1. U.S. entity structure

Should the Taiwan parent establish a U.S. subsidiary, operate through a branch, or consider another structure? The answer should reflect not only today’s activities, but the company’s longer-term U.S. strategy.

2. U.S. taxable presence before an entity is formed

Sending engineers or other employees to perform installation, technical support, or other services in the U.S. can create tax considerations even before a formal U.S. entity exists.

3. State and local tax footprint

Where a company incorporates and where it actually conducts business are not necessarily the same. Employees, facilities, inventory, and customers can create obligations across multiple states.

4. Transfer pricing, intercompany transactions, and treaty limitations

Once a U.S. subsidiary is established, transactions involving products, services, technology, management support, financing, and other intercompany activities should be structured with U.S. transfer pricing requirements in mind. There is currently no comprehensive U.S.-Taiwan income tax treaty in force.

As a result, cross-border payments generally cannot rely on treaty-based reductions in U.S. withholding. U.S.-source dividends, royalties, and many other fixed or determinable annual or periodical (FDAP) payments to a Taiwan recipient may therefore be subject to the 30% statutory U.S. withholding rate unless a specific Internal Revenue Code exemption or other rule applies. Certain interest may qualify for a statutory exemption, so the payment type and documentation matter.

5. Taiwanese employees working in the U.S.

Engineers, executives, and technical specialists working temporarily or permanently in the U.S. may create individual income tax, payroll, employer, and state tax considerations. Immigration and tax planning should be coordinated, but they are not the same analysis. The absence of a comprehensive income tax treaty also means employees generally do not have treaty residence tie-breakers or treaty-based short-term assignment exemptions to fall back on; U.S. domestic residency, sourcing, and foreign tax credit rules become especially important.

6. Foreign-parent and related-party reporting

Foreign-owned U.S. businesses may have additional information-reporting requirements. Capital contributions, loans, purchases, service fees, reimbursements, and other transactions with the foreign parent should be properly identified and tracked.

7. Sales and use tax

Companies selling equipment, components, spare parts, installation, maintenance, or technical services should understand how those transactions are treated in the states where they operate.

8. Equipment, inventory, and the supply chain

Who owns inventory? Who is the importer? When does title transfer? How is the U.S. entity compensated? Tax, customs, transfer pricing, and the commercial supply chain should be considered together.

9. Federal, state, and local incentives

Manufacturing, capital investment, R&D;, and job creation may qualify for incentives. Many opportunities are best evaluated before locations and investments are finalized rather than after operations begin.

10. Planning for what the U.S. business could become

A structure designed for three employees supporting one customer may not work as well when the U.S. tax planning should begin before the first U.S. tax return. For Taiwanese companies entering the U.S., market-entry decisions often involve several interconnected questions – business structure, people, supply chain, intercompany transactions, state footprint, tax, and accounting infrastructure. Addressing these issues early can help management build a structure that supports both the company’s initial entry into the U.S. and its longer-term growth.