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  • 2024-05-25

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IncomeTax
Eligibility Laws & Regulations of Tax Reduction and Exemption or Tax Incentives Related Explanation
1. Private institutions participating in major infrastructure projects
1. A private institution participating in a major infrastructure project may be exempted from profit-seeking enterprise income tax for a maximum period of 5 years from the year in which taxable income is derived after the commencement of the operation of such project.
1. It is stipulated in Article 36 of the Act for Promotion of Private Participation in Infrastructure Projects.
2. The term “participating in a major infrastructure project” means that a private institution participates in an infrastructure project which is classified under the Scope of the Major Infrastructure Projects of the Act for Promotion of Private Participation in Infrastructure Projects.
2. A private institution participating in a major infrastructure project may credit 5% to 20% of the certain expenditures incurred against the profit-seeking enterprise income tax payable in the then current year. In case the amount of the profit-seeking enterprise income tax payable in the then current year is less than the creditable amount, the balance thereof may be credited against the profit-seeking enterprise income tax payable in the 4 ensuing years. The amount of the tax credit against the profit-seeking enterprise income tax payable in each year shall not exceed 50% of the amount of the profit-seeking enterprise income tax payable in the then current year for the private institution except in the last year of the said 4-year period.
1. It is stipulated in Article 37 of the Act for Promotion of Private Participation in Infrastructure Projects.
2. The certain expenditures incurred refer to the funds invested in the equipment or technology used for construction or operation of the infrastructure project, disbursed for the procurement of equipment or technology for pollution control, or invested in research, development, and personnel training.
2. Profit-seeking enterprises which subscribe for or underwrite the registered stock issued by a private institution participating in a major infrastructure project upon its incorporation or expansion
Where a profit-seeking enterprise subscribes for or underwrites the registered stock issued by a private institution participating in a major infrastructure project upon its incorporation or expansion, and has held such registered stock for a period of 4 years or more, such profit-seeking enterprise, starting from the fifth year of the date on which such profit-seeking enterprise has held such registered stock, may credit up to 20% of the price paid for acquisition of such stock against the profit-seeking enterprise income tax payable in the then current year. In case the amount of the profit-seeking enterprise income tax payable is less than the creditable amount, the balance thereof may be credited against the profit-seeking enterprise income tax payable in the 4 following years.
The amount of the tax credit against the profit-seeking enterprise income tax payable in each year shall not exceed 50% of the amount of the profit-seeking enterprise income tax payable in the then current year for the profit-seeking enterprise except in the last year of the said 4-year period.
It is stipulated in Article 40 of the Act for Promotion of Private Participation in Infrastructure Projects.
3. Biotech and pharmaceutical companies approved by the Ministry of Economic Affairs
1. Tax Credit for R&D
A biotech and pharmaceutical company may claim a credit of 25% of the qualified R&D expenditures against the profit-seeking enterprise income tax payable for a period of five years from the year that it is subject to profit-seeking enterprise income tax. The amount of the tax credit against the profit-seeking enterprise income tax payable in each year shall be limited to not more than 50% of the amount of the profit-seeking enterprise income tax payable in each year for a biotech and pharmaceutical company, except in the last year of the aforesaid five-year period.
1. It is stipulated in Article 5 and Article 6 of the Act for the Development of Biotech and Pharmaceutical Industry.
2. The term “Biotech and Pharmaceutical Industry" refers to the industry that deals in New Drugs, New Dosage Forms, High-Risk Medical Devices, Regenerative Medicine, Precision Medicine, Digital Medicine, Innovative Technology Platforms Dedicated to Biotech and Pharmaceutical Industry and Other Strategic Biotech and Pharmaceutical Products used by human beings, animals and plants.
3.

