Foreign talent who come to Taiwan to live and work continue to face a wide range of issues in adapting to their new home and becoming part of Taiwan’s increasingly multicultural society. Some of the challenges they encounter are simply due to normal cultural differences and mainly require time and patience for the foreigner to adjust to them. Others are more institutional in nature and necessitate action from the government. While these issues impact most or all foreign residents in Taiwan, the recent influx of high-level foreign professionals coming to Taiwan through the Employment Gold Card program has highlighted these individuals as an important new resource that the Taiwan government cannot afford to lose once the pandemic is over.
The Gold Card program was launched in 2018 by the National Development Council (NDC). The qualification-based residence-work visa program, established under the Act for the Recruitment and Employment of Foreign Professionals, has thus far been very successful, with over 2,000 cards issued by the time of its three-year anniversary in February 2021. The government continues to improve the program by seeking to enhance its terms and tax benefits, as well as to resolve many other issues facing foreign professionals living and working in Taiwan.
Employment Gold Card applicants are highly experienced professionals who often have a broad choice of international career destinations, many of which offer their own talent incentive schemes. Gold Card applicants’ personal expectations are typically higher than those of most foreign professionals who moved to Taiwan in the past. They are more likely to start a company or otherwise make a big impact on their industry as talented and experienced professionals. The following suggestions are offered to help make Taiwan a more attractive destination to live and work, and to retain this new wave of foreign professionals.
Suggestion 1: Provide a “soft landing” or onboarding program for newly arrived foreign talent.
Several helpful services are currently offered by various government departments, including the InvesTaiwan Service Center, National Immigration Agency’s Information for Foreigners hotline, and the bilingual toll-free service provided by the National Taxation Bureau. However, new migrants coming to Taiwan through the Gold Card program receive no proactive assistance with setting up their lives and businesses here, let alone getting startup ideas off the ground. The onus is thus on foreign residents to research and reach out to an appropriate agency for assistance.
Further, once talent is settled in Taiwan, many seek ways to contribute to society and create a connection to their respective home countries. However, many report that information regarding relevant associations, volunteer organizations, startup incubators, and universities that are seeking assistance is difficult to find. This information generally exists, but there is a lack of a simple starting point or suitable English content.
Proactively assist newly arrived foreign residents to acclimate to Taiwan. In other countries with which Taiwan competes for talent, the government actively assists with onboarding new businesses and high-profile individuals, guiding them over bureaucratic hurdles. The Taiwan authorities should assess these programs and implement an appropriate onboarding solution.
Create a platform that enables new migrants to explore ways to give back to Taiwan and create a connection within their industry or home country.
Suggestion 2: Improve access to education for children of foreign professionals.
Easy access to high-quality education is essential to attracting talent with families to Taiwan. There has been an increasing number of reports of families struggling to access appropriate education for their children.
A general issue concerns insufficient spots for new students in high-quality primary and secondary schools, both private and public. This may partially be a capacity issue but is also related to the schools’ application process. For example, a critical issue is that some schools are unclear on how to enroll foreign nationals. In many cases, the lack of access to appropriate schooling has caused families to reconsider settling in Taiwan long-term.
In addition, a lack of centralized information regarding Taiwan’s education system, details about schools, and the process of applying for schooling for a child puts the burden on parents to seek such information through personal research or contacting multiple schools individually. The information they receive is often inconsistent or even incorrect. For example, they are sometimes told that foreign students have lower priority for enrollment or that enrollment is impossible if the parents did not meet some unique requirement.
Lastly, there is a lack of schools offering international programs, such as the International Baccalaureate (IB), or bilingual education. Some schools, while claiming to be “international,” do not necessarily follow an international curriculum standard.
International programs are particularly crucial to attracting and retaining foreign talent with families. Some parents cite the Taiwanese educational system as a reason for leaving Taiwan, pointing to the outsized focus on rote learning, teaching to the test, and the lack of emphasis on building critical thinking skills. Parents also note the lack of diversity in after-school programs beyond private cram schools.
Create an English or bilingual portal to provide incoming talent with a convenient means of locating kindergartens and schools with open spots. Such a portal should also include information regarding the types of education available to migrants in Taiwan and provide detailed steps about how and when to apply for each school.
Increase the number of international education programs.
Assess the reasons causing the limited spots in Taiwan’s schools and take steps to address capacity issues where necessary.
Analyze and improve the application process at Taiwan’s schools, including the use of waiting lists and lotteries, as well as the requirement that families be physically present to enroll children in school. Talented individuals will not come to Taiwan if their children cannot attend school for long periods of time due to delays caused by these processes.
Suggestion 3: Streamline and accelerate the company registration process.
High-level talent is more likely to start a company in Taiwan. However, Taiwan’s current company registration system is not competitive compared to other countries. Whereas in some countries with which Taiwan competes for talent, applicants are able to complete company registration online in less than a week, the minimum time to register a company in Taiwan is 4-6 weeks. Even that timeframe requires a deep familiarity with the process and most first-time company registrations take months to complete.
