Sat, Jun 22, 2019 - Page 3 News List

Legislature extends investment perks

‘SUNSET CLAUSE’:The tax benefits on investments in R&D and start-up firms, due to expire at the end of the year, were extended to encourage industrial innovation

By Sean Lin  /  Staff reporter

Deputy Legislative Speaker Tsai Chi-chang bangs the gavel at the Legislative Yuan in Taipei yesterday to mark the passage of amendments to the Statute for Industrial Innovation.

Photo: George Tsorng, Taipei Times

The Legislative Yuan yesterday passed amendments to the Statute for Industrial Innovation (產業創新條例), extending the period in which tax exemptions will be granted to four types of private investment and expenditure by 10 years until the end of 2029.

The act originally came with a “sunset clause,” which stipulated that it would expire at the end of this year.

The amendments extend the tax benefits by 10 years for research and development (R&D) expenditure, angel investors, employee stock bonuses and start-up firm investors.

Under the act, private companies that invest in R&D can choose between a tax reduction of 15 percent on their profit-seeking enterprise income tax or a 10 percent reduction for three consecutive years.

People who become shareholders by authorizing a firm to use their technologies or through their contributions to academic or R&D projects and who have worked for at least two consecutive years can choose either to file their securities transaction tax based on the stock price at the time they were awarded the shares or after they sold the shares, the amendments say.

This option also applies to employee stock bonuses. The current act limits this to shareholders of innovative companies.

The provision that angel investors who have invested at least NT$1 million (US$32,103) in a start-up would receive a tax deduction of 50 percent, or not more than NT$3 million, has also been extended by 10 years, the amendments say.

To encourage companies to spend their undistributed surplus earnings, the amendments stipulate that companies or their partner firms that use their undistributed surplus earnings on investments would be exempt from a 5 percent profit-seeking enterprise income tax.

The rule also applies to small and medium-sized companies, the amendment says.

The Industrial Development Bureau in April said that although pushing back the deadline of the sunset clause would reduce annual tax revenue by NT$30 billion, it is expected to boost investments and add NT$30.45 billion to annual revenue.

Additional reporting by Huang Pei-chun

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