KAW PING Co., CPAs (BWKP)Services
Investment in Mainland China
According to Article 35 of “Act Governing Relations between the People of the Taiwan Area and the Mainland Area”, “Any individual, juristic person, organization, or other institution of the Taiwan Area permitted by the Ministry of Economic Affairs may make any investment or have any technology cooperation in the Mainland Area; the product or business item of the referred investment or technology cooperation shall be categorized into prohibited and general categories based on the consideration of national security and industry development, and the Ministry of Economic Affairs in consultation with the authorities concerned shall prescribe and publish an item list and the principles of review for individual cases thereof. The investment not more than a certain dollar amount, however, may be made through filing; the referred amount limit shall be published with an order by the Ministry of Economic Affairs…”
According to “Trade between Taiwan and Mainland China” of Mainland Affairs Council, Executive Yuan, Taiwan import and export trade with Mainland China was US$118,675.6 million; and Mainland China import and export trade with Taiwan was US$188,205.5 million from 2001 to September of 2015.
According to “Taiwan Investment in Mainland China” of Investment Commission, Ministry of Economic Affairs, there were 41,845 investment projects with a total amount of US$159.25 billion as of June of 2015.
An investment is made directly to mainland China in the name of individual person. When the mainland Chinese company distributes earnings to shareholders, the individual shareholder shall declare the respective individual income tax in Taiwan in the year of receiving the earnings.
A direct investment is made to a third party company, who then reinvests the mainland Chinese company. When the mainland Chinese company distributes earnings to shareholders, the earnings are paid to the third party company instead of the individual shareholder. Therefore, income generated from this profit-seeking business shall not be declared in Taiwan in the year of distribution. Only when the third party company distributes earnings to the individual shareholder, this income will be declared in Taiwan accordingly.
An investment is made directly to mainland Chinese company. When the mainland Chinese company distributes earnings to shareholders, such income will be incorporated into the profit-seeking enterprise income tax of Taiwan.
A direct investment is made to a third party company, who then reinvests the mainland Chinese company. When the mainland Chinese company distributes earnings to shareholders, the earnings are paid to the third party company instead of the company. Therefore, income generated from this profit-seeking business shall not be incorporated into the company’s income tax in the year of earnings distribution. Only when the third party company distributes earnings to the company, this income will be declared by the company in Taiwan.
BWKP’s affiliated company has highly experienced professional in Taipei and Shanghai. This is the reason that BWKP is capable to provide customers with bi-directional investment (operational and development) planning and package services.
