THE TAIWAN FUND, INC.

225 Franklin Street, Boston, Massachusetts 02110

For questions about the Proxy Statement, please call (800) 636-9242

December 9, 2005

Dear Stockholder:

      Enclosed you will find a Notice and Proxy Statement for the Annual Meeting of Stockholders of The Taiwan Fund, Inc. to be held on Thursday, January 19, 2006.

      The only matter on which you, as a stockholder of the Fund, are being asked to vote is the election of the Fund’s directors. The Board of Directors recommends that you vote in favor of the re-election of eight of the Fund’s existing directors listed on the proxy card.

      YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE TAKE A FEW MINUTES TO REVIEW THIS MATERIAL, CAST YOUR VOTE ON THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOUR PROMPT RESPONSE IS NEEDED TO AVOID FOLLOW-UP MAILINGS WHICH WOULD INCREASE COSTS PAID BY ALL STOCKHOLDERS.

      Thank you very much for your assistance.

THE TAIWAN FUND, INC.

Notice of Annual Meeting of Stockholders

January 19, 2006

To the Stockholders of THE TAIWAN FUND, INC.:

      NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The Taiwan Fund, Inc. (the “Fund”) will be held at the offices of State Street Bank and Trust Company, 2 Avenue de Lafayette, Blackwell Theater, 2nd Floor, Boston, MA 02111, on Thursday, January 19, 2006 at 2:00 p.m., Boston time, for the following purposes:

      The Board of Directors has fixed the close of business on November 18, 2005 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting or any adjournments thereof.

      You are cordially invited to attend the meeting. Stockholders who do not expect to attend the meeting in person are requested to complete, date and sign the enclosed form of proxy and return it promptly in the envelope provided for that purpose. The enclosed proxy is being solicited by the Board of Directors of the Fund.

December 9, 2005

PROXY STATEMENT

THE TAIWAN FUND, INC.

INTRODUCTION

      This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of THE TAIWAN FUND, INC. (the “Fund”) for use at the Annual Meeting of Stockholders, to be held at the offices of State Street Bank and Trust Company, 2 Avenue de Lafayette, Blackwell Theater, 2nd Floor, Boston, MA 02111, on Thursday, January 19, 2006 at 2:00 p.m., Boston time, and at any adjournments thereof. The Fund’s investment adviser is HSBC Investments (Taiwan) Limited (the “Adviser”), 99 Tun Hwa South Road, Section 2, Taipei, Taiwan, ROC.

      The approximate date on which this Proxy Statement and the form of proxy will be mailed to stockholders is December 9, 2005. Any stockholder giving a proxy has the power to revoke it by mail (addressed to the Secretary of the Fund c/o the Fund’s administrator, State Street Bank and Trust Company, at the Fund’s address at 225 Franklin Street, Boston, Massachusetts 02110) or in person at the meeting, by executing a superseding proxy or by submitting a notice of revocation to the Fund. All properly executed proxies received in time for the meeting will be voted as specified in the proxy or, if no specification is made, for the election of directors described in this Proxy Statement. Abstentions and broker non-votes are each included in the determination of the number of shares present at the meeting for purposes of determining the presence of a quorum.

      The Board of Directors has fixed the close of business on November 18, 2005 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting and at any adjournment thereof. Stockholders on the record date will be entitled to one vote for each share held, with no shares having cumulative voting rights. As of the record date, the Fund had outstanding 16,365,572 shares of common stock.

      Management of the Fund knows of no business other than that mentioned in Proposal (1) of the Notice of Meeting which will be presented for consideration at the meeting. If any other matter is properly presented, it is the intention of the persons named in the enclosed proxy to vote in accordance with their best judgment.

      The Fund will furnish, without charge, a copy of its annual report for its fiscal year ended August 31, 2005 to any stockholder requesting such report. Requests for the annual report should be made in writing to The Taiwan Fund, Inc., 225 Franklin Street, Boston, Massachusetts 02110, Attention: William Cox, or by calling (800) 636-9242.

