution. Consequently, Taiwan has not introduced a domestic top-up tax that would likely be granted Safe Harbour status by the OECD.

Tax credits are available for both value added business tax and profit-seeking enterprise income tax for various purposes. 

The laws and regulations provide tax credits to certain goods and services that are not provided within the territory of Taiwan, for example, exported goods, services relating to export or services provided in Taiwan but used in a foreign country, goods sold to outbound or transit passengers by duty-free shops, goods or services sold to a bonded zone business entity, and international transportation. Tax incentives are also offered to foreign enterprises, institutions, organisations or associations having no fixed place of business within the territory of Taiwan so that such foreign taxpayers may request a refund for the tax payable for the goods and services purchased for participating in exhibitions or temporary commercial activities within one year, provided that the foreign taxpayer comes from a country which offers the same tax incentives as Taiwan. 

As to income tax, there are various tax credits available. The main tax credits apply to the following regimes and businesses:

• an enterprise that engages in the business of recycling and reuse;
• expenses for sponsoring government-initiated international promotion campaigns, attending international tourism organisations and travel fairs, and sponsoring government efforts to promote business and conference tourism;
• a business that engages in the research, development and manufacture of new drugs, new dosage forms, high-risk medical devices, regenerative medicine, precision medicine, digital medicine, innovative technology platforms dedicated to the biotech and pharmaceutical industry, and other strategic biotech and pharmaceutical products;
• a private institution participating in a major infrastructure project and limited transportation infrastructure projects;
• a company or limited partnership that aims to promote industrial innovation and that has not violated any environmental protection, labour health and safety, or food safety and sanitation laws in the past three years; and
• small and medium-sized enterprises that seek to promote innovation and research.

Taiwan allows a parent company and its subsidiary to file a consolidated income tax in the following circumstances.

• When the parent company is a financial holding company and it holds 90% or more of the outstanding issued shares of a domestic subsidiary, such parent company may, for a tax year in which such shareholding in the subsidiary has existed for the entire 12 months of that tax year, elect to be the taxpayer itself, and jointly declare and report profit-seeking enterprise business income tax. 
• If as a result of carrying on a merger/consolidation, division or acquisition, the shares or contributed capital of a subsidiary company held by the parent company reach 90% or more of the total number of issued shares or subscribed capital, the parent company may be elected as the taxpayer once the parent company holds the shares or contributed capital for the entire 12 months in a tax year.

To prevent thin capitalisation, the “Regulations Governing Assessment of Interest Expenditure on the Debts Owed by a Profit-seeking Enterprise to a Related Party in Accordance with the Condition that the Related Payments Shall Not be Considered as Expenses or Losses”, which are regulations implemented by the Ministry of Finance, provide that a business should disclose the proportion of related party debt to equity and relevant information in a prescribed format, and prepare the required documents for examination and verification by the tax collection authorities. 

Among others, the required documents should include:

• the explanation of the changes in circumstances of the company’s paid-in capital, capital reserve, retained earnings (or accumulated losses), and other items under owner’s equity;
• the nature of the liabilities, purposes of the liabilities and market situation at the time of the acquisition of the liabilities;
• the types of currency, amount, interest rate, period and financing condition of the liabilities, and the criteria for calculating the exchange rate;
• pledges and conditions offered by a profit-seeking enterprise;
• guarantors and guarantee conditions;
• the trends of loan interest rate and financing conditions under the same period and similar loans;
• the conversion conditions of the convertible corporate bonds; and
• other information regarding the related parties, liabilities and owner’s equity that could impact the calculation of the excess interest expenditure. 

The standard ratio of related party debt to equity is 3:1. If the proportion of related party debt to equity of a company exceeds the standard ratio, the excess interest expenditure on the debts owed directly or indirectly by a company to a related party shall not be considered as expenses or losses. 

If a company engages in transactions with other profit-making enterprises in Taiwan or abroad in an attempt to circumvent or reduce its tax liabilities in Taiwan by engaging in non-arm’s length transactions, the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm’s Length Transfer Pricing may apply and the tax authorities may investigate and make adjustments in accordance with the law.

