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Taiwan's superior high-tech industry means that it is heavily dependent on exports. As a leading producer and exporter of electrical circuit boards, semiconductors and PC monitors, Taiwan continues to attract investors from around the world....

Taiwan's superior high-tech industry means that it is heavily dependent on exports. As a leading producer and exporter of electrical circuit boards, semiconductors and PC monitors, Taiwan continues to attract investors from around the world. It has an abundance of small and medium-sized businesses run by innovative entrepreneurs leading to significant investment in research and development (R&D) and this helps them keep close ties with leading brand manufacturers and as an important link in the supply chain.

To boost investment in Taiwan the government has initiated various measures such as establishing Free Trade Zones, Science Parks and Exporting Processing Zones. On the legislative side, corporate income tax has been reduced to 17% since 2010 and R&D credit has been provided for upgrading industries, but more importantly the government has been making a more conscious effort to enact closer cross-straits ties with Mainland China. This was part of President Ma Ying-Jeou's manifesto during his first term in office after being elected president in 2008. He was recently elected for a second term earlier in 2012.

On the domestic front to solve the problem of labour shortages the government has lifted the ban on employing foreign workers, which now allows white collar employees, managers and executives from abroad to be employed to perform professional or technical work.

The legal market itself is dominated by domestic law firms, but there are a few notable international law firms many of whom offer a wide range of financial and corporate services, while others specialise in disputes and litigation. The market has gone through a transition period which has seen some firms focusing on opportunities created by deregulations and financial reforms, while other newer and smaller firms concentrate on niche markets.

CONTEXT AND TRENDS Financial and corporate activity has been low compared to previous years with the slowdown in exports and domestic consumption playing a major part. To try to counter this the government is set to implement the Economic Climate Response Program, featuring seven sets of strategies for stabilising finance, holding down prices, increasing employment, promoting investment, helping industries, boosting consumption and boosting exports....

Financial and corporate activity has been low compared to previous years with the slowdown in exports and domestic consumption playing a major part. To try to counter this the government is set to implement the Economic Climate Response Program, featuring seven sets of strategies for stabilising finance, holding down prices, increasing employment, promoting investment, helping industries, boosting consumption and boosting exports. Furthermore, the government will carry on the next wave of reshaping Taiwan's economic structure which includes amongst others strengthening technological innovation, enhancing research and development, promoting traditional industries, while at the same time placing less reliance on export products.

From January 2013, the two-stage capital gains tax will give retail investors the option during the first two years to either pay a flat 15% tax on stock gains or pay a levy linked to the performance of the benchmark index. From 2015, the tax will only apply to active investors, non-residents and shareholders of unlisted companies, as well as those selling larger amount of stocks in the island's emerging board and shares in IPOs. Domestic institutional investors will pay a 12% to 15% tax on gains. This highly controversial levy is expected to increase government revenue by approximately $365 million per year.

Another development is the introduction of the 'One-stop online application website for business establishment' that will mean people wishing to set up a business can do so with the convenience of online completion for all procedures needed to apply for company establishment, labour and health insurance and business registration.

The Financial Supervisory Commission is working to build a legal system that will accommodate the concept of using moving property as collateral and will consult opinion from industry, government and academic fields, which will formulate the revisions to the Personal Property Secured Transactions Act and related regulations.