ELECTION OF DIRECTORS

      Persons named in the accompanying form of proxy intend in the absence of contrary instruction to vote all proxies for the election of the eight nominees listed below as directors of the Fund to serve for the next year, or until their successors are elected and qualified. Each of the nominees for director has consented to be named in this Proxy Statement and to serve as a director of the Fund if elected. The Board of Directors of the Fund has no reason to believe that any of the nominees named below will become unavailable for election as a director, but if that should occur before the Annual Meeting for the Fund, the persons named as proxies in the proxy cards will vote for such persons as the Board of Directors of the Fund may recommend.

Information Concerning Directors, Nominees and Officers

      The following table sets forth certain information concerning each of the directors, nominees as a director and officers of the Fund.

     The Fund’s Board of Directors has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) which is responsible for reviewing financial and accounting matters. The Fund’s Audit Committee is composed of directors who are independent (as defined in the New York Stock Exchange, Inc. (“NYSE”) listing standards, as may be modified or supplemented) and not interested persons of the Fund and its actions are governed by the Fund’s Audit Committee Charter. The current

members of the Audit Committee are Messrs. Canavan, Rogers, Lo and Weber. The Audit Committee convened eight times during the fiscal year ended August 31, 2005.

      The Fund’s Board of Directors has a Nominating Committee which is responsible for recommending individuals to the Board for nomination as members of the Board and its Committees. The Nominating Committee does not consider nominees recommended by the security holders. The Board believes that it is appropriate for the Fund to not have such a policy because the Committee has not previously received any director candidate recommendations from a non-director stockholder. The Fund’s Nominating Committee is composed of directors who are not interested persons of the Fund (as defined in Section 2(a)(19) of the 1940 Act), and independent (as defined in the NYSE listing standards), and its actions are governed by the Fund’s Nominating Committee Charter which was filed as an exhibit to the Fund’s proxy statement dated December 20, 2004. The current members of the Nominating Committee are Messrs. Canavan, Chang, Lo and Weber. The Nominating Committee met once during the fiscal year ended August 31, 2005.

      Persons recommended by the Fund’s Nominating Committee as candidates for nomination as directors are required to possess such knowledge, experience, skills, expertise and diversity so as to enhance the Board’s ability to manage and direct the affairs and business of the Fund, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties and/or to satisfy any independence requirements imposed by law, regulation or any listing requirements of the NYSE.

      The Fund’s Board of Directors has a Fair Valuation Committee which is responsible for establishing and monitoring policies and procedures reasonably designed to ensure that the Fund is valued appropriately, objectively and timely, reflecting current market conditions. The Fund’s Fair Valuation Committee is composed of directors who are not interested persons of the Fund as well as certain employees of the Fund’s Adviser. The current Directors who are members of the Fair Valuation Committee are Messrs. Canavan, Lo and Weber. The Fair Valuation Committee met twice during the fiscal year ended August 31, 2005.

      On July 18, 2005, the Fund’s Board of Directors formed an Investment Management Oversight Committee. The Investment Management Oversight Committee is responsible for overseeing and evaluating the nature and quality of the investment services provided to the Fund by its investment adviser in order to assist the Board in overseeing the investment services being provided to the Fund by its investment adviser. The current members of the Investment Management Oversight Committee are Messrs. Chang and Hu and Ms. Liu. The Investment Management Oversight Committee met once during the fiscal year ended August 31, 2005.

      The Board of Directors of the Fund held four regular meetings and one special meeting during the fiscal year ended August 31, 2005. For the fiscal year ended August 31, 2005, Mr. Wang attended all five of the regular meetings of the Board but was absent from four of seven audit committee meetings held during the period while he was a member of that committee. As a result, Mr. Wang did not attend at least

seventy-five percent of the aggregate number of meetings of the Board and of any committee on which he served held during the time he was a member of the Board or the relevant committee. For the fiscal year ended August 31, 2005, Mr. Hu and Ms. Liu did not attend at least seventy-five percent of the aggregate number of meetings of the Board and of any committee on which they served held during the time they were members of the Board or the relevant committee.

