According to the local media reports a number of buildings had toppled with around 30 people trapped in the collapsed hotel.
Citing the national fire agency, The Telegraph said another hotel had also been damaged.
The quake hit at 23:50 pm (3.50pm GMT) around 21 kilometres (13 miles) northeast of the port city Hualien, according to the United States Geological Survey.
Emergency services are working to free anyone trapped inside the building, media reports said. (ANI)