Chapter II Demarcation, Establishment and Management of a Free trade zone
The management authority (agency) of an international airport or an international seaport may draw up the planning report of development feasibility of a free trade zone and an operation proposal in respect of a particular piece of land under its control and apply with the competent authority, which shall in turn, after having consulted with the local municipal/county/city government where such land is situated and the Ministry of Finance for their comments, having obtained their preliminary consent, having selected a candidate management authority for the proposed free trade zone , forward the same together with a management proposal to the Executive Yuan for its approval of designating a free trade zone.
The management authority, or the owner or user of the public or private land within or outside the controlled district of an international airport or an international seaport, may draw up the planning report of development feasibility of a free trade zone and an operation proposal, and submit the same to the management authority of a free trade zone of said international airport or international seaport for its preliminary review and consent. In addition, the competent authority shall consult with the local municipal/county/city government having the administrative jurisdiction where such land is situated and the Ministry of Finance for their comments and consent, and shall thereafter select a candidate management authority for that proposed free trade zone and forward the same together with a management proposal to the Executive Yuan for its approval of designating a free trade zone.
In case an application for demarcating and designating the land set forth in the preceding paragraph for an appropriate purpose is required by act, such application shall be filed accordingly prior to the application for the designation of a free trade zone.
When an application has been filed by the management authority, or the owner or user of the public or private land in the first paragraph in accordance with the procedure set forth in the preceding paragraph, then the respective management authority shall hold a public hearing prior to preliminary review of the said application to obtain public opinions. In case the application fails to satisfy the qualification requirements or conditions for the demarcation and designation of a free trade zone, or difficulties in the management thereof, then the said respective management authority shall not render its consent after its preliminary review.
When applying for demarcation and designation as a free trade zone, the land user referred to in the first paragraph hereinabove shall obtain the written consent from the land owner(s).」
Regulations governing the qualification requirements and conditions for the application for establishing a free trade zone under the provisions set out in the preceding two Articles, the application procedures, the required documents and certificates, and other provisions to be complied with shall be prescribed by the competent authority.
The management authority of a free trade zone shall take charge of the following affairs within the free trade zone:
1. Planning and execution of the activities pertaining to management and operation of and security maintenance in the free trade zone;
2. Matters related to examining and approving the applications filed by free-trade-zone enterprises, non-free-trade-zone enterprises for operating in the free trade zone, and annulment thereof;
3. Approving the entry and exit of personnel and goods into and from the free trade zone, and supervising the gate access control and inspection;
4. Forwarding the entry permit applications filed by or for foreign business personnel
5. Forwarding the resident permit extension applications filed by or for foreign nationals serving in free-trade-zone enterprises;
6. Enforcing preventive measures against smuggling;
7. Examining and auditing business operations and financial conditions;
8. Providing operation-related assistance and services to free-trade-zone enterprises and non-free-trade-zone enterprises;
9. Planning, promoting, implementing, and managing environmental protection activities;
10. Supervising the development of information oriented business operation;
11. Handling the matters as required by applicable acts and regulations, or as instructed by superior authorities;
12. Handling other management-related affairs.
The management authority of a free trade zone shall be eligible for taking charge of the following affairs within the free trade zone only after having been mandated or commissioned by the competent government authority in charge of the relevant end-enterprise(s) concerned:
1. Labor-related management activities, labor safety, hygiene and labor inspection;
2. Issuance of industrial or commercial registration certificates and licenses;
3. Issuance of certificate of industrial electric power requirement;
4. Issuance of the employment certificate of foreign or overseas Chinese professional or technical personnel;
5. Issuance of relevant certificates as required for applying tax exemption or deduction benefit;
6. Issuance of commodity export/import endorsements, certificate of country of origin, and re-export certificate; and
7. Land use control and construction administration.
The number of domestic employees employed by a free-trade-zone enterprise shall not be lower than 60% of that of its total employees.
The salary of a foreign employee of a free-trade-zone enterprise shall be subject to the restriction of the basic salary as set forth in the “Labor Standards Law”.
3% of the total employees employed by a free-trade-zone enterprise shall be aborigines.
A free-trade-zone enterprise that does not employ enough employees in accordance with the preceding paragraph shall pay the employment contribution in the amount of multiplying the shortfall of the employees with the monthly basic salary to Employment Fund Specialized Account established by central aborigine competent authority on a regular basis.
Enterprise with employment exceeding standard ratio specified in paragraph 2 shall be rewarded, while the central aborigine competent authority shall prescribe the reward regulations.
The following activities within a free trade zone shall be transacted and handled by the branch offices set up or the full-time representatives appointed by the appropriate respective government authorities in charge of the relevant end-enterprise concerned in collaboration with the management authority of that free trade zone:
1. Taxation activities;
2. Customs activities;
3. Quarantine and test activities;
4. Police activities;
5. Financial activities;
6. Electric power and water supply and other public-facility-related activities;
7. Post and telecommunication activities; and
8. Other official activities in connection with government agencies.
Any enterprise applying to establish and operate within a free trade zone shall apply to the management authority of the said free trade zone for operation permission by submitting a business operation plan, the written operation procedures in connection with good control, customs clearance, and accounting operations together with relevant required documents.
Regulations governing the qualification requirements for the establishment and operation permission in a free trade zone, the type of operational organization, the application procedures, the required documents, various regulations pertaining to business operation and control, accounting transactions, revocation and/or abolishment of permission, and other relevant requirements to be complied with shall be prescribed by the competent authority.
A foreigner may apply with the management authority for the establishment of a holding company specializing in offshore investment and the “Statute for Investment by Foreign Nationals” shall not apply thereto.
An offshore banking unit may handle the remittance and exchange and transactions of the foreign currency of the holding company in the preceding paragraph and such relevant regulations as Article 5 of the “Offshore Banking Act” shall apply thereto, provided however that each individual transaction shall not involve any domestic financial, economic, or commercial transaction nor New Taiwan Dollars.