      For annual or special stockholder meetings, directors may but are not required to attend the meetings; and for the Fund’s last annual stockholder meeting, four Directors attended the meeting.

Stockholder Communications

      Stockholders may send communications to the Fund’s Board of Directors by addressing the communication directly to the Board (or individual Board members) and/or clearly indicating that the communication is for the Board (or individual Board members). The communication may be sent to either the Fund’s office or directly to such Board member(s) at the address specified for each Director above. Other stockholder communications received by the Fund not directly addressed and sent to the Board will be reviewed and generally responded to by management, and will be forwarded to the Board only at management’s discretion based on the matters contained therein.

Ownership of Securities

      The following table sets forth information regarding the ownership of securities in the Fund by directors and nominees for director as of November 29, 2005.

      No director or nominee for election as director who is not an interested person of the Fund, or any immediate family member of such person, owns securities in the Adviser, or a person directly or indirectly controlling, controlled by, or under common control with the Adviser.

Transactions with and Remuneration of Officers and Directors

      The aggregate remuneration, including expenses relating to attendance at board meetings reimbursed by the Fund, paid in cash to directors not affiliated with the Adviser was $377,971 during the fiscal year ended August 31, 2005. The Fund currently pays each director that is not affiliated with the Adviser an annual fee of $15,000 plus $2,000 for each directors’ meeting and committee meeting attended in person, and $2,000 for each meeting attended by telephone.

      The Adviser pays the compensation and certain expenses of Ms. Adelina Louie, an employee of the Adviser who serves as Secretary, Treasurer and Chief Compliance Officer of the Fund. Ms. Louie may participate in the advisory fees paid by the Fund to the Adviser, although the Fund makes no direct payments to her.

      The following table sets forth the aggregate compensation from the Fund paid to each director during the fiscal year ended August 31, 2005, as well as the total compensation earned by each director from the Fund and other funds advised by the Adviser or its affiliates (collectively, the “Fund Complex”).

Required Vote

      The election of each director will require the affirmative vote of a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote for the election of the directors. For this purpose, votes that are withheld and broker non-votes will have no effect on the outcome of the elections.

      THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THE EIGHT NOMINEES FOR DIRECTORS.

Audit Committee Report

      The Audit Committee has reviewed and discussed the Fund’s audited financial statements for the fiscal year ended August 31, 2005 with management, the Adviser and KPMG LLP, the Fund’s independent registered public accounting firm (“KPMG”), and has discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 61 (Codification of Statements on Auditing Standards, AU Section 380), as may be modified or supplemented. The Audit Committee has received the written disclosures and letter from KPMG required by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees), as may be modified or supplemented, and has discussed with KPMG its independence. Based on the Audit Committee review and discussions referred to in the two preceding sentences, the Audit Committee recommended to the Board of Directors that the audited financial statements of the Fund for the fiscal year ended August 31, 2005 be included in its annual report to stockholders and the Fund’s annual report filed with the Securities and Exchange Commission.

Independent Registered Public Accounting Firm

      KPMG serves as the Fund’s independent registered public accounting firm, auditing and reporting on the annual financial statements of the Fund and reviewing certain regulatory reports and the Fund’s federal income tax returns. KPMG also performs other professional audit and certain allowable non-audit services, including tax services, when the Fund engages it to do so. Representatives of KPMG are expected to be available via telephone at the Meeting and will have an opportunity to make a statement if they desire. Such representatives are expected to be available to respond to appropriate questions at the Meeting.

      Audit Fees. The aggregate fees billed by KPMG in connection with the annual audits of the Fund for the fiscal years ended August 31, 2005 and 2004 were $51,000 and $47,500, respectively.

