Market Introduction

1.Leased Area

The common practice in Taiwan is to quote floor areas in terms of gross area, the normal range is from 25% to 35% of the gross area not to be usable.

Assuming the usable to gross ratio of a particular property is 70%, a tenant committing into a property quoting 100 ping (330 sq. meters) gross will only have an approximate usable space of 70 ping (231 sq. meters).

The rental and other charges are generally based on the gross area.

2.Rental

Rentals are payable in advance on monthly basis by way of 12 post-dated checks and usually quoted exclusive of other charges such as value-added tax, management fees and air-conditioning charges.

3.Air-conditioning and Management Charges

Most of the buildings in Taipei are professionally managed and a management fee will be charged.  For buildings equipped with central air-conditioning systems, an air-conditioning charge will also be applicable, both charges are borne by the tenants.

Public area’s air-conditioning charges and management fees in total, normally range from NT$100 to NT$180 per ping gross, plus 5% value-added tax.

4.Utilities Charges on Leased Area

Share on utility charges on use of public facilities, motors, illumination shall be based on electrical consumption records, which is calculated based on a pro-rata basis depending on the total area occupied by each tenant.

Lessee shall be responsible for paying electricity charges used inside leased space, calculated based on electrical consumption record of each tenant.

5.Relevant Tax

Tenants are required to withhold tax on rental and pay it to the local Tax Bureau on a monthly basis under the below percentages:

•If the premises are registered under A PERSONAL NAME, 10% rental income tax should be withheld.

• If the premises are registered under A COMPANY NAME, 5% value-added tax should be added.

6.Lease Term

3~5 years, with the lessee having the first right to renew.

7.Rental Escalation

It is accepted practice to stipulate, at lease commencement, fixed annual increases in the rental throughout the term.  These can be linked to the movement of a government price index or more commonly fixed at a stated percentage normally in the range of 2% to 3% p.a.

8.Leasing Deposit

•The total amount normally ranges from 3 to 6 months rental equivalent.  All benefit or interest accruing from holding such a deposit is generally retained by the owner.

• These deposits are generally paid in 2 stages :

a)Submitting a genuine offer and

b)Signing of a Formal Tenancy Agreement.

It will be return after lease term termination.

9.Hand-over Conditions

Premises will be handed over with existing conditions. When the lease is expired or terminated, the premises will be returned in the same condition it was originally leased.