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Tax Incentives

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General Tax Incentives

R&D tax credits

Companies are entitled to a deduction from their profit-seeking enterprise income tax for expenditures in highly innovative R&D activities.

No import duties for machinery and instruments not produced in Taiwan

Companies are entitled to zero import duties when importing machinery and instruments that are not produced in Taiwan.

Tax incentives for companies that introduce key technologies

Where companies that introduce new production technologies or products from overseas or use patents, trademarks, or other special permits owned by foreign profit-seeking enterprises, the royalties they have paid to foreign enterprises may be applied toward income tax exemptions.

Tax incentives for corporate investment in smart machinery and 5G

Companies are entitled to a deduction from their profit-seeking enterprise income tax when they invest in brand-new smart machinery or introduce brand-new 5G hardware, software, or technical services, where those things are for the companies'''' own use.

Tax incentives for use of undistributed earnings for substantive investments

Within three years from the year after an enterprise has recorded a surplus on its operations, if the surplus is used to construct or purchase buildings, software and hardware equipment or technology that the enterprise uses for its own production or business activities, and if the money thus spent equals or exceeds a certain amount, then the enterprise can classify this amount as a deduction to its undistributed surplus for the year, and will be exempt from paying business income tax on it.

Tax incentives for stock obtained in exchange for technology

Where a company assigns or grants a license to use intellectual property rights generated by its own R&D results, the company may opt to exclude the new shares acquired as the consideration from its taxable income in the year such shares are acquired. However, the amount is limited to NT$5 million for the entire year. In addition, shareholders that hold shares for at least 2 years and meet related criteria are eligible to be taxed based on "acquisition price" or "transfer price," whichever is lower.

Tax incentives for stock-based employee compensation

When a company employee acquires stock-based employee compensation, the employee may opt to exclude the amount from annual taxable income for the current year. In addition, shareholders that hold shares for at least 2 years and meet related criteria are eligible to be taxed based on "acquisition price" or "transfer price," whichever is lower.

Tax incentives for specific professional foreign talents

Specific professional foreign talents that meet certain criteria are entitled to a 50% deduction of total income tax for amounts exceeding NT$3 million.

Tax Incentives for specific industries

Biotechnology and pharmaceuticals industry

Companies determined to qualify as "biotech and new pharmaceutical companies" that engage in R&D and manufacturing of new animal and botanical drugs, high-risk medical devices, or new biotech and pharmaceutical products are eligible for related tax incentives for R&D, talent development, investments and technology invested as capital stock.

Promotion of private participation in infrastructure projects

To upgrade the level of public services, expedite social economic development, and encourage private participation in infrastructure projects, the government provides companies participating in infrastructure projects with tax breaks on profit-seeking enterprise income tax, import duties, land value tax/house tax/deed tax, and shareholder investment tax credits.

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Update: 2020.07.06

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