People ride a double bicycle past a logo of the Alibaba Group at the company's headquarters on the outskirts of Hangzhou, Zhejiang province Nov 10, 2014.[Photo/Agencies]

Alibaba Group Holding Ltd faces a 24,000 yuan ($3,820) fine and other possible penalties related to its affiliate in Taiwan, where the local economic authorities are investigating the mainland company's investment.

The Taiwan economic authorities said that Alibaba Singapore E-commerce Private Ltd, the Alibaba affiliate in Taiwan that was registered in 2008, is actually a Chinese mainland-invested company.

But it has not submitted supplementary registration documents as a Chinese mainland company, as required by local regulations. If the affiliate does not submit the required information within six months, it will be required to withdraw from Taiwan.

Alibaba defines itself as an international company, because the holding company is listed in the United States and only 16.28 percent of the shares are held by Chinese mainland shareholders.

Japan's Softbank Corp and Yahoo Inc in the US remain the major shareholders.

In an e-mail response to China Daily, Alibaba said that it set up the Taiwan branch in 2008 as a foreign company "in accordance with the regulations promulgated by the authority at that time and has since operated its business based on all legal procedures".

"After Alibaba went public in New York in September, the authorities changed its view about the internal structure of Alibaba and deemed it as a Chinese mainland company. Concerning recent questions from the authorities, we will actively communicate with related parties to clarify the issues," wrote Alibaba in the e-mail.

Taobao, one of Alibaba's e-commerce platforms, entered the Taiwan market in 2010 and has grown rapidly. About 10,000 parcels are delivered daily to Taiwan consumers from Taobao-based merchants.

In light of the rising consumption by Taiwan people on Taobao, the local customs authorities there issued a draft notice recently that calls for higher taxes on parcels delivered from the mainland.