The term "Biotech and Pharmaceutical Company" refers to a company in Biotech and Pharmaceutical Industry that is organized and incorporated in accordance with the Company Act and engages in any of the following business activities approved by the Competent Authority:

(i) the research, development and manufacture of New Drugs, New Dosage Forms, High-Risk Medical Devices, Regenerative Medicine, Precision Medicine, Digital Medicine, Innovative Technology Platforms Dedicated to Biotech and Pharmaceutical Industry and Other Strategic Biotech and Pharmaceutical Products; and
(ii) the contract development and manufacture of New Drugs, New Dosage Forms, High-Risk Medical Devices, Regenerative Medicine, Precision Medicine, Digital Medicine and Other Strategic Biotech and Pharmaceutical Products.
2. Tax Credit on Machinery
A biotech and pharmaceutical company investing in brand-new machinery, equipment, or system, of which the amount is between NT$10 million up to NT$1 billion in the same taxable year, can choose to claim the tax credit within the current year using a 5% tax credit rate or within three years using a 3% tax credit rate against the profit-seeking enterprise income tax payable from the year that it is subject to profit-seeking enterprise income tax. However, the amount of the tax credit against the profit-seeking enterprise income tax payable in each year shall be limited to not more than 30% of the amount of the profit-seeking enterprise income tax payable in each year for a biotech and pharmaceutical company.
4. Profit-seeking enterprises which are shareholders in a biotech and pharmaceutical company approved by the Ministry of Economic Affairs
Where a profit-seeking enterprise subscribes for or underwrites the stock issued by a biotech and new pharmaceuticals company and has been a registered shareholder of such biotech and  pharmaceutical company for a period of 3 years or more, the said profit-seeking enterprise may credit up to 20% of the price paid for acquisition of such stock against the profit-seeking enterprise income tax payable for a period of 5 years from the year in which the company begins to have the payable profit-seeking enterprise income tax; provided that the such biotech and new pharmaceuticals company has not applied for exemption from profit-seeking enterprise income tax or investment credit for shareholders based on the subscription or underwriting price under other applicable laws and regulations. The amount of the tax credit against the profit-seeking income tax payable in each year shall not exceed 50% of the amount of the profit-seeking enterprise income tax payable in the then current year.
However, in the case that the said profit-seeking enterprise is a venture capital company (“VC”), the tax credit shall be enjoyed by such VC’s profit-seeking enterprise shareholders. Such VC’s profit-seeking enterprise shareholders may claim a tax credit against their profit-seeking enterprise income tax payable based on the aforementioned amount originally creditable by the VC hereof and in proportion to their respective shareholdings in the VC, for a period of 5 years from the fourth year of the date on which the VC has become a registered shareholder of such biotech and new pharmaceuticals. The amount of the tax credit against the profit-seeking income tax payable in each year shall not exceed 50% of the amount of the profit-seeking enterprise income tax payable in the then current year.
It is stipulated in Article 7 of the Act for the Development of Biotech and Pharmaceutical Industry.
5. Individuals which are shareholders in a biotech in cash and pharmaceutical company approved by the Ministry of Economic Affairs
Where an individual invests at least NT$1 million in one year in a biotech and pharmaceutical company which qualifies under specified conditions and holds new shares issued by the company for three years, up to 50% of his/her investment can be deducted from the individual's consolidated income within two years, with the deductible amount not exceeding NT$5 million for each person per year. It is stipulated in Article 8 of the Act for the Development of Biotech and Pharmaceutical Industry.
6. Top executives and technology investors participating in the operation of biotech and  pharmaceutical companies approved by the Ministry of Economic Affairs
Where top executives acquire stock-based compensation, or technology investors acquire stock as return for assigning or licensing their knowledge and technology, top executives or technology investors may opt to defer assessment of the income tax payable until the year of transfer after the year he/she/it acquires the shares.
Where the top executive or individual technology investor opts to defer the assessment of the income tax payable as aforementioned, has held the stocks and stayed employed or provided relevant services to the company which issued the stock for a period of two years or more, he/she may opt to include in his/her income for the year of transfer at the entire transfer price in the year of transfer or the market price in the year of acquisition, whichever is lower, and then declare the assessment of income tax in accordance with the Income Tax Act.
Where biotech and pharmaceutical companies issue subscription warrants to its top executives and technology investors, subscription of the shares by exercising the subscription warrant shall be subject to income tax in accordance with the provisions of the preceding two paragraphs.
It is stipulated in Article 9 and Article 10 of the Act for the Development of Biotech and Pharmaceutical Industry.
7. Companies limited by shares investing in the construction of new towns
Companies limited by shares may credit up to 20% of the total investment amount of construction of new towns against the profit-seeking enterprise income tax payable in the then current year. In the case the amount of profit-seeking enterprise income tax payable is less than the creditable amount, the balance thereof may be credited against the profit-seeking enterprise income tax payable in the 4 following years.
1. It is stipulated in Subparagraph 1, Paragraph 1, Article 14 of the New Town Development Act.
2. The term “the then current year” refers to the year of the completion of the allocation and registration of the cadastre for the land within the area in which a company limited by shares invests.
8. Companies limited by shares investing in a designated area in new towns and engaging in an industry which is recognized to be beneficial to the development of such towns
