Where an investor provides a parcel of land in an industrial zone as his capital investment in a small or medium enterprise, and the said medium or small enterprise agrees to allow the investor to furnish the stock(s) of the said small or medium enterprise acquired by the said investor as the security for his payment of taxes, then the land value increment tax payable by the said investor may be paid in five equal installments in five consecutive years from the year in which the said parcel of land is committed to the investment.
The land to be invested under the preceding paragraph shall be used only by the said small or medium enterprise for its own. If the land is not used by the said small or medium enterprise for its own or is transferred to any other person, the outstanding land value increment tax shall be paid, in a lump sum, by the investor.

Where a small or medium enterprise has moved, on account of any of the following causes, its factory or plant into an industrial zone, an industrial zone under an urban plan, or an industrial land designated in accordance with the act for Encouragement of Investment prior to the enforcement of this Act, the land value increment Tax payable on the sale or transfer of its original factory or plant site (land) shall be levied at the lowest tax rate:
1.Where the original factory land does not meet with the zoning requirements upon implementation of the urban planning or zoning plan;
2.Where the relocation of factory or plant is applied by the said small or medium enterprise and is approved by the competent authority due to the difficulties in making necessary improvement to meet with the requirements for pollution control, public safety or maintenance of natural landscape; and
3.Where the relocation of factory or plant implemented under the initiative assistance of the government.
Where the new factory land of a small or medium enterprise is transferred to anther party (or other partied) within three years after the factory relocation made under the preceding paragraph, the reduced portion of land value increment tax reduced while assessing such tax on the original factory land sold or transferred prior to the factory relocation shall be assessed supplementarily in accordance with the act.

To promote innovation and research and development of small and medium enterprises, a small and medium enterprise, by investing in research and development, may select to get the amount of tax credit up to 30% of the current year profit-seeking enterprise income tax payable by such company or limited partnership between the following two methods. No change of the method is allowed once the choice is made.
1.Tax credit up to 15% of the research and development expenses, applied to the current year profit-seeking enterprise income tax payable.
2.Tax credit up to 10% of the research and development expenses, applied to the annual profit-seeking enterprise income tax payable for three years, starting from the current year.
For any instrument and equipment used for research and development, experiment or quality inspection purposes, if its service life is more than two years, the depreciation thereof may be accelerated by one half (1/2) of the number of years applicable as listed in the table of service life of fixed assets annexed to the Income Tax Act. Balance of service life in a length of less than one year after the depreciation acceleration shall not be taken into account.
The standards referred to the tax credit from investment in paragraph 1 of this Article, regarding scope, application deadline, application procedure, approving authority, applicable period, tax credit rate and other related matters shall be prescribed by the central competent authority in consultation with the Ministry of Finance.

To promote circulation and application of innovation and R&D results, new shares of stock issued to a small and medium enterprise in exchange of its intellectual property rights, by an enterprise that is not listed in the Taiwan Stock Exchange, OTC, or the Emerging Stock Board, shall be excluded from the current year profit-seeking enterprise taxable income of the said small and medium enterprise.
New shares of stock issued to an individual in exchange of her (his) intellectual property rights, by an enterprise that is not listed in the Taiwan Stock Exchange, OTC, or the Emerging Stock Board, shall be excluded from the current year taxable consolidated income of the said individual.
When shares of stock mentioned in preceding Paragraph 1 and 2 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 recognized yet, in obtaining the stock.
The above mentioned enterprise that issues new shares of stock to obtain intellectual property rights should report to the local tax authority within 30 days from the day after the date of the stock transfer. The said enterprise is subject to a 20% fine based on the actual transfer amount and required to resubmit the report with voucher(s) in required format if it fails to meet the reporting deadline, to report the fact, or to report with voucher(s) in required format.
In case the said small and medium enterprise or the individual who receive the shares of stock through intellectual property transfer is unable to provide the cost basis of the transfer for income calculation, a default 30% of the transaction price shall be applied to the cost basis of obtaining the stock.

A small and medium-sized enterprise may retain and withhold from distributing a surplus earning in an amount not exceeding double the amount of its paid-in capital. In case the retained and undistributed earnings exceed the aforesaid limit, any additional surplus earning retained in each year thereafter shall be free from the restriction stipulated in the Income Tax Act after as profit seeking enterprise income tax at the rate of 10% has been surcharged.
The retain and withhold from distributing a surplus earning after 1998 until then, shall obey the Income Tax Acts, and not apply to the preceding paragraph.

Small and medium enterprises development companies may raise the preparation to investment loss, under 20% of the investment amount, so as to compensate for actual loss. If there is no actual loss situation within 5 years, they shall turn the raising preparation to be the benefit of the 5th year.
When corporations calculate the clearing accounts income due to cancellation, rescission, revocation, mergence, or transference with Article 75, of the Income Tax Act, the accumulate remaining amount from the investment loss preparation within the preceding paragraph, shall turn to be the benefit of the same year.

If a small and medium enterprise additionally hires certain number of domestic junior employees under the age of 24 or over the age of 65 and increases its aggregate gross salary payments, the small and medium enterprise can deduct up to 200% of the annual gross salary payments to such additional employees from its current year profit-seeking enterprise income.
If a small and medium enterprise raises the average salary paid to the domestic junior employees, the small and medium enterprise can deduct up to 175% of the incremental annual gross salary payments, excluding statutory minimum 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 paragraph.
As referred to in the preceding two paragraphs, matters regarding type and number of additional employees hired, aggregate gross salary payments, the range of junior employees, calculation of the average salary paid, approving authority, the prerequisites for application, application deadline, application procedure, and measures of other related matters, shall be prescribed by the central competent authority in consultation with the Ministry of Finance.

A small and medium enterprise that has enjoyed tax benefit under other laws may not enjoy tax benefit under this Act for the same matter again; if same matter conforms to both requirements for different tax benefits under this Act, the small and medium enterprise shall select the application of one of tax benefits and may not enjoy both tax benefit repeatedly.
If a small and medium enterprise that has seriously violated the laws relating to environmental protection, labor, or food safety and health in the most recent three years and has been determined by the respective central competent authorities for specific business may not apply for tax benefit under this Act.