      Audit-Related Fees. The aggregate fees billed by KPMG for audit-related services in the amount of $6,500 for the year ended August 31, 2005 were related to the performance of the audit or review of the Fund’s financial statements and are not reported under the section Audit Fees above. The aggregate fees billed by KPMG for audit-related services in the amount of $27,500 for the year ended August 31, 2004 were related to the performance of agreed-upon procedures on the Fund’s performance results as published in monthly reports on the Fund’s website and on the Fund’s semi-annual financial statements.

      Tax Fees. The aggregate fees billed by KPMG for professional services rendered by KPMG for tax compliance, tax advice and tax planning (consisting of a review of the Fund’s income tax returns and tax distribution requirements) for the fiscal years ended August 31, 2005 and 2004 were $11,250 and $10,500, respectively.

      All Other Fees. There were no other fees billed by KPMG for services rendered to the Fund for the fiscal years ended August 31, 2005 and 2004.

      Audit Committee Pre-approval. The Audit Committee’s policy is to pre-approve all auditing and non-auditing services to be provided to the Fund by the Fund’s independent registered public accounting firm. All of the audit and the tax services described above for which KPMG billed the Fund fees for the fiscal years ended August 31, 2005 and 2004 were pre-approved by the Audit Committee.

      KPMG did not bill any non-audit fees for services rendered to the Fund’s Adviser, or any entity controlling, controlled by, or under the common control with the Adviser that provides ongoing services to the Fund, for the fiscal years ended August 31, 2005 and 2004.

Security Ownership of Certain Beneficial Owners

      Set forth below is information with respect to persons who, to the knowledge of the management of the Fund, owned beneficially more than 5% of the Fund’s outstanding shares as of November 23, 2005. The information is based on publicly available Schedule 13D and 13G disclosures filed with the Securities and Exchange Commission.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section 16(a) of the Exchange Act requires that the Fund’s officers and directors, and beneficial owners of more than 10% of any class of equity security registered pursuant to Section 12 of the Exchange Act, make certain filings on a timely basis under Section 16(a) of the Exchange Act. Based solely on a review of copies of such reports of ownership furnished to the Fund, the Fund believes that during the past fiscal year all of its officers, directors and greater than 10% beneficial holders complied with all applicable filing requirements.

Miscellaneous

      Proxies will be solicited by mail and may be solicited in person or by telephone or telegraph by officers of the Fund or personnel of the Adviser. The Fund has retained Georgeson Shareholder Communications Inc. to assist in the proxy solicitation. The cost of their services is estimated at $7,500, plus out-of-pocket expenses. The expenses connected with the solicitation of these proxies and with any further proxies which may be solicited by the Fund’s officers or Georgeson Shareholder Communications Inc. in person, by telephone, by facsimile, or by telegraph will be borne by the Fund. The Fund will reimburse banks, brokers, and other persons holding the Fund’s shares registered in their names or in the names of their nominees for their expenses incurred in sending proxy material to and obtaining proxies from the beneficial owners of such shares.

      No business other than as set forth herein is expected to come before the meeting, but should any other matter requiring a vote of stockholders arise, the persons named in the enclosed proxy will vote thereon according to their best judgment in the interests of the Fund.

Stockholder Proposals

      In order to submit a stockholder proposal to be considered for inclusion in the Fund’s proxy statement for the Fund’s 2007 Annual Meeting of Stockholders, stockholder proposals must be received by the Fund (addressed to The Taiwan Fund Inc., 225 Franklin Street, Boston, Massachusetts 02110) not later than August 18, 2006. Any stockholder who desires to bring a proposal at the Fund’s 2006 Annual Meeting of Stockholders without including such proposal in the Fund’s proxy statement, must deliver written notice thereof to the Secretary of the Fund (addressed to The Taiwan Fund, Inc., 225 Franklin Street, Boston, Massachusetts 02110), not before October 27, 2006 and not later than November 28, 2006.

225 Franklin Street

Boston, Massachusetts 02110

December 9, 2005