The following tax incentives are offered to businesses in science parks, export processing zones, and agricultural technology parks, along with bonded factories and bonded warehouses, and businesses in logistics centers and free trade zones.
Type |
Explanation |
---|---|
R&D | In order to promote industrial innovation, if a company or limited partnership has not committed severe violations of environmental protection, labor, or food safety and health laws, it may take a tax credit of 15% of R&D expenditures applied in one year or a tax credit of 10% over three years. The tax credit is offset R&D from payable for the current year, and may not exceed 30% of profit-seeking enterprise income tax due for the current year. |
If a Taiwan national, company, or limited partnership receives revenue from the licensing of intellectual property obtained from conducting its own research within the range of the self-developed IP, they may deduct up to 200% of the amount of the R&D expenses for that year from the amount of taxable income for that year. Companies or limited partnerships may elect to either double this deduction or choose the investment deduction from the previous paragraph. | |
SMEs that meet a designated investment amount for innovation and R&D activities can use the Act for Development of Small and Medium Enterprises to get a tax credit of up to 30% of the current year's profit-seeking-enterprise income tax by selecting one of the following two tax credits: (1) 15% of R&D expenses applied to the current year, (2) 10% of R&D expenses applied for three years; however, the deductible amount may not exceed 30% of the current year's profit-seeking enterprise income tax. | |
Biotechnology and New Pharmaceutical Industries |
For biotechnology and new pharmaceutical companies, 35% of R&D and employee training expenditures may be claimed as a deductible expense against the current year's payable business income tax. If the current fiscal year's expenditure on R&D or employee training exceeds the average amount spent in the previous two fiscal years, half of the excess amount may be claimed as a deductible expense. |
When for-profit enterprises invest in the founding or expansion of biotechnology or new pharmaceutical companies and also have been or become such a company's registered shareholder for a period of three years or more, 20% of the amount invested may be claimed as a deductible expense against their payable business income tax. | |
When professionals or technology investors of biotechnology or new pharmaceutical companies receive income in the form of newly issued stock or the subscription of shares through stock option certificates (with the subscription value being lower than the face value), the amount is exempt from the current fiscal year's taxable income. However, if such stock or shares are transferred, gifted, or part of an estate settlement, they shall be listed as income for the current year and declared once cost has been deducted. | |
Private Participation in Major Infrastructure Projects |
Private sector companies that participate in major infrastructure projects are eligible for a five-year business income tax exemption, investment tax credits, and exemption of tariffs on imported construction machinery as well as deductions on the house tax, land value tax, and deed tax. Profit-seeking businesses that invest in private-sector organizations that participate in major infrastructure projects also receive deductions on their business income tax. |
Tourism Industry | A tourism enterprise with a corporate organization may claim 10% - 20% of international tourism promotion expenditures as a deduction against payable business income tax for the current year. Unused deduction amounts can be claimed within a period of four years; however, the amount may not exceed 50% of the current year's total business income tax payable (the amount deductible in the final year is not subject to this restriction). |
A company in the amusement park industry, tourist hotel industry, or travel agency industry that raises the quality of its services in line with tourism policy may, subject to the approval of the central competent authorities, be eligible for an appropriate reduction of the land value and building tax on real estate used directly by these operations. | |
Film Production | A private company that invests in the establishment or expansion of a domestic motion picture production enterprise of a designated size, is a holder of an original share subscription or by solicitation of registered shares issued by said domestic motion picture production enterprise, and holds the shares for three years or more, may credit a maximum of 20 percent of the amount paid for the share acquisitions against the amount of the profit-seeking-enterprise income tax payable each year within a period of five years from the then-current year. |
Investment in the Film Production Industry |
When a profit-seeking enterprise invests a certain amount in the establishment or expansion of a film production enterprise, and has held registered stock, either originally owned or obtained as a result of fundraising, in that enterprise for a period of at least three years, up to 20% of the purchase price of the stock may be claimed as a deductible expense against its business income tax payable within a five-year period starting from the fourth year after becoming a registered shareholder of that film production enterprise. |
Development of Satellite Towns | A joint stock limited liability company investing in satellite town development may claim up to 20% of total investment as a deduction against business income tax payable on development income for the current year. |
When a company limited by shares invests in a designated applicable tax-incentive zone and engages in an industry facilitating satellite town development, the company may claim up to 20% of the total amount of actual purchases of new machinery, equipment, and buildings used for business purposes in accordance with the company's investment plan after beginning operation as a deduction against payable business income tax for the current year. | |
Limited liability companies investing in the construction of new towns are exempt from land value tax during the period of construction. | |
