WT/TPR/S/165/Rev.1 Trade Policy Review 
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(1) INTRODUCTION  
1. Since its accession to the WTO in 2002, the Se parate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu (Chinese Taipei) has continued to make efforts to assure transparency.  Many laws 
and regulations are made available through publica tions and government websites, and legislation 
aimed at transparent administrative procedures ente red into force in 2001.  Various anti-corruption 
laws have also been enacted. 
2. Almost all of Chinese Taipei's trade is on an  MFN basis;  for example some 98% of its 
imports are subject to applied MFN tariffs.  Howe ver, Chinese Taipei prohibits inbound cross-strait 
trade involving some 2,200 tariff lines. Chinese Taipei has started to participate in preferential trade 
agreements.  In 2004, a free-trade agreement entere d into force between Chinese Taipei and Panama. 
3. Most sectors are open to inbound direct investment, if approved by the Ministry of Economic 
Affairs, but is prohibited in several major sectors (notably, certain toxic chemicals, and television and 
broadcasting) for reasons of essential security and pub lic health.  Inbound direct investment in certain 
other sectors requires approval by authorities other than the Ministry of Economic Affairs.  As regards 
cross-strait direct investment, little inbound investment  has been allowed, and outbound investment, if 
not prohibited, requires the approval of the releva nt Chinese Taipei authorities.  Various incentives, 
including tax incentives, are provided to encourage investment, including inbound direct investment. 
(2) DEVELOPMENT AND ADMINISTRATION OF TRADE POLICY  
(i) Main trade laws 
4. The primary rules governing Chinese Taipei's tr ade in goods are laid down in the Foreign 
Trade Act.  The main law regarding tariffs a nd customs administration is the Customs Act  
(Table II.1).  According to the authorities, Chin ese Taipei's obligations under the WTO Agreements 
supersede those under domestic laws or re gulations in the event of conflict. 
5. Trade, including all matters covered by WTO agreements, falls within the power of the 
government of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese 
Taipei).  In the event that the measures taken by  local levels of government have an impact upon 
trade, those measures are subject to regulation by the government of the Separate Customs Territory, 
which could overrule or invalidate measures of local levels of government.  A natural or juridical 
person whose rights and interests in a matter relati ng to issues covered by the WTO agreements are 
impaired by an administrative action in Chin ese Taipei is permitted to appeal such action.1 
(ii) Agencies involved in trade policy implementation 
(a) Government bodies 
6. The Ministry of Economic Affairs (MOEA) is the main governmental agency involved in the 
formulation of Chinese Taipei's trade policy;  it is  responsible for concludi ng and signing trade-related 
agreements with Chinese Taipei's trading partners .  Other ministries and agencies involved in the 
formulation and implementation of Chinese Taipei's trade policy include the Ministry of Finance, 
Department of Health, Financial Supervisory Commission, Council of Economic Planning and 
                                                      
1 WTO document WT/ACC/TPKM/18, October 2001. Separate Customs Territory of Taiwan, Peng hu, Kinmen and Matsu WT/TPR/S/165/Rev.1 
 Page 15 
 
 
Development, Council of Agriculture, Public Cons truction Commission, Ministry of Transportation 
and Communications, Ministry of Justice, and the Fair Trade Commission. 
