The Ministry of Economic Affairs yesterday said it would offer higher tax incentives for research and development (R&D), and for advanced equipment investment for local firms that are important links in global supply chains, such as semiconductor companies.
The ministry plans to raise tax benefits for companies’ R&D efforts to a 25 percent rebate on costs, compared with 15 percent currently, it said in a statement.
The ministry also plans to eliminate a tax deduction limit of NT$1 billion (US$33.63 million) on newly acquired advanced equipment, it said, adding that the 5 percent limit on overall new equipment spending is to remain unchanged.
Photo: Ritchie B. Tongo, EPA-EFE
The ministry said it expects the legislature to pass the measures, which would be added to the Statute for Industrial Innovation (產業創新條例), by the end of the year.
The move comes as the world’s major economies — including the EU, Japan, South Korea and the US — plan tax incentives and substantial subsidies to bolster key components and semiconductor supply chains at home, as supply chain resilience becomes a national security issue for some nations, the ministry said.
The US seeks to push through the Creating Helpful Incentives for Producing Semiconductors for America Act to pump US$52 billion in subsidies for making semiconductors in the US, while the EU also plans to spend about 11 billion euros by 2030 to fund the development of semiconductor research, design and manufacturing capabilities, the ministry added.
Taiwan Semiconductor Manufacturing Co (台積電) has received a subsidy of ￥400 billion (US$3.01 billion) from the Japanese government to build a new fab in Kumamoto Prefecture, the ministry said, adding that the chipmaker is also expecting to receive US subsidies for its new fab in Arizona.
“With countries around the world striving to achieve independence on key component supply, their actions could undermine the existing partnerships [with Taiwan], or bring new competitors,” the ministry said.
Such development “could further diminish the nation’s role in global supply chains,” it added.
To keep up with the incentives being offered in other countries, the “government should add new tax incentives to help strategically important local industries enhance their competitiveness,” the ministry said.
Tax relief and subsidies are being offered at home to safeguard Taiwan’s global role in the semiconductor, electric vehicle and 5G industries, the ministry said.
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