Where a company limited by shares operates in a designated tax-reduction area in new towns and engages in an industry which is recognized to be beneficial to the development of such town, such company, after the commencement of the operation, may credit up to 20% of the total investment amount against the profit-seeking enterprise income tax payable in the then current year. In case the amount of the profit-seeking enterprise income tax payable in the then current year is less than the creditable amount, the balance thereof may be credited against the profit-seeking enterprise income tax payable in the 4 following years.
1. It is stipulated in Subparagraph 1, Paragraph 1, Article 24 of the New Town Development Act.
2. The term “the commencement of operation” refers to the day when sale of products or provision of services begins after the investment plan is completed.
9. Urban renewal business institutions investing in the urban renewal business
If the implementer is an urban renewal business institution organized as a limited company, up to 20% of the total funds invested in an urban renewal business implemented in the renewal area demarcated or changed by the competent authority may be reduced from its business income tax of the year in which the urban renewal business is completed. If the business income tax to be paid in the year is less than the amount to be reduced, the reduction may be conducted in the four following years.
Where an urban renewal business is implemented by the competent authority or an approved agency (institution) in accordance with Article 12 after public solicitation of capital and assistance from limited companies for implementation of the urban renewal business is conducted, and the responsibilities and division of labor and contents of assistance are also specified in the urban renewal business plan, the business income tax reduction regulation stated in the preceding paragraph may apply mutatis mutandis to such companies.
The off-set reduction total of the investment off-set reduction mentioned in the preceding two paragraph allowable each year is limited to no more than 50% of the business profit tax of such a company for that fiscal year. However, the last fiscal year's set-off reduction total is not restricted by this regulation.
The applicable coverage of the investment set-off reduction mentioned in the paragraph 1 and 2 should be instituted by the Ministry of Finance after conferring with the Ministry of Interior.
1. It is stipulated in Article 70 of the Urban Renewal Act.
2. The term “the total investment amount” refers to the planning and design fees which were incurred during the stage of the planning and design for the implementation of the urban renewal business according to the urban renewal business project approved by the competent authority; provided that such fees have not been applied for investment credit under other applicable laws and regulations.
10. Corporate tourism enterprises
Corporate tourism enterprises may credit 10% to 20% of the amount of the expenses under the related categories for international tourism and international promotion campaigns against the profit-seeking enterprise income tax payable in the then current year. In case the amount of the profit-seeking enterprise income tax payable in the then current year is less than the creditable amount, the balance thereof may be credited against the profit-seeking enterprise income tax payable in the 4 following years.
The amount of the tax credit against the profit-seeking enterprise income tax payable in each year shall not exceed 50% of the amount of the profit-seeking enterprise income tax payable in the then current year for such profit-seeking enterprise, with the exception that this limitation shall not apply to the creditable amount in the last year of the said four-year period.
1. It is stipulated in Article 50 of the Act for the Development of Tourism.
2.
The term "expenses under the related categories for international tourism and international promotion campaigns” refers to the following items:
(1) Expenses for cooperating with the government to launch international promotion campaigns.
(2) Expenses for cooperating with the government to attend international tourism organizations and travel fairs.
(3) Expenses for cooperating with the government to promote business and conference tourism.
11. Profit-seeking enterprises making donations related to cultural and creative industries
In the case of a profit-seeking enterprise that purchases products or services which are originally created by the cultural and creative industry and donates those products or services by way of schools, institutions, or organizations to students or disadvantaged minorities, or donates products or services for cultural and creative activities held in remote districts, or funds incubation centers established by a cultural and creative enterprise, or other qualified affairs that are approved by the central competent authority, and where the aforesaid total donation amount is less than NT$10 million or under 10% of the profit-seeking enterprise’s annual taxable income, such amount may be allowed to be listed as current expenses or losses, and is not restricted by Item 2, Article 36 of the Income Tax Act. It is stipulated in Article 26 of the Development of Cultural and Creative Industries Act.
12. Companies or limited partnerships which invest in a cultural and creative industry
A company or limited partnership (i.e., investor) has made a cash investment in a cultural and creative company, limited partnership or project, which should meet a certain scope of business within a nationally strategic cultural and creative industry and be approved by central competent authority, and has met other certain conditions. The said investor may credit up to 20% of the total investment amount against the profit-seeking enterprise income tax payable for a period of five years from the year that it is subject to profit-seeking enterprise income tax. The amount of the tax credit against the profit-seeking income tax payable in each year shall not exceed 50% of the amount of the profit-seeking enterprise income tax payable in the then current year.
However, in the case that the said investor is a venture capital company (“VC”), the tax credit shall be enjoyed by its profit-seeking enterprise shareholders or partners (i.e., VC investors). Such VC investors may claim a tax credit against their profit-seeking enterprise income tax payable based on the aforementioned amount originally creditable by the VC hereof and in proportion to their respective shareholdings in the VC, for a period of five years from the third year of the date when the VC has become a registered shareholder of such cultural and creative company or partner of such limited partnership or invested in such project within a nationally strategic cultural and creative industry. The amount of the tax credit against the profit-seeking income tax payable in each year shall not exceed 50% of the amount of the profit-seeking enterprise income tax payable in the then current year.