If a profit-making business with a total annual revenue of no less than TWD300 million engages in transfer pricing, it should disclose the affiliated enterprise and related party transaction information and prepare a transfer pricing report when filing the annual income tax. The transfer pricing report should contain at least:

• a comprehensive business overview; 
• a description of group organisation and management structure;
• summaries of controlled transactions;
• controlled transaction analysis;
• statements and consolidated reports of the affiliated enterprises; and
• other documents in relation to related parties or controlled transactions. 

If a profit-seeking enterprise is a member of a multinational enterprise group, it should disclose relevant information about the ultimate parent entity and the constituent entity filing the master file on behalf of the ultimate parent entity, regardless of whether the group is required to submit the master file.

Taiwan has various implementations of anti-tax avoidance rules. Among others, the main implementations include the Controlled Foreign Company (CFC) Rules for Enterprises effective from 1 January 2023, and the Place of Effective Management (PEM) Rules with an undetermined effective date. 

CFC Rules for Enterprises

A CFC refers to a foreign company established in a low-tax jurisdiction and directly or indirectly controlled by enterprises or individuals in Taiwan. The Income Tax Act provides that if (i) a CFC does not engage in substantial operating activities, and (ii) its earnings are more than TWD7 million, it shall calculate CFC investment income and be subject to profit-seeking enterprise income tax. To avoid double taxation, the amount that has been recognised as CFC investment income shall not be included in taxable income. Further, the taxes paid on the dividends or earnings in accordance with tax laws of the source jurisdictions may, within five years, be applicable for a deduction or refund. 

PEM Rules

To prevent a resident company of Taiwan from changing to a non-resident company by incorporating and registering in a low-tax jurisdiction for tax avoidance, the Income Tax Act provides that if a non-resident company fulfils all of the following requirements, it should be subject to the profit-seeking enterprise income tax:

• the decision maker who makes significant decisions is a resident individual or a profit-seeking enterprise in Taiwan, or the place where significant decisions are made is Taiwan;
• financial statements, records of accounting books, and minutes of meetings are prepared or stored in Taiwan; and
• major business activities are carried out in Taiwan. 

For any merger or acquisition, acquisition of shares, transfer of business or property, joint operation or entrusted operation, control over the business operation of other businesses or personnel appointment or removal, or the like, if it reaches the threshold of merger filing under the Fair Trade Act, it will trigger the merger reporting obligation. A business is required to notify the Fair Trade Commission if one of the following circumstances applies: 

• as a result of the merger the enterprise(s) will have one third of the market share;
• one of the enterprises in the merger has one quarter of the market share; or
• sales for the preceding fiscal year of one of the enterprises in the merger exceed the threshold amount publicly announced by the competent authority, eg, if the business involved in the merger is a non-financial institution, the threshold amount for domestic sales would be TWD15 billion.

Article 12 of the Fair Trade Act sets forth certain exceptions where no filings are required, such as mergers that do not change the market structure or have no effect on competition in the market. For example, in a case where the participating company or a 100% subsidiary of the participating company already holds 50% or more of the voting shares or capital of the other business, the participating company and the other business are not required to report their merger in advance to the regulator. 

Usually, when two companies decide to merge, they will sign an MOU or a contract whereby obtaining the approval of the Fair Trade Commission is a precondition or condition precedent to the closing. In the contract, the parties may also determine which party shall bear the obligation for filing and the associated fees and costs.

Upon receipt of a merger filing, the Fair Trade Commission will conduct a formal review. The Commission will request the parties to submit further documents if the submitted materials are not complete and additional documents are required. The Commission will then hold a substantive review meeting to determine whether the overall economic benefits of the merger outweigh the disadvantages of restricting competition and whether additional conditions or burdens are required. A decision to approve or not approve the merger should be made within 90 working days.

Concerted actions (also known as “cartels”) are not allowed in Taiwan, except under the circumstance that the concerted action meets the requirements set forth in the Fair Trade Act and is beneficial to the overall economic and public interest and is approved by the Fair Trade Commission in advance. 

A concerted action refers to the conduct of an enterprise that determines the price, quantity, technology, products, equipment, trading partners or trading area, or engaging in other mutually binding activities pertaining to goods or services jointly with a competing enterprise at the same stage of production and marketing by means of contract, agreement or other means of agreement, and is sufficient to affect the market function of production, trade in goods or supply and demand of services. This also includes the acts of trade associations or other business organisations that bind the business activities by the articles of incorporation or the resolutions of the general meeting, the board of directors and the supervisory meeting. 

