:::Skip to main content
Site Map Contact us 中文版
  • font size
    A A A
font size small icon font size medium icon font size large icon Share information to Facebook Forwarding information by email Pop-up print setting
Questions and Answers of the Bonded Factory

1. What is a Bonded Factory?

According to the Article 59 of the Customs Act, manufacturers of export products may be registered, with the approval of the Customs, as bonded factories under Customs supervision. All imported raw materials to manufacture or process into products for export may be exempted from customs duties.



2. What are the advantages of bonded factories? 

Bonded factories enjoy the benefits of duty exemption for imported raw materials processed into export products, saving a huge amount of duties and taxes. As a result, entities increase their competitiveness in the international market and expand their export markets. In addition, they can also enjoy a simpler import clearance procedure.



3.What are the requirements for the establishment of a bonded factory?

A company which is organized, registered and incorporated as a company limited by shares in accordance with the Company Law, with a paid-in capital of more than NT$50 million and has a properly registered factory, may submit an application to Customs for approval of registration as a bonded factory if it conforms to the following conditions:

  1. The company is in a sound financial condition; i.e., it has accumulated no losses; or, it has suffered no losses three years on average before application (if the company exists for less than three years, the time is calculated on the basis of the actual length of its existence); or, if there are accumulated losses, the net capital is still maintained above NT$50 million; or after deducing the accumulated losses the capital is less than NT$50 million but the company has increased the capital or has provided other collateral. (The accumulated losses shall be determined on the basis of CPA-certified financial statements of the previous year.) 
  2. The company has no tax arrears or unpaid fines or has submitted a commensurate value security or guarantee.
  3. The factory compound renders easy control by Customs, and has guard houses manned with security personnel.
  4. The machinery and equipment necessary for manufacture of finished products for export sales and the adequate and complete safety facilities installed in the factory have been inspected and verified by Customs as being in conformity with established standards.
  5. It has separate warehouses approved by the Customs authorities through inspection as appropriate for storage of raw materials and finished products. However, for bulky and hazardous bondable goods, there shall be separate and proper storage places approved by Customs.
  6. The plant buildings and facilities of the factory conform to the standards as below:
    1. The installation of the production machinery and equipment has already been completed and production may begin immediately or has already started.
    2. The warehouses for raw materials and the warehouses for finished products must have strong structures with the necessary facilities to secure the safety of goods stored therein, such as facilities for the prevention of burglary, fire and flood; for proper ventilation and lightly, and are properly isolated from the office area.
    3. Proper isolation facilities shall be erected to separate the factory area from outside surroundings.
  7. It has the ability to process its bonded-goods operations with computer.



4. Can a bonded factory sell bonded products to domestic market? How are the customs duties imposed?

For processed products of a Bonded Factory which are approved for domestic sales, the Bonded Factory alone or jointly with the buyer party, shall prepare an application for "import of foreign goods"; and shall not release such products from the Factory until the said application has been filed with and supplementary assessment of import duties and taxes has been made by the supervising Customs in accordance with the form and state of such products at the time of their release from the Factory.

The firms purchasing such domestically salable bonded products in the preceding Paragraph may apply to the supervising Customs for selecting one of the following methods to assess import duties on such products, however that where domestically salable products are manufactured from materials more than 50% of which are shingle intermediate goods for assembly use, import duties on such products shall be assessed according to the tax rate applicable to the duty-paid value of such products.

  1. Customs duties levy on the domestically salable bonded products shall be calculated and assessed in accordance with the relevant tariff rate against the amount equal to (70) percent of the duty-paying value of such products.
  2. While the fact of use of non-bondable raw materials in the domestically salable bonded products have been confirmed, the import duties levy thereon shall be calculated and assessed in accordance with the applicable tariff rates against the duty-paying value of such products less the value of such non-bondable raw materials.

5. How to dispose of the bonded sub-standard products, by-products, scraps and waste materials?


(1) Sub-standard Bonded Products: Defective products that fail to meet the quality requirements of the clients but still possess all or part of the functions of the products and can still be sold.
(2) By-Products: Other products generated in the process of producing the target products.
(3) Scraps: Residual scraps and additional materials in the manufacturing process of the products that cannot be used by the Bonded Factory.
(4) Waste: Objects generated during the production process that cannot be used.


Bonded substandard products which cannot be exported, and those bonded by-products, scraps, and waste materials brought forth during the production process in a bonded factory shall be classified and stored in the warehouse or a Customs-approved location. In addition, accounting cards shall be prepared for recording the incoming and outgoing conditions. But for semi-finished products listed as waste materials shall be indicated respectively the amount of utilized raw materials so as to be filed for inspection of the Customs.


(1) Items with utilization value : They are allowed to be sold domestically after being levied Customs duty. Or the bonded factory may claim the products after paying the duty based on its residual value after the product has been destroyed under the supervision of Customs. Besides, for those scraps, and waste materials of larger quantity or huge volume that are not easy to be destroyed in the bonded factory, the bonded factory may apply for the customs declaration, pay the duty in advance and then take delivery of them in batches.
(2) Items without utilization value: Upon the discretion, the Customs may send their officers with other accompanying officials in charge to supervise the destruction and dumping.
(3) All destroyed cases under supervision shall make the discard list of bonded goods in advance and submit the application to the Customs in writing or electronic transmission. 
(4) Authorized Economic Operators (AEOs) assessed as superior-class bonded factories who have been approved for exemption from destroying under supervision by Customs shall submit the discard list within 14 days from the day after the completion of the destruction in writing or electronic transmission for the Customs’ verification.


Contact point:Bonding Inspection Section, Bonding Division
TEL:(04) 26595216 ext 200
Office hours:Monday ~ Friday  8:30-12:30  13:00-17:00





Issued:Secretariat Release date:2021-09-02 Click times:923