Taiwan to open up for Offshore Securities Unit (OSU)


<< back
April 20, 2013

A proposed amendment has been presented to the Taiwan legislature to amend the Offshore Banking Act (the “Act”), which if passed will allow securities firms to establish in Taiwan an Offshore Securities Unit, which will be operated as an independent accounting unit to engage in international securities businesses, including brokerage, underwriting and proprietary trading.  According to the then premier Sean Chen, the proposed amendment to the Act “will attract expatriate capital back to Taiwan, make effective use of parent companies’ capital and credit, and expand the scope of participation in international financial and securities services, thus contributing to economic growth, an increase in jobs and cultivation of talent in this sector.”  Currently, only an offshore banking unit is allowed under the Act to engage in international banking businesses including:

  •          sale and distribution of foreign debt and equity securities to persons within and outside Taiwan
  •          acting as broker, agent and/or intermediary in the sale of foreign securities and other approved financial products
  •          proprietary trading with persons within and outside Taiwan
  •          underwriting of foreign securities
  •          providing relevant custodians, agency and advisory services to persons within and outside Taiwan
  •          asset management services and advisory services
  •          foreign exchange business related to securities businesses

 

Similar to an offshore banking unit, an OSU will engage in securities products denominated in foreign currencies and not in New Taiwan dollars (NT$), and therefore, in principle it would not be subject to Taiwan’s foreign exchange restrictions and securities regulations that may be generally applicable to domestic business units.  Pursuant to the proposed amendment to the Act, except sales to domestic persons, for a period of 15 years, there will be no corporate income tax, sales tax, stamp duty, or withholding tax applicable.

 

The proposed amendment has reached the legislature and passed its first reading on March28, 2013.