It is stipulated in Article 27-1 of the Development of the Cultural and Creative Industries Act.
13. Individuals who invest in a cultural and creative industry
Where an individual invests at least NT$500,000 in cash in one year in the following enterprises or projects approved by the central competent authority for a period of two years or more, up to 50% of his/her investment amount can be deducted from the gross amount of consolidated income for the year in which the last day of second anniversary of such investments, with the deductible amount not exceeding NT$3 million for each individual per year:
1. A domestic high-risk innovation company or limited partnership in the nationally strategic cultural and creative industries incorporated for less than two years.
2. A project in the nationally strategic cultural and creative industries co-invested by the National Development Fund under the Executive Yuan.
It is stipulated in Article 27-2 of the Development of the Cultural and Creative Industries Act.
14. Profit-seeking enterprises making donations associated to sporting development
Donations by business enterprises that accord with the following conditions can be, pursuant to Item 1 of Article 36 of the Income Tax Act, listed as expenditure with no cap on the amount:
1. Sports associations registered with the government.
2. Nurturing and supporting sports teams or athletes.
3. Promoting sporting activities of enterprise employees.
4. Donating to government agencies and all levels of educational institutions to establish sports stadiums or facilities or equipment.
5. Purchasing tickets to domestic sporting events and donating to students or disadvantaged groups through schools or non-profit organizations.
It is stipulated in Article 26 of the Sports Industry Development Regulation.
15. Individuals making donations to athletes
If an individual makes a donation for an athlete approved by the central competent authority through the dedicated bank account, when that individual files their income tax return, they may list that donation as a tax deductible item in accordance with the following provisions:
1. A donation made without specifying a designated athlete is regarded as a donation to the government, and the full amount of that donation is listed as a tax deductible item;
2. A donation made for a specific designated athlete is regarded as a donation towards education, culture, public welfare, or to a charity institution or organization, in accordance with the provisions of Article 11 Paragraph 4 of the Income Tax Act, and the amount will be listed as a tax deductible item, in accordance with the provisions of Article 17, Paragraph 1, Subparagraph 2, Item 2-1 of the same law.
If an individual has an amount that satisfies the Income Tax Act requirements for listing as a deduction referred to in the previous paragraph, that amount is not included when calculating the total gift amount of the Estate and Gift Tax Act.
It is stipulated in Act 26-1 of the Sports Industry Development Act.
16. Profit-seeking enterprises making donations associated to sporting development
If a profit-seeking enterprise makes a donation to a professional or amateur sports industry approved by the central competent authority, through the dedicated bank account, when that enterprise files its income tax return, it may list a donation amount of up to a maximum of NT$10 million, and 150% of that donated amount will be deducted from the profit-seeking enterprise’s net income for that year. If, however, the profit-seeking enterprise and a professional or amateur sports industry that receives a donation related parties, only 100% of any donated amount within the limit mentioned above may be deducted from the profit-seeking enterprise’s net income that year.
If a profit-seeking enterprise makes a donation through the dedicated bank account to a major professional or amateur sports industry that has been approved by the central competent authority on a case by case basis, or to the organizer of a major sports competition announced by the central competent agency, when that profit-seeking enterprise files its income tax return, it may list a donation amount, and 150% of the full donated amount may be deducted from the profit-seeking enterprise’s net income for that year and it is not subject to the NT$10 million limit or to the caveat referred to in the preceding paragraph.
It is stipulated in Act 26-2 of the Sports Industry Development Act.
17. Profit-seeking enterprise shareholders in the domestic motion picture production industry
Where a profit-seeking enterprise which invests in the establishment or expansion of a motion picture production on a certain scale subscribes for or underwrites the registered stock issued by such motional picture production industry and has held such registered stock for a period of 3 years or more, such profit-seeking enterprise, starting from the fourth year of the date on which such profit-seeking enterprise has held such registered stock, may credit up to 20% of the price paid for acquisition of such stock against the profit-seeking enterprise income tax payable in the then current year.
The amount of the tax credit against the profit-seeking enterprise income tax payable in each year shall  not exceed 50% of the amount of the profit-seeking enterprise income taxable payable in the then current year for profit-seeking enterprise except in the last year of the said four-year period.
It is stipulated in Article 7 of the Motion Picture Act.
18. Companies or limited partnerships engaging in industrial innovation R&D activities.
A company or limited partnership has the option of choosing one of two choices in the number of years and the related tax credit rates for the claiming of the tax credit. That is to say, if an enterprise’s R&D activities are qualified, it can choose to claim the tax credit within 3 years using a 10% tax credit rate or within the current year using a 15% tax credit rate; provided that the amount of the tax credit against the profit-seeking income tax payable shall not exceed 30% of the amount of the profit-seeking enterprise income tax payable in the then current year.
It is stipulated in Article 10 of the Act for Industrial Innovation.
19. Companies or limited partnerships investing in new smart machinery, 5G, and cyber security products or services

