These Regulations are formulated in accordance with Paragraph 4 of Article 39-1 of the Motion Picture Act (hereinafter referred to as the Act).

The terms used in these Regulations are defined as follows:
1.Credit against business income tax to be paid: This refers to credit against the tax payable calculated on the basis of the stipulated rate for the business income as appraised and determined by the tax bureau, and to the additional tax payable calculated on the basis of 10 percent of the undistributed earnings as appraised and determined for the previous year by the tax bureau.
2.Original share subscription: This refers to shares that promoters subscribe to in cash at the time of establishment, and those that shareholders acquire with cash as a result of capitalization increase for business expansion.
3.Underwriting of shares: This refers to the solicitation of shares at the time of establishment or expansion through capitalization increase, and the acquisition of shares during the period of public offering.
4.Establishment: This refers to the completion of registration for business establishment in accordance with the law during the period between January 9, 2004 and January 8, 2014.
5.Expansion: This refers to the completion of modified registration according to law, during the period between January 9, 2004 and January 8, 2014, upon capitalization increase.
6.Holding for at least three years the original share subscription or the registered shares underwritten: This refers to the period of three consecutive years or longer beginning from the date of payment for the shares by a business shareholder.
7.The then current year: This refers to the fourth year of continuous holding of shares subscribed or registered shares underwritten.

If a business has held for three years or longer the original share subscription of a motion picture production enterprise stipulated in these Regulations or its registered shares underwritten upon business expansion, it may credit 20 percent of the paid price of the shares against the business income tax payable each year, beginning from the then current year, and for a period of five years in accordance with Paragraph 1 of Article 39-1 of the Act.
The total amount of investment credit for each year, as mentioned in the preceding paragraph, shall not exceed 50 percent of the total business income tax payable for that year. But this provision does not apply to the amount creditable in the last year of the five-year period.

A business’s application for the incentives offered by these Regulations shall be filed by the motion picture production enterprise in which it has invested.
In the case of a newly established enterprise, the application shall be filed within six months from the day following its registration for establishment or within six months of the implementation of these revised Regulations. In the case of business expansion, capitalization increase shall be carried out by the enterprise and the application shall be filed within six months from the day following the completion of registration modification or within six months of the implementation of these revised Regulations. The application for a letter of approval of tax credit for a business investing in the production of domestically produced motion pictures (hereinafter referred to as the letter of approval) shall be filed with the Government Information Office (hereinafter referred to as the GIO) along with the following documents:
1.Corporate registration of the motion picture production enterprise and a photocopy of its license. In the case of capitalization increase for business expansion, corporate registrations issued before and after the capitalization increase and a photocopy each of the licenses of the motion picture production enterprise issued before and after the capitalization increase.
2.A domestically produced motion picture investment and production plan.
The form to be used for filing the domestically produced motion picture investment and production plan under Subparagraph 2 of the preceding paragraph shall be prescribed by the GIO.
For capitalization increases described in Paragraph 2 that are made in installments, the application shall be filed within the same period as stipulated in the same paragraph, starting from the day following the completion of modified corporate registration for the first installment of capitalization increase.
When the GIO issues the letter of approval under Paragraph 2, it shall notify the Taxation Agency of the Ministry of Finance and the applicant’s local tax bureau.

A sizable motion picture production enterprise as mentioned in Paragraph 1 of Article 39-1 of the Act refers to one that uses at least NT$30 million of its paid-in capital or paid-in capital increase for the production of domestically produced motion pictures.
A domestically produced motion picture as mentioned in the preceding paragraph shall meet the standards provided for in Paragraph 2 of Article 2 of the Act.
The payment for paid-in capital or paid-in capital increase mentioned in Paragraph 1 may be made or collected in installments during the approved period of the domestically produced motion picture investment and production plan. Payment of production expenditures for a domestically produced motion picture in the case of a newly established enterprise shall be made only after the articles of incorporation have been drawn up during a promoters’ meeting. In the case of capitalization increase, payment shall be made only after the passage of a resolution approving capitalization increase by a meeting of shareholders or the board of directors.
In the case of a capitalization increase made after a capitalization reduction, the amount of paid-in capital increase mentioned in Paragraph 1 shall equal the remainder of total capital increase after deducting the capital reduction unless the increase is intended entirely to make up for losses.

A motion picture production enterprise that has obtained a letter of approval shall complete, within three years from the day following approval, all domestically produced motion pictures listed in its approved domestically produced motion picture investment and production plan. It shall apply, within a year of the day following completion, with the GIO for certification of completion of a domestically produced motion picture with investment from a business (hereinafter referred to as the completion certificate). The application shall be supported by the following documents:
1.A photocopy of the letter of approval.
2.The corporate registration of the motion picture production enterprise and a photocopy of its license. In the case of capitalization increase for business expansion, corporate registrations issued before and after the capitalization increase and a photocopy each of the licenses of the motion picture production enterprise issued before and after the capitalization increase.
3.A photocopy of the record of shareholders’ or board of directors’ meeting(s) that approved, by resolution, the capitalization increase under the said motion picture investment and production plan. In the case of a newly established enterprise, a photocopy of the record of the promoters’ meeting(s) shall be attached.
4.Detailed expenditure accounts for the domestically produced motion picture investment and production plan, and accountants’ audit certification. For expenditures on labor, a photocopy of tax withholding and withholding exemption certificates shall be attached.
5.A photocopy of the screening license for the domestically produced motion picture.
6.A list of the producer, director, actors and supporting staff of the domestically produced motion picture, which shall be consistent with the credits list in the film.
7.Documents related to the solicitation of cash capital, including photocopies of related registration certification of businesses investing in the production of domestically produced motion pictures and documentation certifying the amounts invested.
8.Completion date and total production expenditure of the domestically produced motion picture.
9.Other documents specified by the GIO.
When the GIO issues or decides not to issue the completion certificate as per the preceding paragraph, it shall notify the Taxation Agency of the Ministry of Finance and the applicant’s local tax bureau.

