International Trade in Goods and Services in Taiwan: Overview
"Reproduced from Practical Law with the permission of the publishers" For further information, visit "www.practicallaw.com."
A Q&A Guide to International Trade in Goods and Services in Taiwan.
This Q&A covers key matters relating to the regulation of international trade in Taiwan, including recent trends, trade agreements, trade negotiations, rules relating to the supply of services, imports and exports requirements, trade remedies, and international trade restrictions.
This Q&A is part of the International Trade and Commercial Transactions Global Guide. To compare answers across multiple jurisdictions, visit the International trade in goods and services Country Q&A tool.
For more information on sale and storage of goods in Taiwan, visit Sale and storage of goods in Taiwan: overview.
For a full list of jurisdictional Q&As visit global.practicallaw.com/internationaltrade-guide.
1. What are the recent trends affecting the regulation of international trade in your jurisdiction?
Political pressures of the Chinese Government have reduced trade between China and Taiwan. As a result, the Taiwanese Government has been promoting the "New Southbound Policy" since 2016 to enhance its relations with countries in Southeast Asia. Although international agencies have indicated that economic growth in ASEAN (Association of Southeast Asian Nations) and South Asian countries has been higher than the global average in recent years, the New Southbound Policy, which is still at a very early stage, has not yet generated satisfying outcomes for Taiwan.
The Brexit referendum and the direction of the US trade policy have injected a great deal of uncertainty in global economic development, potentially negatively affecting Taiwan. Taiwan's monthly export and import performances in 2016 show that the overall performance started out low, with negative growth in January, and tended to increase steadily to December. It appears that Taiwan has to some extent recovered its economic and trade momentum. However, in 2018, this momentum may have been negatively affected by the political situation across the Taiwan strait.
Since 2002, Taiwan has held bilateral trade negotiations with Vietnam, Cambodia, Laos, Russia, Saudi Arabia, Ukraine, Belarus, Kazakhstan, Azerbaijan, Tajikistan, Uzbekistan, Libya, Liberia, Lebanon, Iraq, Afghanistan and Algeria under the WTO framework, with the aim to obtain market access and tariff reductions.
In 2016, Taiwan imposed anti-dumping duties on hot-rolled carbo steel plate imported by manufacturers located in China, South Korea, Indonesia and other countries. During the anti-dumping investigation process, Hyundai Steel Company reached a settlement with the Taiwanese Government, which is still currently effective.
2. Is your jurisdiction a member of the World Trade Organization (WTO)? What are the main international, regional or bilateral trade agreements to which your country is a party?
Taiwan is a member of the WTO.
According to the Taiwanese Bureau of Foreign Trade, Taiwan has signed bilateral Admission Temporaire/Temporary Admission (ATA) Carnet Agreements and Administrative Protocols with 41 countries and economic entities, including the US, Japan, Singapore, the EU, and Switzerland. To date, Taiwan is also a party to:
Agreements on investment protection with 31 countries, including Singapore, Indonesia, India, and Malaysia.
Agreements on the avoidance of double taxation with 30 countries, including New Zealand, the UK, The Netherlands, Germany, Singapore, Vietnam, Luxembourg, and Italy.
For more information, see: www.dois.moea.gov.tw/en/Home/relation1.
3. What are the authorities responsible for negotiating trade agreements? How long does it usually take to conclude a trade deal with your country?
The authority responsible for negotiating trade agreements in Taiwan is the Bureau of Foreign Trade, Ministry of Economic Affairs. It is difficult to estimate the time needed to conclude a trade deal with Taiwan due to the political pressures of the Chinese Government. However, the Taiwanese Government is doing its best to negotiate trade deals with other countries.
4. Does your country apply interim rules during trade negotiations?
Taiwan may apply interim rules during trade negotiations. Generally, Taiwan applies WTO rules during the negotiation process.
5. Is your jurisdiction a party to international agreements on cross-border trade in services? Is your jurisdiction taking part in the negotiations of the Trade in Services Agreement (TiSA)?
