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Items may be cut from tax-break list

The Industrial Development Bureau is proposing to exclude 110 products, including notebook computers and computer motherboards, from the so-called "emerging important and strategic industries," an official at the bureau said yesterday.

Products that used to be included in the list of emerging important and strategic industries -- ranging from 8-inch wafers, notebook and desktop computers, motherboards and digital music players to light emitting diodes and memory cards -- have been eliminated from the list in a draft proposal, said Lin Mei-hsueh (林美雪), director of the bureau's industrial policy division.

If the proposal is passed by the Cabinet, manufacturers of those products will no longer have a five-year exemption from the 25 percent business income tax.

"We review the list every two years to decide which products should `graduate' from the subsidiary list in accordance with the Statute for Upgrading Industries (促進產業升級條例), and switch resources to others that are in need of development," Lin said in a phone interview. "It is also for the sake of fairness."

The bureau is still drafting the proposal and will hand in the final version to the Council for Economic Planning and Development for review before delivering it to the Cabinet, Lin said.

Lin estimated that the proposal could be passed next month, at the earliest, and be implemented within the year.

While the bureau proposes that 110 products be excluded from the list, it added 38 others, including nanotechnology products, 40-inch or above optical displays, and thin-film-transistor (TFT) liquid-crystal displays (LCDs) that are manufactured so that 70 percent of waste water is recycled, she said.

For 26 of the items, only advanced models remain on the list, including 5.0 megapixel or above digital cameras, LCD and plasma display panels of 19 inches (48cm) or above, and printers that have two or more functions, such as fax and scanning abilities, Lin added.

The Ministry of Finance requested the stricter screening to ease the government's financial burden, Lin said.

The bureau further added an "exit-mechanism" in the new draft, specifying the conditions for products to be removed from the list, such as total output value, market share in the global market and the number of manufacturers. The conditions for the exit of each product varies, Lin said.

The bureau estimates that the policy adjustment will have little impact on local manufacturers, as most of them have moved their production to China, Lin said.

Instead, the government will see new investment in the new products on the list, she said.
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