Urban Renewal | When an urban renewal enterprise in the form of a company limited by shares invests in urban renewal undertakings within an area designated by the competent authority as subject to urban renewal, the enterprise may claim up to 20% of total investment as a deduction against business income tax payable for the year in which the urban renewal project is completed. |
Import of Machinery Not Manufactured Domestically |
Imported machinery of a kind not yet manufactured domestically is eligible for tariff-free treatment following verification by the Ministry of Economic Affairs. |
Hiring Additional Employees | SMEs that hire additional full-time employees and raise their overall salary expenses can recognize additional tax deductible salary expenses up to 130% of the salaries paid to Taiwanese employees newly hired in the current year. |
For additional domestic hires who are 24 years old or younger, SMEs can deduct up to 150% of the annual gross salary payments to these young domestic hires from their then current year profit-seeking enterprise income. | |
Salary Raises | During the period when the composite leading indicators are above designated levels, if an SME raises the average salary paid to domestic junior employees, it can deduct up to 130% of the incremental annual gross salary payments, excluding statutory basic wage adjustment, to the junior employees from its profit-seeking-enterprise income for the current year. However, the additional salary paid to the new hires shall not be deducted redundantly here as it has been used for tax benefit under the provisions in the preceding two paragraphs. |
Stock-Based Employee Compensation |
If a company employee acquires stock-based employee compensation (i.e., shares issued as employee compensation, employee stock options at cash capital increase, treasury shares redeemed for issuance to employees, share subscription warrants issued to employees, and new restricted stock award shares issued to employees), valued at no more than NT$5 million in the year of issue, tax will be assessed on the actual value of the shares at the time of their transfer. |
Technology and Intellectual Property Rights as Equity | When a Taiwanese individual, company, or limited partnership exchanges technology for shares in a company listed on the stock market or over-the-counter market, or is registered as an emerging stock company, the individual, company, or limited partnership may choose to calculate income tax in accordance with the transfer price at the actual time of transfer. |
When a domestic research institution exchanges technology derived from its own research for company shares that are distributed to domestic inventors, the inventors may choose to calculate their income tax in accordance with the transfer price at the actual time of transfer. | |
Pass-through Taxation for Limited Partnerships |
Limited partnership venture capital companies that meet the requisite conditions may choose passthrough taxation (in which income taxes are paid not at the corporate level but at the individual partner level), with profits on business income being distributed directly to partners on whom the income tax is levied. Business income derived from securities transactions by partners who are Taiwanese nationals or foreign profit-seeking enterprises is tax-exempt. |
Tax Incentives for Angel Investors | Individuals investing in new high-risk companies less than two years old, who have invested up to NT$1 million in a single company and held the shares for two years, may deduct up to 50% of the invested amount from the amount of their total consolidated income, up to NT$3 million per year. |
The “Preferential Land-lease Program for Industrial Estates” is based on the two principles of “parallel lease and sale” and “leasing is preferable to sale.” The program provides rent-free leasing for the first two years for land in industrial parks being developed under the jurisdiction of the Ministry of Economic Affairs (Changhua Coastal Industrial Park, Tainan Technology Industrial Park, Hualian Hoping industrial Park, Yunlin Offshore Industrial Park, and Yunlin Technology-based Industrial Park); a company that signs such a lease, however, must prepay a two-year rental fee at the time of signing, in the form of cash, bank guarantee, or negotiable certificate of deposit. A lessee who completes utilization in accordance with the approved plan within two years will enjoy free land rental for the first two years, and may apply for the interest-free return of the two-year rental fee that was prepaid in cash or use it to offset future rental fees. The determining standard for the above-mentioned“ completes utilization” requires that the building coverage ratio must not be less than 30% of the land area called for in the pre-registered lease application.
1. Revival Plan for Old Factories
(1) Rental Incentives: When there is an approved demolition and rebuilding of an old factory, rental incentives are offered starting from the commencement date listed on the building permit. No land rent is charged in the first two years, a 40% discount is offered in the third and fourth years, and a 20% discount is offered in the fifth and sixth years.
(2) Qualified Applicants: This plan is for use in the Kaohsiung, Nanzi and Taichung parks. Qualified applicants must be at least one of the following:
An enterprise located within the park that demolishes then rebuilds an old factory.
A public or private enterprise that demolishes an old factory and is in the process of rebuilding, but has not yet finished, and that did not previously receive land rent incentives.
An enterprise within a park that takes over rebuilding of a factory that was demolished and partially, but not completely, rebuilt, and that did not previously receive land rent incentives.
An enterprise within a park that leases land where an old factory was demolished but has not yet been rebuilt. The land must not have previously been rented at a discounted price.
An enterprise located within a park that builds a new factory on its own land where it previously demolished an old factory. The new factory must have a floor area ratio of 200% or more and help promote the image of a high-technology park. (3) Period of Applicability: From January 1, 2013, to December 31, 2018.