Exceptions for permissible concerted actions include actions to set forth standards for specifications or models of goods or services for the purpose of reducing costs, improving quality or increasing efficiency, or to engage in joint research for the purpose of upgrading technology, improving quality, reducing costs or increasing efficiency, which can be conducted subject to an advance approval from the Fair Trade Commission. 

Abuse of a dominant position is prohibited. The Fair Trade Act specifically deals with the issue of monopolistic enterprises, as well as governing other types of businesses that are involved in the abuse of a dominant position. 

A business shall not engage in a deal that may impose improper restrictions on the trading counterpart’s business activity. Such conduct includes tying, exclusive dealing arrangements, sales region or customer restrictions, use restrictions and other conduct that restrict the business activities of the counterparty to the transaction. In addition, the Fair Trade Commission has pointed out that it will consider the following factors in their totality to determine the dependent relationships and the abuse of the dominant position:

• the intention and purpose of the parties;
• the market position of the parties;
• the structure of the market;
• the characteristics of the goods; and
• the effect on competition in the market.

The Guideline published by the Fair Trade Commission expressly points out that abuse of a dominant position is an example of obviously unfair conduct prohibited by the Fair Trade Act.

There are three types of patents are available in Taiwan: invention (20 years), utility model (ten years) and design patents (15 years). Applicants from WTO member countries can claim priority based on a patent application filed within 12 months in any WTO member country. Taiwan is not a member of the Patent Cooperation Treaty (PCT). When doing international patent prosecution, Taiwan’s patent applications are not included in the coverage of a PCT application. 

Invention Patent

• An invention is eligible for patent protection if it is a technical creation that satisfies the requirements of novelty, inventive step and industrial utility. 
• The term is 20 years from the filing date. Extensions are applicable for pharmaceutical, agrichemical or manufacturing processes, taking into account the time to obtain the regulatory approval.
• Invention patent applications are filed at Taiwan Intellectual Property Office (TIPO). An e-filing service is available. Applicants from WTO member countries can claim priority based on the patent application having been filed in the previous 12 months in any WTO member country. A PCT application is not acceptable by TIPO, but any applicant from a WTO member that files a patent application in Taiwan may claim priority based on its PCT application. 
• A patent owner has an exclusive right to implement and exploit the patented invention. Monetary compensation will be granted if infringement and the damage thereof are proved. For willful infringements, the patent owner is allowed to claim treble the amount of its established damages. Permanent injunctions prohibiting the defendant from manufacturing, selling, offering for sale, and other exploitation of the patented invention will be granted if the patent owner prevails in an infringement case.

Utility Model

• A utility model is a creation related to the shape or structure of an article or combination of articles. Manufacturing methods, processing methods, and chemical substances with concrete shape cannot be protected as a utility model.
• The term is ten years from the filing date.
• TIPO only conducts a formal review without substantive examination of utility model applications so that utility model patents generally can be granted within six months after filing. An applicant may file invention and utility model patent applications for the same creation on the same date to enjoy continuous protection until both the invention and the utility model are granted – at that time the applicant needs to abandon either the invention or utility model patent because double patenting is not allowed.
• Enforcement and remedies available to a utility patent owner are the same as those for invention patents. 

Design

• A design patent protects a creation made in respect of the shape, pattern, colour, or any combination thereof, of an article as a whole or in part by visual appearance. Computer generated icons and graphic user interfaces applied to an article can also be the subject of a design patent.
• The term is 15 years from the filing date.
• The prosecution procedure is the same as for invention patent applications.
• Enforcement and remedies available to a design patent owner are the same as those for invention patents.

Any mark that can be used to distinguish a company’s goods and services from the goods and services of other companies is protectable. Words, designs, symbols, colours, three-dimensional shapes, motions, holograms, sounds, or any combination thereof, can be registered as a trade mark.

Trade mark applications can be filed with TIPO, which also accepts digital filings via its e-filing system. Taiwan is not a signatory to the Madrid Agreement; thus, an international registration is unable to be extended to Taiwan. Applicants from WTO member countries can claim priority based on a trade mark application filed in the previous six months in any WTO member country. Trade mark examination will take approximately six to eight months and it will take another one to two months to obtain the registration certificate. An opposition may be filed only within three months from the day following the date of publication of registration.

