This Act is enacted for the furtherance of sound development of small and medium enterprises by helping them improve their operation environments, promoting mutual cooperation, and assisting them in striving for growth with their own efforts. With regard to matters not provided for in this Act, the provisions of other relevant acts and regulations shall apply.

The term " small and medium enterprises" used in this Act shall refer to the enterprises which have legally completed company registration or commercial registration under the Act and conform to the standards for identifying small and medium enterprises.
The standards referred to in the preceding paragraph shall be drawn up by the central competent authority according to the category, capital stock, amount of operating revenue and the number of regular employees and shall be submitted periodically to the Executive Yuan for approval.
Other government authorities, which administer small and medium enterprise assistance and guidance may, in accordance with their respective operational requirements, formulate separate criteria with loose requirements for objects of assistance and guidance.

The term "competent authority" used in this Act shall be the Ministry of Economic Affairs at the central government level, the provincial (municipal) government at the province (municipality ) level, and the county (city) government at the county (city) level.
Where any of the matters set forth in this Act involves the functional duties of an authority in charge of a particular enterprise, the competent authority referred to in this Act shall handle such matters in coordination with the said authority in charge of such enterprise.
For enforcement of this Act, government at various levels shall set up or designate a government agency to provide assistance and guidance.

For achieving the objectives of this Act, the competent authority concerned shall take appropriate assisting or encouraging measures in respect of the following:
1.Market research and development,
2.Furtherance of rationalization of business operations,
3.Promotion of mutual cooperation,
4.Acquisition and securing of production factors and technology,
5.Education and training of competent personnel, and
6.Other matters relating to the establishment or sound development of small and medium enterprises.
In formulating the policy, acts and regulations, and measures in the preceding paragraph, the competent authority concerned shall aim the contents at the furtherance of improvement and development of the business operations of small-scaled enterprises without unfair treatment in respect of financial and taxation systems and other related matters.
The central competent authority shall publish a white paper, at the end of each fiscal year, on small and medium enterprises given the enforcement status, the review results and the prospective development of the provisions of the preceding two paragraphs.

For furthering small and medium enterprises to conduct market research and development activities, the assistance and guidance provided by the competent authority to small and medium enterprises shall be emphasized on the provision of information services, the creation of exclusive brands for their own products, arrangement of marketing channels and/or development of potential market.

For furthering small and medium enterprises to rationalize their business operations, the assistance and guidance provided by the competent authority shall be emphasized on the following:
1.Research and development and development of new products,
2.Modernization and renovation of production facilities and improvement of production technology,
3.Improvement of the methods of operational management,
4.Expansion of market and acquisition of necessary information,
5.Conversion and adjustment of the field of business, and
6.Acquisition of resources and technical know-how for business operation.

For encouraging mutual cooperation between small and medium enterprises, the assistance and guidance to be provided by the competent authority shall be emphasized on the following:
1.Verticle amalgamation of businesses of the trade and establishment and promotion of the satellite-factory system,
2.Horizontal amalgamation of businesses of the trade and establishment and promotion of joint production and marketing system,
3.Mutual fund or cooperative enterprise,
4.Technical cooperation and development of common technology,
5.Procurement of common equipment, and
6.Establishmant of strategic marketing points.

For assisting small and medium enterprises to acquire and secure production resources and technology, the assistance and guidance to be provided by the competent authority shall be emphasized on the following:
1.Formation and accumulation of capital,
2.Capital accommodation,
3.Acquisition of land, plant building, equipment, business site and business information,
4.Personnel training and upgrading of labor productivity,
5.Securing the sources of agricultural and industrial raw materials and technical know-how,
6.Assisting small and medium enterprises to obtain fund from capital market, and
7.Upgrading of the level of services and technical skill.

The central competent authority shall set up small and medium enterprise development fund, with the use thereof to be confined to the following:
1.To finance the operating expenses required for carrying out assistance plans,
2.To take part in investment and development projects or provide financing assistance and guaranty jointly with financial institutions under the condition that such financial institutions or credit guarantee institutions can not provide financing or guaranty under normal terms and conditions,
3.To make investment in small and medium enterprise development companies, or to take part in investment in small and medium enterprise with small and medium enterprises development companies, financial institutions and identified investment institutions.
4.To provide financial support to the juridical persons institutions that are incorporated to conduct the activities specified in Article 4 , and
5.Other purposes relating to the furtherance of sound development of small and medium enterprises and as specified in this Act .
For the income-expenditures, safeguarding and utilization of the small and medium enterprise development fund, a small and medium enterprise development fund management committee shall be formed, with its organization structure and the regulations for income and expenditure, safeguarding and utilization of the fund to be stipulated by the Executive Yuan.

The small and medium enterprise development fund shall be derived from the following sources:
1.Appropriation from the annual budget programmed by the central government,
2.Appropriation from other special-case funds,
3.Donation from individuals or public and private business organizations or groups,
4.Interests accrued on the fund, and
5.Other associated income.
The donation referred to in item 3 the preceding paragraph may, when certified by the competent authority, be deductible from the total income of the current year, free from any restriction on the amount, in accordance with the Income Tax Act.

The provincial (municipal) and the county (city) competent authority (henceforth referred to as “local competent authority) may, taking into account of the specific development requirements of small and medium enterprises, under its jurisdiction, draw up assistance plan and formulate budget, and shall be responsible for the execution.
To carry out the assistance plan referred to in the preceding paragraph, the local competent authority may apply to the small and medium enterprise development fund for subsidy or assist the small and medium enterprises to obtain capital accommodation under special projects.

The competent authority may, taking into account of actual requirements, cooperate with or consign to public and/or private research and service institutions, financial institutions, credit guarantee institutions, trade promotion institutions, industrial and/ or commercial organizations or other agencies for execution of the assistance activities under this Act ; and shall set up separate assistance systems in connection with respectively the operations including financial accommodation, operational management, production technology, research and development information management, industrial safety, pollution control, marketing, mutual cooperation, and quality reinforcement, etc.
The regulations governing establishment up and supervision of the assistance systems shall be drawn up by the central competent authority and submitted to the Executive Yuan for approval.

In enacting or adjusting acts related to small and medium enterprises, governments at various levels shall review the operation scales or characteristics of small and medium enterprises to facilitate observance by small and medium enterprises.
The central competent authority shall periodically review the acts related to small and medium enterprises on term, and judge the adapt ability of small and medium enterprises, and the influence to small and medium enterprises, and take a review report to the Legislative Yuan yearly.