Taiwan has reached an agreement with Mainland China regarding the cross-border supply of services pending the review of the Legislative Yuan (Taiwan Congress). However, for political reasons, a resolution of the Legislative Yuan on this agreement is not expected in the near future. In addition, Taiwan is taking part in the negotiations of the TiSA along with 22 other WTO members.
6. What domestic legislation and international rules apply to the supply of financial services, legal services and retail sales in your jurisdiction? What are the main requirements that suppliers must comply with?
Regulatory framework. The regulation of financial services in Taiwan is administered by the Financial Supervisory Commission (FSC). The main statutes governing financial services include the:
Securities and Exchange Act.
Securities Investment Trust and Consulting Act.
Banking Act.
Insurance Act.
Company Act.
Main requirements. Any financial service that can be considered as an "offering" of securities under the FSC standard (similar to the Howey test in the US) is regulated by the FSC. Under the Company Act, foreign companies have the same legal capacity as Taiwanese companies, subject to certain restrictions. Foreign companies are no longer required to file a request with the Taiwanese Government for a certificate of recognition before conducting business in Taiwan. However, a foreign company cannot conduct business in Taiwan without completing the procedure for branch office registration.
Under the Banking Act, banks must be incorporated as companies limited by shares and obtain prior approval of the FSC. Their shares must be sold through public offering procedures.
Under the Insurance Act, insurance companies must be incorporated as companies limited by shares unless the FSC provides otherwise, and their shares must be sold through public offering procedures.
Regulatory framework. The Taiwanese Attorney Regulation Act is the main statute governing the supply of legal services in Taiwan. The Ministry of Justice is responsible for the regulation of legal services. The bar associations of each city or county are responsible for handling violations of ethic rules.
Main requirements. A foreign attorney can apply to the Ministry of Justice for permission to practise in Taiwan if he or she both:
Has practised for at least five years in the jurisdiction of admission.
Holds sufficient documents to prove his/her qualification.
(Article 47-3, Taiwanese Attorney Regulation Act.)
To practise law in Taiwan, a person must pass the Taiwan bar exam and be further trained for five months in a law firm or an entity approved by the Ministry of Justice. The bar exam requirement will be waived for any person who:
Served as a judge, military judge, prosecutor, or public defender for six years.
Was a professor of law for two years who taught major law subjects for three years, or an associate professor of law for three years who taught major law subjects for three years.
The training requirement is also waived for former judges, prosecutors, public defenders, and military judges.
To sit on the bar exam, a person must have a law degree or have completed at least 20 credits of a law course.
Regulatory framework. The main statutes governing retail sales include the:
Civil Code.
Consumer Protection Act.
Fair Trade Act.
The main authority that supervises retail sales is the Fair Trade Commission.
Main requirements. To establish a retail business in Taiwan, a foreign national can set up a company after obtaining approval of the Investment Commission, Ministry of Economic Affairs.
7. Are there restrictions on market access for specific services sectors?
Before entering the Taiwan market, a business should:
Check whether the products or services are prohibited in Taiwan.
Check whether there are restrictions on the amount of products authorised on the market.
Comply with the relevant rules and regulations on permission or approval to enter the Taiwan market, if any.
For example, the sale and manufacture of cigarettes and alcoholic beverages require prior approval of the National Treasury Administration, Ministry of Finance. Establishing a cram school requires prior approval of the Ministry of Education.
The Taiwanese Government has discretion to grant approval subject to conditions to satisfy before entering the Taiwan market.
8. What is the authority responsible for enforcing customs laws and regulations?
The Customs Administration, Ministry of Finance is responsible for enforcing customs laws and regulations. The Customs Administration can initiate an investigation for violation of customs laws and regulations. When a violation is confirmed, the Customs Administration can order the importer or exporter to correct the violation, impose a fine, and/or refuse to grant a permission or registration.
When a case may involve criminal penalties, the Customs Administration will transfer it to the prosecutor’s office or the Investigation Bureau for further investigation.
9. What are the main customs import tariffs and duties?
Generally, Taiwan imposes import tariffs based on the cost, insurance and freight (CIF) price of imported products (that is, the purchase price plus freight and insurance). Import tariffs for each product can be checked here: https://portal.sw.nat.gov.tw/APGQ/GC411. For example, the import tariff rate is 12% for cotton clothes.