Table II.1 
Main trade-related laws and regulations 
(Date of most recent amendment in brackets)  
Trade and exchange restrictions 
Foreign Trade Act (12 June 2002)  
Enforcement Rules of the Foreign Trade Act (18 March 2005) 
Regulations Governing Regi stration and Administration of Exporte rs and Importers (11 December 2002) 
Regulations Governing Import of Commodities (6 April 2005) 
Regulations Governing Export of Commodities (6 April 2005) 
Customs- and tariff-related regulations 
Customs Law (5 May 2004) 
Enforcement Rules of the Customs Law (24 March 2005) 
Regulations Governing the Determin ation of Country of Origin of an Imported Goods (29 March 2004) 
Customs Import Tariff and Classi fication of Import and Export Commodities (17 December 2003) 
Implementation Regulation on the Imposition of Counte rvailing and Anti-Dumping Duties (23 February 2005) 
Rules for handling Import Relief Cases (4 April 2005) 
Services and energy 
Central Bank Act (5 June 2002) 
Banking Law (18 May 3005) 
Insurance Law (18 May 2005)  
Securities and Exchange Law (11 January 2006)  
Telecommunication Act (2 February 2005) 
Communications Basic Act (7 January 2004) 
Commercial Port Law (5 February 2005)  Certified Public Accountants Law (29 May 2002) Attorney Regulation Act (30 January 2002)  Architects Act (15 June 2005)  
Standards and technical regulations, SPS  
Standards Act (26 November 1997)  
Enforcement Rules of the Standards Act (25 November 1998)  
Commodity Inspection Law (24 October 2001)  Enforcement Rules of the Commodity Inspection Act (15 May 2002)  
Regulations Governing Regi stration of Product Certification (11 January 2005) 
Weights and Measures Act (2 January 2003)  Enforcement Rules of Weights and Measures Act (22 October 2003)  
Plant Protection and Quarantine Act (12 June 2002)  
Statute for Prevention and Control of Inf ectious Animal Diseases (29 May 2002)  
Law Governing Food Sanita tion (30 January 2002)  
Intellectual property rights  
Trademark Law (28 May 2003) 
Patent Law (6 February 2003) 
Copyright Law (1 September 2004) 
Optical Disk Law (15 June 2005) 
Integrated Circuit Layout Protection Act (12 June 2002) Trade Secret Act (17 January 1996) 
Agriculture 
Statute for Agricultural De velopment (7 February 2003) 
Others 
Company Law (22 June 2005) 
Statute for Commodity Tax (17 July 2002)  Valued-Added and Non-Valued-Added Bu siness Tax Act (3 February 2006)  
Tobacco and Alcohol Ta x Act (18 January 2006) 
Act Governing the Administration of Professiona l Engineering Consulting Firms (2 July 2003)  
Government Procurement Act ( 6 February 2002)  
Fair Trade Law (6 February 2002)  
Source: Information provided by the Chinese Taipei authorities.  
7. In 2004, the government of the Separate Cu stoms Territory established the Committee of 
Global Trade Policy Strategy Alliance and Arrangement .  Under the auspices of this Committee, the WT/TPR/S/165/Rev.1 Trade Policy Review 
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Ministry of Economic Affairs is entrusted with co nvening the Task Force of Global Trade Strategy 
Alliance and Arrangement, composed of senior officials from various bureaux of ministries to coordinate trade-related issues.
2  Seventeen working groups, under various ministries, deal with 
specific trade issues, such as agri culture, sanitary and phytosanitary measures (SPS), technical barriers 
to trade (TBT), trade-related aspects of intellectua l property rights (TRIPS), services, rules of origin, 
market access, investment, and competition. 
(b) Advisory and review bodies 
8. The private sector expresses its views to the government of the Separate Customs Territory 
through symposiums, conferences, and seminars held  by the government, interviews by government 
officials, and questionnaires.  With a view to co llecting industries' views on industrial development 
and trade policy directions and to meeting needs for structural adjustment in industries, the Ministry 
of Economic Affairs establishe d an industry policy review system and set up the Industry 
Development Advisory Council (IDAC) in 1985.  Its members include experts, scholars, and 
representatives of business sectors. Under the IDAC, there are six reviewing bodies, including the trade and investment review body convened by the Director-General of the Bureau of Foreign Trade 
(BOFT), within the MOEA.
3 
(iii) Transparency 
9. In an effort to assure transparency, the govern ment of the Separate Customs Territory makes 
available Chinese Taipei's laws through  publications and government websites.4  In accordance with 
the Administrative Procedures Law5, regulatory authorities must:  use open and transparent 
administrative procedures;  consult with interest ed parties before issuing regulations;  provide 
advance notice, public hearing, and comment periods for proposed rules;  and publish all regulations. 
10. With a view to sweeping out corruption6, the Ministry of Justice established law enforcement 
forces in 2000 (comprising the prosecutors' offices,  the investigation bureau, and the public services 
ethics system) to target 19 fields that were deemed prone to corruption.7  The main policy tools for the 
campaign include:  the enactment of counter-corru ption laws, such as the Lobby Act, Corruption 
Penalty Act, Witness Protection Act, Anti-money-launde ring Act, Public Servants Conflict-of-interest 
Act, and the establishment of various task forces,  such as the Ethics Office.  During the period 
July 2000 to July 2005, various district prosecu tors' offices pursued 2,810 cases related to corruption 
and indicted 6,722 people. 