The registration term is ten years and can be repeatedly renewed for additional ten-year terms. 

A trade mark owner may use various legal mechanisms to protect its rights and interests against infringement, such as civil action, criminal action and border enforcement. 

A design can be protected as a design patent. Please refer to 7.1 Patents for information on design. 

It is also possible to protect a design by trade mark or copyright. Please refer to 7.2 Trade Marks and 7.4 Copyright, respectively.

An allegation of unfair competition may also be a way to protect a design (trade dress). 

A creation that is within a literary, scientific, artistic or other intellectual domain can be protected under Taiwan’s Copyright Act, including: 

• oral and literary works;
• musical works;
• dramatic and choreographic works;
• artistic works;
• photographic works;
• pictorial and graphical works;
• audiovisual works;
• sound recordings;
• architectural works; and
• computer programs.

Copyright protection is granted immediately with the creation of a work. No registration is required. 

Copyrights include moral rights and property rights:

• protection of an author’s moral rights is perpetual; and
• property rights are for the lifetime of the author and for 50 years after their death. However, property rights in pseudonymous or anonymous works, works authored by a juristic person (eg, a company or foundation), photographic and audiovisual works, sound recordings and performances are for 50 years from the time of public release.

A copyright owner may use various legal mechanisms to protect its rights and interests against infringement, such as civil actions, criminal actions and border enforcement. 

Trade secrets are protected under the Criminal Code, the Trade Secret Act and the Taiwan National Security Act. A trade secret can be any method, technique, process, formula, programme design or other information that may be used in the course of production, sales or operations and must meet the following requirements:

• it is not known to persons generally involved in information of this type; 
• it has economic value, actual or potential, due to its secret nature; and 
• its owner has taken reasonable measures to maintain its secrecy.

Protections for plant varieties and seeds are also available under Taiwan law. Breeders of new plant varieties or seeds shall apply to the authority for plant variety rights before they can enjoy protection for their inventions.

In Taiwan, the Personal Data Protection Act (PDPA) governs the use, collection and processing of personal information (PI). The collection of sensitive data, which includes a person’s health records, genetic information, sexual history and criminal history, is subject to stricter restrictions as set forth in the PDPA. 

The PDPA does not expressly cite any foreign legislation. However, the drafters of the PDPA did consider the provisions of EU Directive 95/46/EC (the Data Protection Directive, which was later replaced by the GDPR), the OECD Guidelines and APEC’s (Asia-Pacific Economic Cooperation) privacy framework when drafting the PDPA.

A breach of the obligations imposed by the PDPA may result in civil and criminal liabilities, as well as administrative penalties and orders.

The PDPA applies to companies outside Taiwan if they collect, process or use the personal data of Taiwan’s citizens. In other words, the data protection provisions under the PDPA apply to a foreign company targeting customers in Taiwan.

Before 2023, there was no one single governmental agency in charge of enforcing data protection rules. Rather, an agency affiliated with the Executive Yuan co-ordinated policy and enforcement matters relating to the enforcement of the PDPA and other matters relating to the EU’s GDPR.

On 31 May 2023, the PDPA was amended and a newly established regulatory agency, the Personal Data Protection Commission, now acts as an independent data protection authority in charge of enforcing the PDPA, as well as supervision of the PDPA’s enforcement. 

Several major legislative reforms occurred during the past five years, including but not limited to:

• the Trade Secret Act (15 January 2020);
• the Company Act (29 December 2021);
• the Patent Act (4 May 2022);
• the Copyright Act (15 June 2022);
• the Intellectual Property Case Adjudication Act (15 February 2023);
• the Trademark Act (24 May 2023);
• the Personal Data Protection Act (31 May 2023);
• the Electronic Signatures Act (15 May 2024);
• the Gender Equality in Employment Act (16 August 2023); and
• the Minimum Wage Act (27 December 2023).

A prudential investor interested in entering markets in Taiwan should pay considerable attention to regulators’ implementation schemes and court cases addressing these new pieces of legislation, as well as keeping updated of any further developments.