In a move to avoid controversy when companies file for research and development (R&D) tax rebates, the Ministry of Economic Affairs (MOEA) yesterday said it was mulling plans to broaden the context to allow more firms to enjoy the incentives.
In the past, there was only one set of regulations defining eligibility for R&D tax incentives. However, government agencies will come up with different eligibility criteria to accommodate the needs of companies across all sectors, Industrial Development Bureau Director-General Woody Duh (杜紫軍) said.
“We just had one dress size for all of them in the past. Now we are tailor-making different dresses for each,” he told a press conference.
In the past, controversies arose among companies, especially those in the services industry, about how to define R&D when they filed for the rebates. R&D for a branded business wasn’t as clear cut as for manufacturing firms with production, Duh said.
Duh’s comments came after remarks from Tsai Ming-kai (蔡明介), chairman of Taiwan’s biggest handset-chip maker, MediaTek Inc (聯發科). Tsai voiced concern about the government’s tax measures during a meeting between Premier Wu Den-yih (吳敦義) and company heavyweights from the Hsinchu Science Park (新竹科學園區) on Wednesday.
Starting this year, all companies must pay a business income tax of 20 percent, down from 25 percent.
Duh said Taiwan was adopting a “minimum tax system,” which means companies across the board would have to pay at least 10 percent income tax, regardless of how much they enjoy in rebates from R&D or personnel training. This is the result of the government talking to industry leaders over the past few years.
However, “the government’s tax income is limited. We can’t keep on offering duty cuts forever,” Duh said.
The new draft statute for promoting innovative industries (產業創新條例) scraps special incentives for companies in the high-tech industry that didn’t need to pay tax for the first five years of their business operations.
This is in line with international practice because Singapore and China have already scrapped special incentives for specific industries in recent years, Duh said.
Wu yesterday visited the Southern Taiwan Science Park (南部科學園區) to hear feedback from more companies about the draft statute.
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