                                                      
2 There are 52 members of the task force. 
3 This review body has twenty members, ten of them from the business community. 
4 Chinese Taipei ranks 19th among 48 economies based on the 2004 Opacity Index, which measures the 
degree to which they lack clear, accurate, easily dis cernible, and widely accepte d practices governing the 
relationships among government s, businesses, and investors (www.milkeni nstitute.org).  This translates into a 
risk premium of roughly 2.8% (opacity may to some degree reflect, among other things, language factors). 
5 The Act entered into force on 1 January 2001. 
6 According to 2005 Corruption Perceptions Index, which measures perceptions of corruption among 
public officials and politicians in 159 countries and eco nomies, Chinese Taipei ranked 32nd with a score of 
5.9 out of 10 (www.transparency.org).  In 2004, it ranked 35th (out of 146) with a score of 5.6 out of 10, and in 
2001, it ranked 27th (out of 91) with a score of 5.9 out of 10. 
7 The 19 fields include:  very large procurements, giant engineering projects, construction control, land 
affairs, funeral parlours, the police, fire-fighting servi ce, business registration, urban planning, motor vehicle 
management, taxation, customs service, medical care, environmental protection, financial operations, correction institutes, the judiciary, education, an d the excavation of sand and gravel.  Separate Customs Territory of Taiwan, Peng hu, Kinmen and Matsu WT/TPR/S/165/Rev.1 
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(3) TRADE POLICY OBJECTIVES  
11. The authorities state that Chinese Taipei's trad e policy objectives include active participation 
in the WTO and other multilateral trade and economi c organizations, building bilateral economic and 
trade relationships as well as regional cooperation,  strengthening trade promotion activities, and 
implementing trade liberalization and facilitation.  In order to achieve these objectives, Chinese Taipei 
wishes to further strengthen the multilateral trad ing system under the WTO and promote Chinese 
Taipei's linkage with its trading partners  in Asia and other parts of the world. 
12. On regional and bilateral relations, Chinese Taip ei aims to:  enter into negotiations for 
free-trade agreements with its trading partners;  establish high-level exchanges of visits and annual 
consultation meetings with its trad ing partners and raise the level of official representation in these 
visits and consultations;  conduct surveys of its trad ing partners' trade barriers and seek the removal of 
such barriers through negotiation, thereby improving  market access for Chin ese Taipei's products and 
services;  and protect intellectual property rights. 
13. Chinese Taipei also wishes to participate in various activities of the Asia Pacific Economic 
Cooperation forum, and to continue seeking to beco me an observer at the Trade Committee and other 
committees and working groups of the Organizat ion for Economic Coopera tion and Development 
(OECD).8 
(4) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) The WTO 
14. Chinese Taipei acceded to the WTO on 1 January  2002.  Chinese Taipei is party to the 
plurilateral Trade Agreement on Civil Aircraft;  it is  not yet a party to the plurilateral Agreement on 
Government Procurement. 
15. Chinese Taipei applies its MFN tariffs to all tr ading partners, except for some countries or 
customs territories;  imports subject to applied MF N tariffs accounted for 98.4% of Chinese Taipei's 
total merchandise imports in 2004.9  In accordance with its laws  and regulations, Chinese Taipei 
prohibits inbound cross-strait trade involving some 2,200 tariff lines (HS 10-digit level).10 
16. Chinese Taipei maintains that the preservation of a strong multilateral trading system is 
essential to the smooth operation of the "world tradi ng order", and considers it self to be contributing 
to a very substantial extent to the development of  the multilateral trading system.  It believes that 
higher levels of trade liberalization and strengthene d rules would bring the greatest benefits to all 
WTO Members.  Thus, it has actively supported and participated in the Doha Development Agenda 
(DDA), and wishes to achieve a successful conclusion of the DDA.  In this context, Chinese Taipei 
has submitted a number of proposals in  various areas under negotiation.11  Chinese Taipei is party to 
various negotiating groups, including Friends of Sectoral Approaches, Friends of Anti-dumping, 
informal sub-groups regarding various services sectors, and the G-10, a group of major food 
importing Members.  Chinese Taipei has also made contributions to the Doha Global Trust Fund for 
                                                      
8 Chinese Taipei is an observer in the OECD  Competition Committee and the Steel Committee. 
9 MFN tariff rates are applied to merchandise imports from all WTO Members and countries and 
customs territories with which Chinese Taipei r eceives reciprocal treatment (Chapter III(2)(ii)). 
