Professional Documents
Culture Documents
Free Trade Zone in Taiwan
Free Trade Zone in Taiwan
Ministry of Transportation
and Communications, Taiwan, R.O.C.
2011
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Contents
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The Planning of FTZs
The meaning and status of FTZs
Special zones that are “inside national
territory but outside customs”: Creating
Tax Area, Bonded Zone an excellent environment for transnational
business operations by lowering barriers
to the flow of goods, commerce and
people.
FTZs Business Multi-stage value-added The creation of special zones for
services “logistics, transshipment, and value
center operations zone adding”: Combining the functions of
seaports and airports with meeting all the
Simple-processing, storage, needs for supply-chain management, to
& transshipment strengthen users’ competitive advantage.
operations zone
Special zones as trial points for
“comprehensive trade liberalization”:
Ships or airplanes arriving Placing stress on autonomous enterprise
at seaports or airports management, while expanding
liberalization across the plane through
Flow of goods at import/export points point and line trial implementation.
Flow of people at entry/exit points
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The Special Features of the System
Free flow of goods
Practical organizational form
Functional side
Efficiency side
(Exempt from customs checking,
(Can set up in a zone as a branch, inspection, and escort; adoption of
office, operations department, etc.) reporting or monthly reporting system)
Relaxation of foreign-
worker hiring ratio
(Foreign workers Single-window administrative service
may constitute up to
40% of employees) (Each FTZ has a single
administrative service and
Cost side
Service side
Tax preferences management authority)
(Goods,machines and equipment for Special coordinating mechanism
operation and private use are exempted
from relevant taxes and fees. Goods (An FTZ Cross-Departmental
purchased domestically are free from Working Group is specially
business tax. Foreign for-profit charged with deliberating on
businesses storing and/or performing
simple processing are exempted from related policy and coordinating
business income tax.) inter-zonal affairs)
Source: Compiled by CEPD,MOTC. 4
The Special Features of the System-
Efficiency Side
5. Can opt for monthly reporting,
Logistics with inter-zonal customs reporting
Reporting of FTZ goods.
Tax areas
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The Special Features of the System-
Cost Side (1/2)
Cost side 1: Tax preferences
Other FTZs
1. Goods and equipment
imported are exempt from Exempt
related taxes and fees. from
payment Subject to bonded
of tax cargo regulations. Bonded zones
Exempt
from 3. Zero-rated business tax for domestic
payment procurement.
of tax FTZ 4. Zero-rated business tax for goods stored
enterprise in FTZ for export by sales from bonded area
to exporting company or from tax area to
bonded area .
FTZ Zero-rated
business 5. Zero-rated business tax for operator
enterprise outside FTZ transporting goods to zone
tax. under instructions of foreign customer and
2. Zero-rated business FTZ obtaining foreign exchange.
tax on sale of services Subject to import
within FTZ. cargo taxation.
6. Taxed on value on leaving FTZ minus
value added in the FTZ.
7. Shipped back to FTZ after processing Tax areas
outsourced outside zone.
8. Exempt from trade promotion service
charges unless shipped to tax area.
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The Special Features of the System-
Cost Side (2/2)
Cost side 2: Tax preferences
Preferential measures for business income tax:
Foreign for-profit businesses or their branch companies in Taiwan that apply for
establishment or delegate free-trade-zone enterprises to store and/or perform simple
processing in FTZs and sell the products in and out of Taiwan shall be exempted from
business income tax. In the event that the annual domestic sales exceed 10% of the total
of annual domestic and foreign sales, the exceeded portion shall not be exempted from
business income tax.
Commissioning to
store & simple
processing
Domestic
FTZ enterprise Customer
Overseas
customer
100% of the total sales
exempted from tax
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The Special Features of the System -
Functional Side
5. Permitted imports from China may be
shipped to tax zones
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The Special Features of the System-
Service Side (1/2)
convener:Political Deputy Minister
of MOTC 1.Policy review of FTZ
Vice-convener:Director of
Department of
FTZ Cross- development
Aviation and Ministries 2.Reviewing on the case of FTZ
Navigation
committee,MOTC application and establishment
Staff Members: vice-chiefs of 3.Coordination of cross-
bureau,department and office from
MOF and MOEA department affaires
Convener:Vice-Chief of
administration
Staff:harbor bureau(CAA) 1.Coordination of FTZ issues
Staff members: National Immigration
Agency, Customs, Harbor Police( air
FTZ Working 2.reviewing on cases of FTZ
police),Fire Control, Local Group business application and
Government and other relevant establishment
ministries and commissions 3.reviewing on the certificate letter
of owner of foreign goods
FTZ
FTZ enterprises
Administrative 1.Execution of FTZ affaires
Authorities 2.Single-window administration
services
FTZ enterprises
(CAA、HB)
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The Special Features of the System-
Service Side (2/2)
After 6 months in operation, check
Application by business to whether operating in accordance with
operate in FTZ submitted documentation.
