“Offshore”, established under the special code.The “Draft for the Free Trade Port City Establishment & Management” submitted by the Legislative (Congress) to the Executive (the Cabinet) contains two brand new reforms. The one is the streamlined administrative formality and the other the adoption of the “offshore” concept. The international airports and international ports up to the prerequisites to set up a Free Trade Port may apply for establishment of the Free Port zones in the public, private land nearby.

Inside a Free Trade Zone, tariff, commodity tax and VAT are exempted. Investors operating inside a Free Port Zone may, when applying for entry of goods from overseas sources into the Zone, be in principle exempted from review and inspection formality and may be permitted to take a variety of commercial and industrial behaviors subject to certain limit, e.g., free flow of goods, the investors’ own management, implantation of commercial activities, advance processing. The establishment of Free Trade Ports is vitally important to Taiwan regarding whether or not it can swim with the international tide. Today amidst the cutthroat competition, Taiwan is desperately in need of an integral framework so that it will grow and prosper in solid paces.

(1) Permit of Advance processing:
In other countries the world over, they are normally against in-depth processing inside a free trade zone in an attempt to streamline management and taxation. In Taiwan, in consideration of the unique advantages in the manufacturing capacity and investment of intensive manufacturing networks in Mainland China, the free trade zones permit investors to take restricted commercial behaviors inside a free trade zone, including in-depth processing. That policy will maximize the manufacturing advantage of high added value products to strengthen competitive edge in global logistics.

(2) The concepts of “Inside Territory Outside Customs”:
Free Trade Ports are designed under the concept of offshore where under the investors inside the Zone take advantage of high efficiency services to have their goods freely flowing inside the zone in sharp contrast with cargo flows among bonded warehouses which call for multiple declarations and other restrictions.

(3) Investors inside the free trade zones may control themselves and make possible free flows of goods.
Inside free trade zones, investors manage and control their business operation themselves instead of government management, minimizing the interference of the government powers, making possible prompt and express flows of labor and goods inside the free trade zones. These will be the key factors very attractive to potential investors.

(4) Reduced tax to minimize investors’ operating costs:
Inside free trade zones, investors are totally free of tariff, commodity tax, business tax, tobacco & wine tax, cigarette health donation, promotion trade fee and commercial harbor service fee. That is to mean the investors can considerably bring down their operating costs..

(5) Eased terms to hire foreign workers:
Inside a free trade zone, investors may hire up to 40% foreign workers in contrast with 10% outside the zone. In turn, they may significantly bring down operating costs.

(6).Activated flows of funds:
The OBU banks may service investors inside the free trade zones in L/Cs in foreign currency, negotiation, import and export collection, remittance in foreign currency and foreign exchange. Foreigners may set up holding companies by means of offshore investment to bypass double taxation burden.