Capital investment in a new Taiwanese entity must be vetted by the Investment Commission of the Ministry of Economic Affairs (MOEA). Requirements imposed by anti-money-laundering laws and concerns about China-sourced funds can severely lengthen the process, especially for Hong Kong-based companies. In addition, the common requirement to provide documents in duplicate or triplicate also complicates the process and is meaningless in the digital world. This red tape is unacceptable to many entrepreneurs and investors, and registrants sometimes decide to open a company elsewhere rather than continue to wait in Taiwan.
The MOEA advertises a “one-stop” online English service for company registration and various company-related processes. However, clicking any button on the site’s landing page sends the user to a Chinese-only page, and the English page itself comes with a warning in red text that “All registration data must be filled out in Chinese.” Those trying to use the service often receive follow-up phone calls in Chinese asking for documentation that is only available – and must be completed – in Chinese.
Overhaul the company registration system, allowing certain types of companies to be established online in English, within a week, in order to be competitive with Hong Kong and Singapore.
Separate the capital approval portion of company establishment from the general registration process or improve the approval process for foreign capital investment.
Suggestion 4: Improve the quantity and quality of English services for migrants.
While Taiwan has done an excellent job of creating bilingual resources for tourists, less attention has been given to the needs of migrants, many of whom face language barriers when conducting business or engaging in everyday activities. The impact is felt in a wide range of areas, from selecting a quarantine hotel to starting a business, signing an employment contract, or researching local laws and regulations.
Government information is frequently available only in Chinese, or when bilingual has been translated literally and is difficult to understand. For example, marketing materials for government programs are written for a Taiwanese audience and often contain references that cannot be understood without an existing understanding of Taiwan’s government context. Furthermore, the quality of translation is not standardized across different departments.
Government websites increasingly include English sections. However, these sections are often outdated and missing portions from the original content. The problem is so severe that many foreign nationals report using an automated translation tool on the Chinese versions of government websites as it produces clearer and more complete information than the English sections.
Include or retain the services of in-house bilingual staff in government agencies. If outsourced, standardize the use of translation firms across all departments.
Implement digital tools to ensure that English-language content is consistent with the original Chinese and that any updates to the Chinese-language content is simultaneously reflected in the English. In addition, ensure that the function allowing users to view content in a different language directs them to the relevant webpage, rather than to the website’s homepage, as is often the case.
Suggestion 5: Resolve tax issues particular to foreign residents.
Taiwan’s tax authorities have made excellent progress in improving their services for foreign nationals in recent years. Many new migrants have spoken positively about the in-person service at tax offices and the English-language phone line the National Taxation Bureau provides, as well as the accessibility of services and the willingness of tax officials to discuss issues. Still, there are some areas where improvements can be made.
5.1 Clarify permanent establishment rules for remote workers.
Taiwan has seen an influx in recent years of remote workers – employees who are not tied to a physical office – mainly software engineers from wealthy countries. These migrants generally have high salaries and are happy to pay taxes in Taiwan. However, due to Taiwan’s ambiguous permanent establishment rules, multinational corporations have occasionally recalled staff from Taiwan or prevented them from migrating, depriving Taiwan of this talent source.
The English term “permanent establishment” only exists in tax treaties signed between Taiwan and other countries, normally for the avoidance of double taxation. These tax treaties are generally clear on what defines a permanent establishment. However, for countries such as the U.S., which does not have a tax treaty with Taiwan and is a major source of talent, the rules are less clear.
Article 10 of the Income Tax Act refers only to a “fixed place of business” and a “business agent” and the terms can be generally conflated with the equivalent OECD definitions. Is a software engineer who normally works at a coffee shop a “business agent?” Does a remote worker’s home constitute a “fixed place of business?” Such terms require further clarification.
Clarify tax rules and minimize the tax impact to remote workers from foreign companies.
5.2 Resolve difficulties related to inbound personal funds.
High-level professionals with families often face enormous expenses in moving to Taiwan. The current limit on personal funds from abroad for living expenses is NT$6 million per year, and anything above that amount may result in tax implications for transferring additional funds into Taiwan. Such a limit does not consider the costs incurred by many two-child families who pay for private school tuition fees, purchase a vehicle, and locate suitable housing.
In order for Taiwan to be competitive in attracting high-level professionals, limitations on inbound personal funds should be increased proportionally for families.
5.3 Develop educational materials on Taiwan’s tax system for U.S. nationals.
U.S. nationals, subject to their country’s globally unique taxation system, face issues with basic education about Taiwan’s residence-based taxation system. American expats frequently report confusion about simple principles such as “withholding tax” and physical presence rules for determining the source of income for salaried or contracted work.
Make available English-language educational materials on Taiwan’s tax system tailored to U.S. migrants.
5.4 Investigate tax incentives for foreign talent.
Unlike other countries with which it competes, Taiwan lacks a system of comprehensive tax incentives to attract business or talent. Many global companies that have decided to exit Taiwan for other markets often cite this reason. Existing R&D incentives are mainly limited to Taiwanese companies and the application process is complicated.
Investigate the tax incentive schemes of other countries as reference for implementing an appropriate one for Taiwan.