If, after finishing a domestically produced motion picture investment and production plan but prior to obtaining a completion certificate, a newly established or expanded motion picture enterprise carries out a reduction of capitalization that results in its total capitalization being lower than that specified in the Paragraph 1, Article 5 definition of a sizable motion picture enterprise, its business shareholders shall not be eligible to apply for investment credits. Business shareholders in a motion picture production enterprise that have already enjoyed tax credits in connection with the investment and production plan shall refund them. An exception shall be made for cases in which funds are used solely to make up for losses. However, if after deducting capitalization reductions, a capitalization increase leaves a motion picture production enterprise still meeting the Paragraph 5, Article 1 definition of a sizable enterprise, business shareholders shall refund a portion of tax credit they enjoyed calculated according to the ratio of the capitalization reduction to the initial capitalization on establishment or capitalization increase for expansion.
If the GIO does not issue the completion certificate, the applicant’s local tax bureau shall seek refunds of credits made in connection with the investment and production plan.
When repaying tax credits to the local tax bureau in accordance with the preceding two paragraphs, interest on said credits shall be tallied on a daily basis in line with the one-year fixed savings deposit rate posted by Chunghwa Post Co. Ltd. beginning the day following the last day of the income-tax filing period and ending on the day payment is made.

After obtaining the letter of approval, if a motion picture production enterprise needs to change the content or extend the deadline by which to complete its domestically produced motion picture investment and production plan, it shall apply with the GIO for the change or extension before the said plan’s date of completion arrives. The period granted for the completion of a motion picture investment and production plan, however, shall not exceed four years; and an application shall be filed for a completion certificate in accordance with Article 6 within a year from the day following completion of the said plan.
No completion certificate shall be issued if the domestically produced motion picture is not completed within the period set forth in the preceding paragraph and if it has not acquired the domestically produced motion picture screening license.
When approving the change of content or extension of deadline of the motion picture investment and production plan under Paragraph 1, the GIO shall notify the Taxation Agency of the Ministry of Finance and the applicant’s local tax bureau.

Applications for a letter of approval and a completion certificate shall be reviewed by a review panel composed of representatives of the GIO and related experts appointed by the GIO. The review panel shall comprise five to nine members.
The letter of approval and the completion certificate mentioned in the preceding paragraph shall be approved of and issued with the concurrence of at least two-thirds of the members present at a review meeting attended by at least two-thirds of the members of the review panel. If no concurrence is reached, the applicant will be notified to make up the inadequacy and file a new application.
Members of the review panel shall abide by the principle of recusal in the case of conflict of interest.
No compensation shall be provided to panelists.

After acquiring the letter of approval, a motion picture production enterprise shall, within five years after a full three-year period from the day of payment for shares by a business, apply with the local tax bureau for permission to issue investment tax credit certificates to its business shareholders. The application shall be supported by the following documents:
1.Corporate registration issued at the time of its establishment or both before and after its capitalization increase for business expansion.
2.Letter of approval.
3.A photocopy of the record of shareholders’ or board of directors’ meeting(s) that approved, by resolution, the capitalization increase. In the case of a newly established enterprise, a photocopy of the record of the promoters’ meeting(s) shall be attached.
4.Business shareholders’ certificate of payment for shares.
5.For those business shareholders who have held shares for longer than three years, a detailed list of applicable tax credits that includes the shareholder’s account number, name, business identification number, total number of shares held, total dollar amount invested in shares, date of payment, stock code, number of shares held over three years, amount deductible and amount of tax deductible.
After receiving permission to issue the investment tax credit certificates referred to in the preceding paragraph, the motion picture production enterprise shall issue the said certificates to its shareholders as described in Paragraph 1 of Article 3.
When filing business income tax returns in the year in which a tax credit is being applied for, shareholders referred to in the preceding paragraph shall submit the certificate mentioned in the preceding paragraph to their local tax bureau(s).
The form of the investment tax credit certificate shall be prescribed by the Ministry of Finance.

A motion picture production enterprise that has obtained a letter of approval shall limit the use of the capital raised in accordance with its approved domestically produced motion picture investment and production plan to related expenditures incurred within the timeframe given for completion of the said plan.
If the raised capital described in the preceding paragraph is not entirely used for expenses incurred under the investment and production plan, the amount of the shareholder’s investment tax credit shall be calculated according to the ratio of expenditures on the production plan to the amount of total capital raised.

The GIO and the professional motion picture supervisors it designates may inspect, at any time, the progress of the motion picture production enterprise’s execution of its approved domestically produced motion picture investment and production plan.
The motion picture production enterprise shall not evade, obstruct or refuse inspections stipulated in the preceding paragraph.

These Regulations shall come into effect on the day of their promulgation.

Note: In case of any discrepancy between the Chinese original and this English translation, the Chinese text shall prevail.