10 The total number of tariff lines at the HS-10 digit level is 10,922. 
11 Such areas include agriculture,  non-agricultural market access (NAM A), services, trade facilitation, 
environment, rules and intellectual property. WT/TPR/S/165/Rev.1 Trade Policy Review 
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technical cooperation, and provided the least deve loped WTO Members with technical assistance and 
capacity building programmes under the Integrated Framework. 
17. Like all members of the WTO, Chinese Taipei is required to notify its laws and measures 
under various WTO agreements (Table AII.1).  This  is an important instrument for transparency. 
(ii) Regional and bilateral agreements 
(a) Bilateral free-trade agreements 
18. A free-trade agreement between Chinese Taipei  and Panama entered into force at the 
beginning of 2004.  During that year, bilatera l trade between the two Members amounted to 
US$269.3 million, an increase of 111.8% over the prev ious year.  The authorities of Chinese Taipei 
are of the view that the FTA accounted for much  of this expansion in the bilateral trade. 
19. In mid-August 2005, Chinese Taipei and Guatemala announced the completion of FTA 
negotiations.  The FTA is expected to enter into  force during 2006.  Currently, Chinese Taipei is 
negotiating an FTA with Nicaragua.  The authorities expect that FTA negotiations with Honduras, as 
well as with El Salvador, will be launched in the near future.  
(b) Other bilateral agreements 
20. At end January 2006, Chinese Taipei had conc luded agreements for the avoidance of double 
taxation with respect to income taxes with 16 countries12;  it had concluded bilateral agreements 
providing for the exemption from income tax of sh ipping and/or air transport enterprises, with 
13 economies.13  Chinese Taipei has also signed ATA (admission temporaire/temporary admission) 
Carnet agreements or related admini strative protocols with 15 economies14;  the agreements aim to 
ease the temporary importation of commercial samp les, professional equipment, and goods for 
exhibitions and fairs, and facilita te cross-border business by facilitati ng customs clearance.  Chinese 
Taipei has also signed agreements on promotion and protection of investments with 26 countries.15  
21. Chinese Taipei does not receive GSP (Generalized  System of Preferences) treatment from any 
of its trading partners;  nor does it provide GSP treatment. 
                                                      
12 Australia, Belgium, Denmark, the Gambia, Indon esia, Macedonia, Malaysia, the Netherlands, New 
Zealand, Senegal, Singapore, South Africa, Swazila nd, Sweden, the United Kingdom, and Viet Nam. 
13 These agreements concern the exemption, on a reci procal basis, of tax on income derived from the 
operation of ships or aircraft in cross-border traffic for the purpose of alleviation of double taxation.  The 
authorities of contracting economies exempt the shipping or  air transport enterprises of the contracting trading 
partner from income tax and certain other taxes derived fr om the operation of ships or aircraft in cross-border 
traffic in their respective economies.  The 13 economi es are: the European Communities, Germany, Israel, 
Norway and Sweden (shipping only);  Canada, Luxembourg, Thailand and Macao, China (air transport only);  and Japan, the Republic of Korea,  the Netherlands, and the United St ates (shipping and air transport). 
14 Australia, Canada, El Salvador, the European Co mmunities, Israel, Japan, the Republic of Korea, 
Malaysia, New Zealand, Norway, the Philippines, Singapor e, South Africa, Switzerla nd, and the United States. 
15 Argentina, Belize, Burkina Fa so, Costa Rica, the Dominican Re public, El Salvador, Guatemala, 
Honduras, India, Indonesia, Liberia,  Macedonia, Malawi, Malaysia, the Republic of the Marshall Islands, 
Nicaragua, Nigeria, Panama, the Philippines, Saudi Ar abia, Senegal, Singapore, Swaziland, Thailand, the 
United States, and Viet Nam. Separate Customs Territory of Taiwan, Peng hu, Kinmen and Matsu WT/TPR/S/165/Rev.1 
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(c) Regional agreements and initiatives 
22. Since 1991, when Chinese Taipei joined the Asia Pacific Economic Cooperation (APEC) 
forum, it has actively participated in APEC's meetings and initiatives.  In August 2005, Chinese 
Taipei hosted a 2005 APEC Digital Opportunity Cent er (ADOC) Week, which aimed to share APEC 
members' experience on information technology app lications and to explore ways of reducing the 
digital divide.  On trade facilitation, in the Shan ghai Accord of 2001, APEC leaders set the goal of 
reducing trade transaction costs by 5% before 2006 , and in 2002 the leaders set the APEC Trade 
Facilitation Action Plan.  Against this background,  Chinese Taipei started implementing the Barrier-
free Customs Clearance Project and is planning a Trade Facilitation Network project, which is to 
enable businesses to file their customs clearance documents at a "single window".  Chinese Taipei 
also joined the APEC Business Travel Card progr amme in August 2001.  Chinese Taipei submitted its 
