FSC to Allow Domestic Companies to Open OBU Accounts at Domestic Banks

Taiwan’s Financial Supervisory Commission (“FSC”) announced on 22 September 2020 the draft “Rules for Domestic Companies to Open Offshore Banking Unit ("OBU") Accounts for Foreign Currency Loans” (“Rules”), which will allow domestic companies to open OBU accounts at domestic banks for the purpose of handling foreign currency loans.  The Rules may become effective as early as the end of October 2020.
At present, only overseas companies are permitted to open OBU accounts.  However, among all of the OBU accounts in Taiwan, nearly 70%, or approximately 90,000 OBU accounts, are actually owned by overseas companies that are in fact Taiwan domestic companies.
After the Rules take effect, domestic companies will be permitted to open OBU accounts directly at domestic banks for the purpose of handling foreign currency loans.  Nevertheless, such domestic companies will not be allowed to transfer the funds in OBU accounts to other domestic banks, nor to exchange them for New Taiwan Dollars.  These restrictions are included as measures to prevent money laundering and to protect against fluctuation in foreign exchange rates.  In addition, the funds in OBU accounts will not be interest-bearing and limitations will be placed on the amount and time period that such funds can remain in OBU accounts, depending on the discretion of the individual banks.
Despite the above limitations, the FSC anticipates that most of the domestic companies currently having OBU accounts will close such existing OBU accounts and apply to open new OBU accounts at domestic banks directly.  This prediction is based on the fact that the cost of remaining an overseas company has been continuously rising.
Previous Back to list Next