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.

Taobao had more than 500,000 registered users in Taiwan as of 2013, with annual sales of NT$50 billion ($1.56 billion), as calculated by Taobao.

More surprisingly, cities in Taiwan accounted for four positions among the top 10 cities having the biggest spenders on Alipay, the payments service of Alibaba. Chiayi in southwestern Taiwan overtook Hangzhou, where Alibaba is based, to crown the list.

Local e-commerce platforms in Taiwan are dwarfed by the mainland e-commerce goliath. The shopping platform of Yahoo, which is the most popular in Taiwan, has annual sales revenue equivalent to about 2.4 billion yuan, while PChome, another leading online shopping site, achieved similar annual sales revenue.

However, Taobao and Tmall each achieved annual sales revenue exceeding 1 trillion yuan by 2012.

Wang Jen-tang, director-general of the Taipei Computer Association, has warned that mainland online shopping platforms could hamper the growth of Taiwan's e-commerce industry.

Bryan Fu, general manager of Alibaba's Taiwan affiliate, noted earlier that business-to-business exporters in Taiwan were at least three years behind their mainland peers.

In a summit held in Taipei in late December, Vincent Siew, honorary chairman of the Cross-Straits Common Market Foundation, said that Alibaba's networks are the best and fastest way for products made in Taiwan to enter the mainland market.

Jack Ma, founder and executive chairman of Alibaba, announced on Monday the establishment of a NT$10 billion fund to help young entrepreneurs in Taiwan set up businesses on Alibaba's online platforms so that they can expand their products and services to other parts of China.