2004 Individual Action Plan to the APEC. 
(5) TRADE DISPUTES AND CONSULTATIONS  
(i) Dispute settlement in the WTO 
23. Since 1 January 2002, Chinese Taipei has ma de two requests for consultations under the 
WTO Dispute Settlement Mechanism;  these concer n definitive safeguard measures by the United 
States on imports of certain steel products and India's anti-dumping measures on certain products.16 
During the same period, Chinese Taipei has requested  to join consultations in four cases brought by 
other Members, and participated in panels of 29 cases as a third party. 
(ii) Other 
24. Under the free-trade agreement between Chin ese Taipei and Panama and other bilateral 
agreements on promotion and reciprocal protecti on of investment, there are general provisions for 
settling disputes through bilateral consulta tion, arbitration and/or meditation.17   
(6) INVESTMENT REGIME  
(i) Direct investment 
25. Chinese Taipei's main policy objectives on dir ect investment are to build a sound and 
favourable investment environment for non-Chinese Taipei businesses, and sustainable development, 
through simplifying the procedures for application, review, and approval of direct investment, and 
providing better service to investors.  The authorities regard inbound direct investment as an important policy tool for facilitating the continuo us growth of Chinese Taipei's economy.  They 
consider that Chinese Taipei is a business base that allows an easy extension of markets to East and 
Southeast Asia, and other Asia-Pacific areas. 
26. The Ministry of Economic Affairs (MOEA), pa rticularly its Investment Commission, is 
mainly responsible for matters concerning Chinese Taipei's inbound and outbound direct investment.  
The Industrial Development and Investment Center  (IDIC), within the MOEA, serves as a single 
window for handling direct investment applicati ons and providing services to non-Chinese Taipei 
                                                     
 
16 WTO documents WT/DS274/1 and 318/1, 11 November 2002 and 1 November 2004. 
17 Article 10.19 of the fr ee-trade agreement between Chinese Taip ei and Panama stipulates that the 
"disputing parties should first attempt to settle a claim through consultation or negotiation".  All  bilateral 
agreements on promotion and protection of investments that Chinese Taipei has concluded contain dispute settlement provisions (section (4)(ii)(b)).  WT/TPR/S/165/Rev.1 Trade Policy Review 
Page 20 
 
 
investors.18  The IDIC serves as a channel of communi cation between other related government 
agencies and investors during their investment process;  the IDIC is also in charge of, inter alia,  
promoting inbound direct investment in Chinese Taipei, and assisting domestic companies in investing overseas.  In addition, the Coordination O ffice for Investment Promotion (COIP) within the 
Industrial Development Bureau of the Ministry of Economic Affairs assists in eliminating investment 
barriers in various areas, including land acqui sition, transportation, water and electricity, 
environmental protection and conservation, and in  speeding up administrative procedures regarding 
investment.
19 
27. Chinese Taipei's law governing inbound direct in vestment stipulates that inbound investment 
resulting in the non-Chinese Taipei ownership of more  than one third of shares of an enterprise in 
Chinese Taipei must obtain the approval of the Ministry of Economic Affairs.20  Inbound direct 
investment is prohibited in industries where it ma y negatively affect essential security, good customs 
and practices or health, and in some industries including forestry and logging, manufacture of certain chemicals used for explosives, firearms and wea pons, certain land transportation, postal services, 
postal saving and remittance services, certain pa ssenger car rental and leasing, radio and TV 
broadcasting, and special recreational services (Table II.2).  Some other sectors are "restricted", i.e. 
subject to approval from the authority in charge of the industry.  In addition, the Mining Law, Land 
Act, Act of Ships, and Civil Aviation Act contain several restrictions on FDI.