Eligibility
Undertaking of trading, warehousing,
logistics, container (cargo) terminal, Review by FTZ
Approval
Operation
Application management Qualified
entrepot, transshipment, freight forwarding, authority
customs reporting service, assembling,
rearrangement, packing, repair, processing,
manufacturing, inspection,
jointly
testing,exhibition, technical services, or with
FTZ storage businesses.
Documentation required
Customs and other
1. Application form. related agencies Handled and
2. Business plan (including financial plan).
assisted by
3. Goods control plan.
specially assigned
4. Explanation of customs reporting and
personnel
book keeping.
5. Investors’ identification documents.
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Introduction to Each FTZ
FTZs and Industrial Zones Taipei Port FTZ Keelung Port FTZ
Taoyuan Air Cargo Park FTZ Nangang Software Park
Hsinchu Science Park
Software
Electronics and information Knowledge-based industries
Software
Opto-electronics (photonics) Lize & Londe Industrial Park
Taichung Port FTZ Opto-electronics (solar energy)
Central Taiwan Science Park ChemicalEngineering, ironware
Opto-electronics (photonics) machinery
Precision machinery Computer peripherals
Nano materials Suao Port FTZ
Aviation and space industry
Southern Taiwan Science Park
Yunlin Science Park Opto-electronics (photonics)
Textiles Machinery
Opto-electronics (photonics) Food
Kaohsiung Biotechnology
Petrochemicals Environmental protection
Steel
Electronics
Taiwan’s FTZ can develop variable operating models such as transit, exhibition,
international logistics distribution, testing/maintenance/repairing, Multi-countries
Value-added Consolidation, branding & research, etc.
Transit/Transshipm Transshipment
ent Services Center
Value-Added Transit Procurement Center
Commercial
Exhibition
International
Regional Logistics Distribution Center
Division Distribution
Testing/Maintenanc Testing Center
e/Repairing Services
Headquarter Multi-countries Value-
added Consolidation Value-Adding
Regional Service Center
Headquarter Branding/Research R&D Center
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Developed Operating Models (1/6)
Overseas
Kaohsiung Harbor Out-contracted
processing
Benefits:
1.Shorten clearing time(F1 & F5 are excluded from review & check/
shortest average distance to market
2.Tax preferences(Owners of foreign goods are exempted from business
income tax)
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Developed Operating Models (4/6)
Testing/Maintenance/Repairing Services-Semiconductor after-sale services
& Asian maintenance center
Semiconductor equipment sold
Overseas
new & spare parts
headquarters entered & stored FTZ
high-price parts are simple maintenance
sent back for Spare parts
repairing & returned
Asian Maintenance /
Repairing center
Non-simple maintenance case:
Inventory management of spare parts
parts replaced by new ones ,then Domestic
returned to customer Tax/Bonded
Areas or
Foreign business
Benefits:
1.Leveraging FTZ’s tax preferences and high efficiency to make Taiwan able to rival with Singapore
& become a logistic center of Semiconductor parts/equipment in the Asian region。
2.Great advantage to the processing technology , production volume & outsourcing opportunity of
parts for Taiwan’s semiconductor industry
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Developed Operating Models(5/6)
(Foreign Ship)
(Refueling Ship)
Niches:
1. Due to large amount of stored-transit fuel oil, relevant tax preferences can
alleviate pressure from cost of interest。
2. Without entering into tax area,〝reporting〞can be adopted to proceed fast
clearance, avoiding the import restriction of oil, thus the refueling and
store/transit/re-export can be done just in time.
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Developed Operating Models(6/6)
Testing/Maintenance/Repairing-Repairing of Electrical
Forklift
Tax/Bonded Area
FTZ Processing of reusable
battery
Products to be Battery/Parts
repaired
Foreign Customers 1.Maintenance & repairing
of Electrical Forklift,Electrical
motor(including replacing of
To customer battery module)
2.Assembly of battery
module
Foreign Parts
Non-usable battery
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Invest in Taiwan, operate
globally !
End
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