 

A company or limited partnership investing in new smart machinery and 5G during the period from January 1, 2019 to December 31, 2024, or investing in cyber security products or services during the period from January 1, 2022 to December 31, 2024, of which the amount of expenditure will reach between NT$1 million and 1 billion in the same tax year, can choose to claim the tax credit within three years using a 3% tax credit rate or within the current year using a 5% tax credit rate. However, the amount of the tax credit against the profit-seeking enterprise income tax payable in each year shall be limited to not more than 30% of the amount of the profit-seeking enterprise income tax payable in the same year. It is stipulated in Article 10-1 of the Act for Industrial Innovation.
20. Companies engaging in  forward-looking innovative R&D and investment in advanced manufacturing processes

 

Where a company engages in technological innovation within the territory of the ROC and occupies a key position on the international supply chain, the company may claim a tax credit rate of 25% of the amount that it invests in forward-looking innovative R&D and a tax credit rate of 5% of the amount used to purchase new machines or equipment in advanced manufacturing processes within the current year. However, the amount of the tax credit against the profit-seeking enterprise income tax payable shall be limited to not more than 30% of the amount of the profit-seeking enterprise income tax payable in the same year. It is stipulated in Article 10-2 of the Act for Industrial Innovation.
21. Individuals or companies or limited partnerships receiving revenue from assignment or licensing of intellectual property rights
Where an R.O.C. individual, company or limited partnership receives revenue from assignment or licensing of his/her/its intellectual property rights in his/her/its own R&D results, up to 200% of his/her/its R&D expenses in the then current year may be deducted from the amount of his/her/its taxable income up to the amount of the above revenue in that year, and in the case of a company, the company or limited partnership may select the tax credit against its R&D expenses under either this Paragraph or Article 10. It is stipulated in Paragraph 1, Article 12-1 of the Act for Industrial Innovation.
22. Individuals, companies or limited partnerships acquiring stocks from assignment or grant of license of intellectual property

Where an R.O.C. individual, company or limited partnership assigns, or grants a license to use, his/her/its intellectual property rights in his/her/its own R&D results to a company, the individual, company or limited partnership may opt to exclude the new shares acquired as the consideration from his/her/its income taxable in the year such shares are acquired. Once an option is made, it cannot be reversed. However, after the individual, company or limited partnership has opted to exclude such new shares from his/her/its income taxable in the year such shares are acquired, if the shares are transferred or are delivered by book-entry transfer to an account with a securities depository enterprise, the entire transfer price, the market price of the shares at the time of giving away or distribution as estate, or the market price of the shares on the date of book-entry transfer less the expenses or costs incurred for acquisition of the shares but not yet recognized, shall be included in the revenue for the year of transfer or book-entry transfer and be declared for assessment of income tax.