21 
28. Non-Chinese Taipei investors must submit the name chosen for their company in Chinese 
Taipei to the Department of Commerce, within the MOEA for approval.22  For investments in 
ordinary industrial zones (excluding export proc essing zones and science-based industrial parks), 
investors must file their application with the Investment Commission within the MOEA.23  A f t e r  
receiving approval, investors may apply for inwa rd remittance of capital;  once the Investment 
Commission has completed verification of their capital, investors may apply for company registration, business registration, and for factory construction a nd utilities.  An investor must undertake approved 
investment in full within the prescribed time limit,  otherwise the approval may be revoked.  Inward 
direct investment in enterprises that are expropr iated for reasons of essential security are entitled to 
compensation, with certain conditions.
24 
                                                      
18 The Investment Commission is mainly responsible for the examination and approval of investment 
applications submitted by non-Chinese Taipei investors an d applications for outbound direct investment projects 
(including applications for outbound cross-strait direct investment), while the IDIC promotes direct investment and provides follow-up services for investment projects after they have been approved by the Investment 
Commission.
 
19 The COIP focuses mainly on assisting projec ts with a value of NT$200 million or above. 
20 WTO document WT/ACC/TPKM/18, 5 October 2001, p. 3.  Non-Chinese Taipei investors may 
establish proprietorships, partnerships or companies.  Di rect investment into Chines e Taipei by Chinese Taipei 
persons living overseas is governed by another law.  The main law governing Chinese Taipei's outbound direct investment is the Statute for Upgrading Industries. 
21 These restrictions concern mining, acquisition of land, shipping companies providing domestic and 
overseas maritime transport, and air tr ansport (and auxiliary services includi ng ground-handling services).  With 
special approval by the government of the Separate Customs Territory, non-Chinese Taipei investors may not be 
subject to these restrictions. 
22 The company is required to register within six months of obtaining approval of the company name. 
23 Investors in export processing zones and science-based industrial parks must file their application to 
the Export Processing Zone Administration and the Science Park Administration, respectively. 
24 By law, enterprises in which non-Chinese Taipei investors own less than 45% may be requisitioned 
or expropriated by the government based on essential security considerations, but not without payment of proper 
compensation;  enterprises in which non-Chinese Taipei investors hold at least 45% of the total capital may not be expropriated or requisitioned by the government for a period of 20 years following the initial investment. Separate Customs Territory of Taiwan, Peng hu, Kinmen and Matsu WT/TPR/S/165/Rev.1 
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Table II.2 
Industries in which inbound direct investment is prohibited or restricted 
1.  Prohibited 
Forestry and logginga 
Manufacture of nitro-glycerine-nitrated  glycerine used in gun power/explosive pillars and involving public safety 
Soda-chloride factories operating with mercuric electrolyzersb 
A category of chemical products in accordance with the prohibition of chem ical weapons of the United Nationsb 
CFC, halon, methylchroform, carbon tetrachlorideb 
Manufacture of toxic chemicalsb 
Gun powder fuses, agents of fire and fulminating mercury 
Cadmium smeltingb 
Firearms, weapons manufacture, arms repair, ammunitions  and fire-control (exclusive of military aircraft) 
Passenger bus services (including city  and highway passenger bus services)a 
Taxi transportationa 
Tour bus servicesa 
Postal services 
Postal saving and remittance services 
Light-truck rental and leasinga 
Radio broadcasting industry 
Radio television industry 
Special recreational services 
2.  Restricted 
Paddy rice, dry-land food crops, special crops, vegetables, fru it, mushrooms, sugar-cane, flowers, other agriculture and hortic ulture, 
cattle, hogs, chickens, ducks, other animal husbandry 
Fishing 
Manufacture of wine and liquorb 
Manufacture of beerb 
Manufacture of tobaccob 
Manufacture of nitro glycerine-nitrated glycerine not used in gun power/explosive pillars and not involving public safety 
Manufacture of toxic chemicals (manufacture is subject to approval pursuant to Toxic Chemicals Control Act)b  
Manufacture of drugs and medicinesb 
Manufacture of Chinese medicinesb 
Manufacture of pesticides and herbicidesb 
Manufacture of  swords 
Military aircraft (manufacture and repair of aircraft, and parts) 
Military instruments and equipment 
Processing of ivoryb 
Electric power supply 
Fuel gas supply by pipe lines 
Water supply 
Transport by ship and ship leasing servicesa 
Airport ground services, air cargo forwarding services, air cargo terminal servicesc, and air catering servicesa 
Harbour and the relevant services (private ship hauling, shipment consolidating, wate r freight loading, unloading and forwardin g, minor 
repair of boats and ships, supply of sailor's daily needs and cargo salvage);  other supporting services to water transportatio nb 
Type I telecommunications enterprisesa, d 
Banks, credit cooperatives, trust and investme nt, bills financing, credit card companiesb 
Table II.2 (cont'd) WT/TPR/S/165/Rev.1 Trade Policy Review 
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Personal insurance, property and liability insuran ce, reinsurance carriers,  auxiliary insuranceb 
Offices of lawyers, scrivener's services, other legal services 
Accounting servicesb 
Architectural and engineering technical servicesb 
Supplementary classes (educational services) 
Cable broadcasting and televi sion, satellite broadcasting 
a Investment not prohibited or restricted for Chinese Taipei persons living overseas. 
