Taiwan – Free Economic Pilot Zones

In July 2013, the Council for Economic Planning and Development (CEPD) announced that in the latter part of April the Executive Yuan approved the Free Economic Pilot Zone Plan, proposed by the CEPD, at the same time setting up a Free Economic Pilot Zone Promotion Task Force. The Free Economic Pilot Zone Plan in intended to accelerate the country’s progress toward economic liberalization.

The main objectives of the pilot zones are to relax regulations and remove restrictions. The CEPD states that pilot zones will require special legislation to free them from existing regulatory restrictions. The drafting and implementation of the legislation will require consultation among the different ministries as well as completion of the legislative process. For this reason, CEPD believe that it may be two years before local governments will be able to apply for establishment of the zones.

However, the Executive Yuan will carry out the Free Economic Pilot Zone Plan in two stages. The first stage will not require the amendment of laws but will be centered on the six existing free trade zones: Suao Port, Keelung Port, Taipei Port, Taichung Port, Kaohsiung Port, and Taoyuan Aerotropolis. This stage will require only the readjustment of a portion of the laws governing free trade zones, and will commence in 2013.

The CEPD states that the “free economic pilot zones will concentrate on high-value-added, high-end services supported with manufacturing operations that stimulate the development of services. Key industries to be developed include smart logistics, international medical care, value-added agriculture, and industrial cooperation.” In addition,

Hiring, entry, and residence rules for foreign and mainland Chinese white-collar professionals will be relaxed in the pilot zones. They will be exempt from the two-year work experience requirement, and zone enterprises of a stipulated size will be allowed to apply for mainland Chinese to stay in Taiwan for business purposes. Zone enterprises will be able to invite mainland Chinese people to Taiwan for short-term business purposes lasting no more than one month without having to undergo review by the competent authority, and the number of such invitees will not be limited.

To carry out business activities within the zones, foreign businessmen will be able to enter visa-free for short visits and mainland Chinese business people will be issued three-year multiple entry/exit permits. Foreign professionals will be allowed to provide services needed in the pilot zones on a commission or contract basis.

Goods will be allowed to flow freely between the zones under a monthly consolidated customs-clearance reporting system. Agricultural and industrial raw materials and products imported into the zones will be exempt from customs tariffs, commodity taxes, business taxes, trade promotion service charges, and harbor service fees. Exported goods will be exempt from the profit-seeking-enterprise income tax, and 10% of the value of domestic sales will be exempt. Goods will be allowed to enter and leave the zones without examination, inspection, or escort, and will not be subject to export/import procedural regulations or customs code requirements.

An August 23, 2013 presentation about the Free Economic Pilot Zones is available from CEPD. A March 27, 2013 presentation is also available.