2. Incentives in Kaohsiung Software Park
Land Rent Incentive Measure |
Incentives |
---|---|
Enterprises in the Park (That Lease-to-Build) 555 Incentive 6688 Incentive |
50% discount on land rental during construction. Limit of three years, and can only be used one time for each plot of land. |
The "6688" land rental incentive plan is offered at the start of operations. Can only be used one time for each plot of land. | |
The plan offers a 40% land rental discount during years 1 and 2 and a 20% discount during years 3 and 4. Standard rent is charged starting in year 5. | |
Enterprises in the Park (That Purchase a Buildings from a Developer) 6688 Incentive |
The "6688" land rental incentive plan is offered at the start of operations. Can only be used one time for each plot of land. |
The plan offers a 40% land rental discount during years 1 and 2 and a 20% discount during years 3 and 4. Standard rent is charged starting in year 5. |
In order to prevent enterprises that enter the park from terminating their contract on completion of these incentives, restrictions are placed on the rental period. The minimum rental period in the Kaohsiung Software Park is six years.
3. Incentives in Taichung Software Park
Land Rent Incentive Measure |
Incentives |
---|---|
Developers 555 Incentive | 50% discount on land rental during construction. Limit of three years, and can only be used one time for each plot of land. |
Standard rent is charged starting from when the first enterprise begins to use the building (when the enterprise completes tax registration with the National Taxation Bureau). | |
Enterprises in the Park (That Purchase a Buildings from a Developer)6688 Incentive |
The "6688" land rental incentive plan is offered at the start of operations. Can only be used one time for each plot of land. |
The plan offers a 40% land rental discount during years 1 and 2 and a 20% discount during years 3 and 4. Standard rent is charged starting in year 5. | |
Enterprises in the Park (That Lease-to-Build) 006688 Incentive |
The "006688" land rental incentive plan is offered at the start of construction and operations. Can only be used one time for each plot of land. |
The plan offers free land rental during years 1 and 2, a 40% discount during years 3 and 4, and a 20% discount during years 5 and 6. Standard rent is charged starting in year 7. | |
Park Management Fee (Limited to Business Operators Approved to Operate in the Taichung Software Park Before December 31, 2021) |
Years 1 and 2: 40% discount on the management fee |
Years 3 and 4: 20% discount on the management fee | |
Year 5 and After: Standard fee is charged |
Source: Export Processing Zone Administration Bureau of Industrial Parks
Loans for Promoting Industrial Innovation or R&D: Applicable to all innovation and R&D projects relating to internet, manufacturing, technical services, distribution services, and cultural and creative industries. Loans can be up to 80% of total expenses of the approved plan up to a maximum amount of NTD 65 million per loan. Government assistance must first be deducted.
Preferential Loans for Companies in Agricultural Technology Parks: Loans of up to NTD 80 million are available for the development or purchase of factories or related facilities and equipment, along with operational revolving funds. If the company is 50% or more foreign-owned, its investment in the park must be at least NTD 80 million and its paid-in capital must be at least NTD 30 million.
Loans for Production, Marketing, Operations and R&D by Farmers' Associations and Agricultural Enterprises: Loans of up to NTD 50 million are available for production, marketing, operations and R&D by farmers' associations and agricultural enterprises engaged in businesses that promote government agricultural policy.
Loans for Machine and Equipment Upgrades: Loans are available primarily for the purchase of automated machinery and equipment, pollution prevention equipment, and energy efficient equipment. The loans provided for each investment plan shall not exceed 80% of the total cost of the plan, and the total loans provided to each applicant shall not exceed NTD 400 million. For plans for the purchase of pollution prevention equipment, the maximum investment value is NTD 1 billion.
Project Financing to Assist with Corporate Mergers and Acquisitions: Financing provided is primarily to assist enterprises with merger, acquisition and split-up plans. Financing for each plan shall not exceed 70% of the total cost of the plan. Total financing provided to each applicant shall not exceed NTD 1 billion.
In order to promote plans that advance commercial academic R&D cooperation among firms located in science parks, the government provides subsidies for both the applicant and the academic institution up to a total of NTD 10 million, or 50% of the cost of development of the project (including self-raised funds). The total subsidy for the academic institution may not be less than 30% of the gross subsidy. The Department of Industrial Technology, MOEA, promotes a variety of technology-based projects that encourage enterprises to invest in developing promising technologies. It also promotes cross-field integration to strengthen the industrial climate. Subsidies of up to 50% are offered based on project characteristics.
Research and development subsidy plans offered by the Department of Industrial Technology, MOEA, are described in the following website:
A+ Industrial Innovation R&D Program Global R&D Innovation Partnership Project http://aiip.tdp.org.tw/index.php (Chinese only)
The National Development Fund targets the Six Emerging Industries, the Four Major Smart Industries and key service sectors, with government-held shares not to exceed 49% of the total equity of the invested enterprise. Moreover, the government has allocated NTD 10 billion each for investment in SMEs, cultural/ creative industries, strategic services and strategic manufacturing industries, with government-held shares also limited to 49%. Government investment is conducted in conjunction with a professional management company.