b Investment by Chinese Taipei i nvestors also prohibited/restricted. 
c According to Articles 66-1 and 73 of the Civil Aviation Act, the limitation on inbound direct investment in air freight forwa rders 
and air cargo distribution centers has b een lifted completely for WTO Members. 
d According to Article 12 of the Telecommunications Act, telecomm unications enterprises are classi fied into Type I and Type II 
enterprises.  Type I telecommunications enterprises are define d as enterprise that install telecommunications line facilities a nd 
equipment in order to provide telecommunications services.  Ty pe II enterprises are defined as telecommunications enterprises 
other than Type I. 
Note: For the purpose of this table, di rect investment includes investment by  Chinese Taipei persons living overseas. 
Source:  Information provided by the Chinese Taipei authorities.  
29. Data provided by the authorities indicate that, on average the examination procedure takes 
two days, in respect of investments (or capital increases) that involve no more than NT$500 million 
and are not on the Negative List for Investment.  For investments (or capital increases) that involve 
NT$500 million to NT$1 billion and are not on the Nega tive List, the procedure takes three days on 
average.  For investment (or capital increases) th at involve NT$1 billion or more, or those on the 
Negative List, the average period for examination is three weeks. 
30. A non-Chinese Taipei company can set up a bran ch office in Chinese Taipei, after obtaining 
recognition in accordance with the Company Law and other relevant laws.25  A non-Chinese Taipei 
company may also set up a representative office, after obtaining approval from the Department of 
Commerce, in accordance w ith the Company Law. 
31. Except when other provisions in the Employme nt Services Act apply, non-Chinese Taipei 
persons recruited by employers to work in Chinese Taipei are limited to those performing special or 
technical services, teachers of public or registered  private colleges or universities, or primary schools 
for non-Chinese Taipei residents.26  Prior to the recruitment of non -Chinese Taipei persons for work 
prescribed in the Employment Services Act, the employer must examine and prepare related 
documents and apply for permission from the competent authorities. 
32. Non-Chinese Taipei persons may lease or purch ase land for offices, residences, shops and 
factories, churches, schools for expatriates, chance lleries, and facilities of non-profit organizations on 
a reciprocal basis;  land in forestry, aquaculture, salt plants, mineral deposits exploitation, and water 
resources may not be transferred to, used as collate ral by, or leased to non-Chinese Taipei persons. 
33. Chinese Taipei has signed bilateral agreements  on investment protection with 28 countries 
(section (4)(ii) above). 
                                                      
25 According to the Company Law (Article 3 II), the term "branch office" denotes a unit subject to the 
control of the head office.  Th e branch office must be incorporated in Chinese Taipei.  
26 These "other provisions" concer n Articles 48, 49, and 51 of the Employment Services Act.  These 
articles stipulate exemption of employment permit for certain workers to be employed, for example, by governmental organs. Separate Customs Territory of Taiwan, Peng hu, Kinmen and Matsu WT/TPR/S/165/Rev.1 
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(ii) Cross-strait investment 
34. Outbound cross-strait direct investment requi res approval from the competent authorities of 
Chinese Taipei.  Outbound cross-strait investments by Chinese Taipei enterpri ses with paid-up capital 
of more than NT$80 million are limited to  not more than 40% of their net assets.27  In certain 
manufacturing, agriculture, services and basic in frastructure construction sectors, Chinese Taipei 
prohibits outbound cross-strait direct investment;  the list of prohibited sectors are reviewed annually 
by the competent authorities, and decided by th e government of the Separate Customs Territory.28  
Inbound cross-strait direct investment requires approval by the government, in accordance with relevant regulations;  to date, only one  such investment has been approved. 