An importer must also pay:
An additional 5% business tax, which is equivalent to value added tax.
The trade promotion service fee, that is, 0.04% of the CIF price.
Since 1 January 2018, the threshold to benefit from import tariffs exemption for goods imprted by parcel post has been lowered to TWD2,000. Therefore, when a parcel’s CIF price exceeds TWD2,000, the importer must pay the applicable import tariffs and business tax.
Importers can make claims for preferential tariffs under free trade agreements, which are listed here: https://web.customs.gov.tw/Content_List.aspx?n=912013077F1F4D11.
No import tariffs apply to goods originating from Panama, Guatemala, Honduras, and New Zealand. Reduced import tariffs apply to goods from Nicaragua and El Salvador (2.4%) as well as Singapore (9.6%). Certain goods from China listed in the Economic Cooperation Framework Agreement (ECFA) may enjoy preferential tariffs. Goods from least developed countries may also benefit from preferential tariffs (https://web.customs.gov.tw/News_Content.aspx?n=3D7C9BFC4F86BF4A&sms=4372861B01F3270C&s=B92FF3A417CBC2EE).
10. Are there non-tariff barriers to imports into your jurisdiction?
Taiwan restricts the importation of certain goods that may endanger animals/plants and of strategic advanced technology. Products originating from certain embargoed countries are prohibited from importation.
Country of origin marking is only required on imported socks, towels, textiles, bedding, tiles, and shoes. The Ministry of Finance has issued a standard called "Regulations Governing the Determination of Country of Origin of Import Goods" to identify the country of origin of imported goods. Where Taiwan has signed a free trade agreement with a particular country, the agreement will determine the country of origin of goods imported from these countries.
Taiwan does not generally impose absolute import quotas.
11. Can customs decisions and import restrictions be challenged?
Customs decisions and import restrictions can be challenged.
To challenge import tariffs, an importer must file a petition for review with the Customs Administration within 30 days from receipt of the import tariff decision. An importer that does not agree with the decision of the Customs Administration can file a petition with the Ministry of Finance within 30 days after receipt of the review decision. If the importer is not satisfied with the decision of the Ministry of Finance, it can file a complaint with the courts within two months, seeking to revoke the decision.
Other decisions made by the customs authorities (such as an order to return goods) can be challenged directly before the courts.
12. What are the main regulations on trade remedies? What are the authorities responsible for investigating and deciding on trade remedies?
WTO rules on trade remedies are implemented in Taiwan. The Taiwanese Government can impose countervailing duties and anti-dumping duties in accordance with the:
Customs Act.
Regulations Governing the Implementation of the Imposition of Countervailing and Anti-Dumping Duties.
The Ministry of Finance is responsible for investigating whether imported products are subsidised or dumped. The Ministry of Economic Affairs is responsible for investigating whether subsidised or dumped imports cause injury to the domestic industry. Depending on the outcome of these initial investigations, the Ministry of Economic Affairs will direct its International Trade Commission to conduct an investigation. The Ministry of Finance is responsible for deciding on the imposition of trade remedies after investigations have been conducted.
13. What are the requirements and procedure to start trade remedies investigations?
Producers of domestic like products and commercial, industrial, labour, agricultural associations or other legal organisations can apply for the imposition of countervailing or anti-dumping duties on behalf of the domestic industry if they are legally established and are representative of the industry. The Ministry of Economic Affairs determines whether an applicant is "representative of the industry" by referring to the total production of like products in the most recent year. In addition:
The application must be supported by those domestic producers whose collective output constitutes more than 50% of the total production of the like product produced by the portion of the domestic industry expressing either support for, or opposition to, the application.
The domestic producers expressing support for the application must account for more than 25% of the total production of the like product by the domestic industry.
Foreign parties importing goods into Taiwan can make representations, access documents, and be heard during investigations.
14. Is there a right of appeal against the authority's decision? What is the applicable procedure?
Parties that are subject to a countervailing or anti-dumping duty can appeal to the Taipei High Administrative Court within two months from the announcement of the decision.