Where a domestic individual has opted to exclude the new shares acquired as the consideration from his/her taxable income in the year such shares are acquired in accordance with the preceding paragraph, and has held such shares and provided services regarding application of the intellectual property rights under the preceding paragraph to the company issuing those shares accumulatively for two years, if the shares are transferred or are delivered by book-entry transfer to an account with a securities depository enterprise, and the entire transfer price, the market price of the shares at the time of gift or distribution as estate, or the market price of the shares on the date of book-entry transfer is higher than the acquisition price of the shares, the acquisition price of the shares shall be included in the revenue for the year of transfer or book-entry transfer and be declared for assessment of income tax. Where a domestic individual has not declared the price of the shares for assessment of income tax or has declared the price for assessment of income tax but cannot provide documentary proof of the acquisition price of the shares, and the information is not available from the taxation authority, the above provisions shall not apply.

1. It is stipulated in Paragraphs 2 and 3, Article 12-1 of the Act for Industrial Innovation.
2. The transfer refers to purchase, sale, giving away, distribution as estate, cancellation of shares as a result of capital reduction, corporate liquidation, or change in ownership due to other causes.
23. The creators of academic institutions or research institutions.

Where a domestic academic or research institution assigns the intellectual property rights resulting from its R&D achievements and conferred on it to a company or licenses the company to use such rights in accordance with Paragraph 1, Article 6 of the Fundamental Science and Technology Act, and acquires shares in the company, and distributes such shares to the R.O.C. creators of such intellectual property rights in accordance with Paragraph 3, Article 6 of the Fundamental Science and Technology Act, such an R.O.C. creator may opt to exclude the new shares so acquired from his/her income taxable in the year such shares are acquired. Once such option is made, it cannot be reversed. However, after the creator has opted to exclude such new shares from his/her income taxable in the year such shares are acquired, if the shares are transferred or are delivered by book-entry transfer to an account with a securities depository enterprise, the entire transfer price, the market price of the shares at the time of giving away or distribution as estate, or the market price of the shares on the date of book-entry transfer shall be included in the creator’s salary for the year of transfer or book-entry transfer and be declared for assessment of income tax in accordance with the Income Tax Act.

Where a domestic creator has opted to exclude the acquired new shares from his/her taxable income in the year such shares are acquired in accordance with the preceding paragraph, and has held such shares and worked and carried out research and development at an industry or an academic or research institution within the territory of the R.O.C. accumulatively for two years, if the shares are transferred or are delivered by book-entry transfer to an account with a securities depository enterprise, and the entire transfer price, the market price of the shares at the time of gift or distribution as estate, or the market price of the shares on the date of book-entry transfer is higher than the market price of the shares at the time they are acquired by the creator, the market price of the shares at the time they are acquired by the creator shall be included in the creator’s revenue for the year of transfer or book-entry transfer, and be declared for assessment of income tax. Where an R.O.C. creator has not declared the price of the shares for assessment of income tax or has declared the price for assessment of income tax but cannot provide documentation proof of the market price of the shares at the time they are acquired by the creator, and the information is not available from the taxation authority, the above provisions shall not apply.