(iii) Measures to encourage investment  
35. The framework of Chinese Taipei's measures fo r encouraging investment (including inbound 
direct investment) is outlined in  the Statute for Upgrading Industries and its enforcement rules and 
various laws and re gulations on taxation.
29  Chinese Taipei's incentives for inbound direct investment 
include preferential tax measures, R&D subsidies, funding incentives, including low-interest loans, 
and government participation in investment.  The au thorities indicate that all of Chinese Taipei's tax 
and other incentives are applicable to all compani es established in accordance with its Company Law, 
including subsidiaries of non-Chinese Taipei companies.30 
36. Tax incentives for investment in Chinese Taipei  include:  (a) accelerated depreciation for 
certain equipment and facilities, such as those used  for R&D, experimentation, and quality control 
purposes, as well as those used for energy conservation or for environmental protection;  
(b) deduction from income tax of a certain amount of investment from profit-seeking enterprises for 
certain equipment or technology (e.g . those related to protection of the environment and facilitation of 
information technology), for investment in R&D and personnel training, and for investment in resource-poor or lesser-developed rural areas;  (c) investment tax credits for shareholders in companies investing in "newly emerging, important  and strategic" industries, and five-year tax 
holiday for such companies
31;  (d) tax exemption for 50% of royalties for personal creation or 
innovation;  (e) income tax exemption on technical  royalty payments;  and (f) exemption from import 
duties and business taxes for certain industries.32  Other relevant incentives include those aimed at 
encouraging mergers and consolidation of companies.33   
                                                      
27 Outbound cross-strait investments by Chinese Taipei persons or enterprises (with paid-up capital of 
less than NT$80 million) are limited to NT$80 million. 
28 The prohibited sectors include ma nufacture of certain chemicals, electronics, machinery, various 
agricultural subsectors, postal services, telecomm unications, financial services, and public utilities. 
29 The Statute for Upgrading Industries entered into force on 1 January 1991. 
30 Total tax revenue forgone as a result of the implementation of the Statute for Upgrading Industries 
(i.e. concerning incentives directed at both inbound direct investment and domestic investment) in 2004 was 
NT$53,139 million. 
31 According to the authorities, newly emerging, important and strategic industries include 
semiconductors and flat-panel displays ("Two Trilli on" industries) and digital content industry and 
biotechnology ("Twin Star" industries).   
32 Machinery and equipment, imported by a "science-based industrial company" for its own use, that is 
not currently manufactured by local manufacturers, may be exempt from import duties and business tax. 
33 In accordance with Article 15 of the Statute for Upgrading Industries, merged companies approved 
by the Ministry of Economic Affairs to merge for the purpose of promoting "reasonable operation", are exempt 
from profit-seeking enterprise income taxes and securitie s transaction taxes that may result from the merger.  
The land increment tax due to plant relocation can be charged to the surviving enterprise.  WT/TPR/S/165/Rev.1 Trade Policy Review 
Page 24 
 
 
37. R&D subsidies include grants of up to 40% of th e cost of development.  Eligible products 
include those:  of "newly emerging, important a nd strategic" industries;  employing key technologies 
that surpass current standards of industrial technol ogy in Chinese Taipei; or having a strong linking 
effect and good market potential and that can stim ulate the development of related industries.  
Financial incentives include preferential loans provi ded by the Development Fund of the government 
of the Separate Customs Territory for small a nd medium-sized enterprises to upgrade and purchase 
automation equipment.  Investors may ask the govern ment to participate in up to 49% of the total 
capitalization of their investment;  the Sci-Tech Development Fund and othe r development funds, and 
the Management Committee of the Development Fund provide the capital on behalf of the 
government. 
38. The Industrial Development and Investment Center (IDIC) undertakes the promotion of 
Chinese Taipei as an investment destination;  th is includes organizing overseas investment missions, 
implementing a potential investor invitation programme , holding investment seminars, participating in 
investment exhibitions, and placing adve rtisements in general business media.