15. What are the main requirements to export goods from your jurisdiction? What are the authorities responsible for enforcing export regulations and controls?
The Bureau of Foreign Trade, Ministry of Economic Affairs, is responsible for enforcing export regulations in Taiwan. The main export regulations are the:
Foreign Trade Act.
Regulations Governing Export of Commodities.
Exporters must be registered with the Bureau of Foreign Trade before they can export products.
16. Are certain categories of goods subject to specific export quotas, restraints or other controls?
Goods that are subject to export restrictions under the Foreign Act include:
Goods to be exported to specific countries or areas.
Strategic high-tech commodities.
Endangered species of wild fauna and flora.
The Bureau of Foreign Trade has compiled a list of restricted export commodities, available at: https://fbfh.trade.gov.tw/rich/text/fhj/asp/FHJI010L5.asp. Exporters of restricted goods must file an application for an export licence in accordance with the regulations referred to in this list. Exporters that cannot comply with these regulations must obtain special permits from the Bureau of Foreign Trade, which are granted on a case-by-case basis.
17. What are the consequences of non-compliance with export regulations?
Exporters that export strategic high-tech commodities to restricted areas without a licence are liable to imprisonment for up to five years and a fine of up to TWD1.5 million. The Bureau of Foreign Trade will also suspend their registration for at least one month and no more than a year. For other violations of export regulations, exporters are liable to a fine of between TWD30,000 and TWD300,000, and will be prohibited from exporting goods for between one month and one year.
18. Are there specific restrictions on trade with certain jurisdictions?
Taiwan is currently restricting trade with Iran in line with the US sanctions. These restrictions are similar to the sanctions imposed by the US (see www.treasury.gov/resource-center/sanctions/Programs/Documents/jcpoa_winddown_faqs.pdf).
19. What is the authority responsible for imposing trade restrictions?
The Bureau of Foreign Trade is responsible for enforcing trade restrictions. It has powers to:
Issue warnings.
Impose fines on exporters.
Suspend exporters' registration.
Prohibit exports.
20. What are the consequences of non-compliance with trade restrictions?
See Question 17 and Question 19.
21. Are businesses subject to specific compliance requirements? What practical steps should a business take to ensure compliance with trade restrictions?
The Foreign Trade Act does not provide for specific compliance requirements. However, a business must maintain its import and export registration with the Bureau of Foreign Trade, and therefore comply with the restrictions of the Foreign Trade Act (see Question 16) and orders of the Bureau of Foreign Trade.
22. What is the procedure for local exporters to complain against foreign trade barriers contrary to the WTO or other trade agreements?
The Bureau of Foreign Trade is responsible for dealing with trade agreements, handling complaints of local exporters against foreign trade barriers, and addressing unfair trade practices. When local exporters file a complaint, the Bureau of Foreign Trade will analyse and decide whether an unfair trade practice exists. If so, the Bureau will contact the relevant foreign government to address a potential dispute.
23. Are there impending developments or proposals for reform affecting international trade in goods and services?
In recent years, the Bureau of Foreign Trade has been promoting the Cross-Border Exchange of Electronic Certificates of Origin Project. To date, Taiwan has established electronic certificates of origin mechanisms with both China and South Korea.
Taiwan has signed Memorandums of Understanding on the Mutual Acceptance of Certificates of Origin with Vietnam in July 2016 and Belgium in November 2016, to facilitate trade and strengthen bilateral co-operation.
website: www.trade.gov.tw/English
Principal responsibilities. The Bureau of Foreign Trade is responsible for the negotiation of trade agreements, issuing import/export regulations, and enforcing import/export requirements.
website: https://eweb.customs.gov.tw
Principal responsibilities. The Customs Administration is responsible for enforcing customs laws and tariffs.
website: www.moeaitc.gov.tw/ITC/english/home/wfrmEnglish.aspx?menu_id=2&sub_menu_id=21
Principal responsibilities The International Trade Commission is responsible for conducting anti-dumping and countervailing investigations.
website:www.trade.gov.tw/Pages/List.aspx?nodeID=168
Description. This website is maintained by the Bureau of Foreign Trade and provides access to all trade laws and regulations.
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