The Legislative Yuan yesterday passed a new version of a statute designed to promote investment in strategic industries, just a few days before the old version had been set to expire.
Lawmakers yesterday rushed through the second and final readings of the new "Statute for Upgrading Industries" (
Under the new statute, companies can enjoy a tax deduction of 5 percent to 25 percent of the amount they invest in research and development and personnel training. This is five percentage points higher than the old version.
Also, 5 percent to 25 percent of investments in "facilities and technologies that reduce green-house gas emissions or raise energy efficiency levels" will also be tax deductible.
To encourage investment in selected "strategic" industries, the new statute will provide a 10 percent income tax deduction to shareholders in those sectors starting next year. The tax deduction will be reduced by one percentage point every two years. The old version had allowed a 20 percent tax break.
The new version of the statute, however, does not specify exactly which industries will receive preferential treatment. That decision will be left to the Industrial Development Bureau.
The Executive Yuan will review the scope, application and enforcement of the statute every two years. The tax breaks are "essential for keeping industries in Taiwan," said vice economics minister Yin Chi-ming (
Yesterday's readings were opposed by New Party legislator Hsieh Chi-ta (
According to the Ministry of Finance, tax losses from the existing tax credits amount to more than NT$100 billion, and if the credits are extended for another 10 years, lost tax revenue will total an additional NT$500 billion.
Article 42 of the new statute, which prohibits private ownership of land in coastal areas, was also a hot topic of debate during the review.
The article stipulates that companies can only "lease" industrial port areas, as compared to "lease or buy" under the old version.
The article is seen as specifically aimed at Formosa Plastics Group (FPG, 台塑), which has applied to buy a port near its sixth naphtha cracker in Mailiao.
Chen said the Industrial Development Bureau should not rush through FPG's application in the three days left before the end of the year, when the old version of the statute will expire.
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