1. It is stipulated in Act 12-2 of the Statue of Industrial Innovation.
2. The transfer refers to purchase, sale, giving away, distribution as estate, cancellation of shares as a result of capital reduction, corporate liquidation, or change in ownership due to other causes.
24. Company employees acquiring stock-based employee compensation
Where a company employee acquires stock-based employee compensation, the employee may opt to exclude up to an annual total of NT$5 million worth of the acquired shares from his/her annual taxable income as calculated at the market price prevailing in the year such shares are acquired or the year of the day the acquired shares become disposable. Once an option is made, it cannot be reversed. However, employee who has opted to exclude the acquired shares from the annual taxable income in the year such shares are acquired, when the shares are transferred or book-entry transferred to an account of a securities depository enterprise, the entire transfer price, the market price of the shares at the time of giving away or distribution as estate, or the market price of the shares on the date of book-entry transfer is deemed the employee’s revenue for the year of transfer or book-entry transfer and must be declared for assessment of income tax in accordance with the Income Tax Act.
Where a company employee has opted to apply the regulations in the preceding paragraph, and has held the shares and continued to work at the company for two years or more from the day the shares are acquired, when the shares are transferred or book-entry transferred to an account of a securities depository enterprise, and the entire transfer price, the market price of the shares at the time of giving away or distribution as estate, or the market price of the shares on the date of book-entry transfer is higher than the market price on the day the shares are transferred or become disposable, the market price on the day the shares are transferred or become disposable shall be included in the revenue for the year of transfer or book-entry transfer, and be declared for assessment of income tax in accordance with the Income Tax Act. However, where a company employee has not declared for assessment of income tax, or has been declared for assessment of income tax but cannot provide documentation proof of the market price on the day the shares are transferred or become disposable, and the market price on the day the shares become disposable cannot be obtained by the taxation authority, the above provisions shall not apply.
1. It is stipulated in Article 19-1 of the Act for Industrial Innovation.
2. The transfer refers to purchase, sale, giving away, distribution as estate, cancellation of shares as a result of capital reduction, corporate liquidation, or change in ownership due to other causes.
25. Venture capital enterprises in the form of limited partnerships
Venture capital enterprises in the form of limited partnerships (hereafter “venture capital limited partnerships”) meeting the criteria are exempt from profit-seeking enterprise income tax during the applicable period, which is principally ten years, and, if required, the extension period shall not exceed five years. In the applicable period, the income of venture capital limited partnerships is divided into two categories: income from gains derived from the securities transactions regulated in Article 4-1 of the Income Tax Act (hereafter “gains derived from securities transactions”) and income other than income from the securities transactions. Partners are attributed income from venture capital limited partnerships according to the earning distribution proportion; this income is subject to the Income Tax Act. In other words, for the partners who are individuals or profit-seeking enterprises whose head office is not within the territory of the R.O.C., the attributed income sourced from gains derived from the securities transactions is exempt from income tax.  It is stipulated in Article 23-1 of the Act for Industrial Innovation.
 
26. Individual Angel Investors
Where an individual invests at least NT$1 million in cash in one year in domestic innovative startups which have been incorporated for less than two years and identified by the central authority in charge of relevant enterprises as high-risk innovative startups, and acquires and holds the new shares issued by the company for two years, up to 50% of the investment may be excluded from the individual’s consolidated income for the year in which the second anniversary of such shareholding falls. The aggregate amount excludable from an individual’s consolidated income each year in accordance with this paragraph shall not exceed NT$3 million. It is stipulated in Article 23-2 of the Act for Industrial Innovation.
 
27. Companies or limited partnerships use earnings for substantive investment

 

A company or limited partnership uses a certain amount of its undistributed earnings to construct or purchase buildings, software or hardware equipment, or technology for use in production or operation as needed for operation of its business or ancillary business within three years from the year after such earnings are derived, such investment amounts may be deducted from the undistributed earnings in calculation of the current year’s undistributed earnings for assessment of additional profit-seeking enterprise income tax leviable on undistributed earnings from the year 2018 under Article 66-9 of the Income Tax Act. It is stipulated in Article 23-3 of the Act for Industrial Innovation.
28. Small and medium enterprises engaging in industrial innovation R&D activities
A small-and-medium enterprise has the option of choosing one of two choices in the number of years and the related tax credit rates for the claiming of the tax credit. That is to say, if an enterprise’s R&D activities are qualified, it can choose to claim the tax credit within three years using a 10% tax credit rate or within the current year using a 15% tax credit rate; provided that the amount of the tax credit against the profit-seeking income tax payable shall not exceed 30% of the amount of the profit-seeking enterprise income tax payable in the then current year. It is stipulated in Article 35 of the Act for Development of Small and Medium Enterprises.
29. A small and medium enterprises or an individual acquiring stocks from transfer of intellectual property
New shares of stock issued to a small and medium enterprise or an individual in exchange of its/her/his intellectual property rights, by an enterprise that is not listed on the Taiwan Stock Exchange, OTC, or the Emerging Stock Board, shall be excluded from the current year taxable income of the said small and medium enterprise or individual. When the aforesaid shares of stock are transferred through an actual transaction, stock gift, or inheritance, the total stock value shall be included in the current year taxable income of the recipient(s), calculated based on the actual transaction price or the fair market value of the stock at the time of the transfer, minus the related expenses or cost, incurred but not realized yet, in obtaining the stock. It is stipulated in Article 35-1 of the Act for Development of Small and Medium Enterprise.
30. Small and medium enterprises recruiting additional domestic employees
1. During the period when the Composite Leading Indicators are above certain levels, a newly created small and medium enterprise or an existing small and medium enterprise that commits certain amount of capital expansion, hires certain numbers of additional people, and increases its aggregate gross salary payments, can deduct up to 130% of the annual gross salary payments to its additional domestic hires from its current year profit-seeking enterprise income.
It is stipulated in Paragraph 1,Article 36-2 of the Act for Development of Small and Medium Enterprises.
2. Of the additional domestic hires mentioned in the preceding Paragraph who are 24 years old or younger, the small and medium enterprise can deduct up to 150% of the annual gross salary payments to these young domestic hires from its current year profit-seeking enterprise income.
It is stipulated in Paragraph 2,  Article 36-2 of the Act for Development of Small and Medium Enterprises.
31. Small and medium  enterprises raising salary paid to its domestic junior employees
During the period when the Composite Leading Indicators are above certain levels, if a small and medium enterprise raises the average salary paid to its domestic junior employees, it can deduct up to 130% of the incremental annual gross salary payments, excluding statutory basic wage adjustment, to the junior employees from its current year profit-seeking enterprise income. However, the additional salary paid to the new hires shall not be deducted here as it has been used for tax benefit applied to the provisions in the preceding two Paragraphs. It is stipulated in Paragraph 3, Article 36-2 of the Act for Development of Small and Medium Enterprises.
32. Foreign profit-seeking enterprises
1. Profit-seeking enterprises, which engage only in preliminary or auxiliary business activities in R.O.C. by the enterprises themselves or delegate free-trade-zone (FTZ) enterprises to purchase, import, store, or deliver products in FTZs, and are reviewed and approved by the FTZ management authority shall be exempted from profit-seeking enterprise income tax on the income from selling such products.
It is stipulated in Paragraph 1, Article 29 of the Act for the Establishment and Management of Free Trade Zones and in Article 35 of the International Airport Park Development
2. When profit-seeking enterprises from foreign countries, mainland China, Hong Kong, or Macau without a fixed place of business in the ROC purvey commodities certified by a recognized international metal futures exchange and ratified by the authority (MOTC), or the commodities of the same tariff number as those described above, and when the commodities are stored in places of FTZ enterprises approved by the FTZ management authority, the income from sales to domestic and/or overseas customers shall be exempted from profit-seeking enterprise income tax without the need to apply for such tax exemption, and the enterprises are exempted from filing an income tax return for such income in accordance with the Income Tax Act.
It is stipulated in Paragraph 2, Article 29 of the Act for the Establishment and Management of Free Trade Zones
33. Foreign Special Professionals
Foreign special professionals who meet certain conditions to have half of their annual salaries over NT$3 million exempted from individual income tax, and shall not be subject to inclusion of the overseas income in basic income in accordance with the Income Basic Tax Act during their first five years of coming to work in R.O.C. It is stipulated in Article 20 of the Act for the Recruitment and Employment of Foreign Professional Talent.
34. Agencies, businesses, schools, legal entities and organizations paying salaries to its employees during the period when a reservist is in a recall
An organization, business entity, school, juristic person, or institution may deduct 150% of the salaries expense paid to its employees for official business leave in according with Article 7 of the Act Governing Preferential Treatment for Recalled Reservists from its annual income tax return for the current year. It is stipulated in Article 8 of the Act Governing Preferential Treatment for Recalled Reservists.
Issued:Income Tax Division Release date:2024-01-26 Last updated:2024-01-26