To strengthen the international competitive advantage of industries and reinforce domestic industries’ foothold on the global supply chain, a company that engages in technological innovation in Taiwan, occupies a key position in the international supply chain, and meets the following conditions may enjoy a tax credit of 25% of the amount that it spends on the forward-looking innovative R&D against its profit-seeking enterprise income tax payable in the then-current year, up to 30% of the amount of the profit-seeking enterprise income tax payable in the then-current year:
1.The amount of the company’s R&D expenses and the percentage of such expenses to its net operating revenues for the same taxable year reach certain thresholds.
2.The effective tax rate applicable to the company in the then-current year is not lower than a certain percentage.
3.The company has not committed any severe violation of any environmental protection, labor, or food safety and sanitation laws in the past three years.
Where a company meets the requirements specified in the preceding Paragraph and the amount that it spends on the purchase of new machinery or equipment for its own use in advanced manufacturing processes reaches a certain threshold, the company may enjoy a tax credit of 5% of such amount against its profit-seeking enterprise income tax payable in the then-current year, up to 30% of the amount of the profit-seeking enterprise income tax payable in the then-current year.
Where a company has applied and been approved for the investment credit under Paragraph 1, none of its R&D expenditures in the then-current year can enjoy the income tax credits or reductions provided for the purpose of encouraging the R&D under Article 10 or Paragraph 1, Article 12-1 of this Statute and other laws; where a company has applied and been approved for the investment credit under the preceding Paragraph, none of its expenditures for the purchase of machinery and equipment in the then-current year can enjoy the income tax credits or reductions for investment in machinery or equipment under the preceding Article and other laws.
Where a company has applied and been approved for both the investment credits under Paragraphs 1 and 2 or is concurrently applicable for such investment credits and any other investment credits under this Statute or other laws in the same year, the total amount creditable in the then-current year shall not exceed 50% of its profit-seeking enterprise income tax payable in the then-current year, unless, under other laws, the then-current year is the final creditable year and there is no limitation on the creditable amount.
The effective tax rate referred to in Subparagraph 2, Paragraph 2 shall mean the percentage of the amount of the tax payable by a company in the then-current year as calculated pursuant to Paragraph 1, Article 71 of the Income Tax Act, after deducting the tax reductions for the income tax paid on overseas income in the country of origin under the tax laws of that country, the tax reductions for the income tax already paid in the People’s Republic of China (PRC) or any third area on PRC-sourced income, and the investment credits under this Statute and other laws, to its annual income; such percentage shall be 12% for 2023 and 15% from 2024 onwards; however, the percentage for 2024 may be adjusted to 12% based on the review by the central competent authority in conjunction with the Ministry of Finance of how the international community enforces the Organization for Economic Cooperation and Development’s Global Minimum Corporate Tax; such adjustment shall be subject to the approval of the Executive Yuan before being promulgated by the central competent authority in conjunction with the Ministry of Finance.
The scope of applicability, eligibility requirements, thresholds, application deadline, application procedure, authority granting approval, calculation of the total creditable amount in the then-current year, and other related matters for the investment credits under the preceding five Paragraphs shall be determined by the central competent authority in conjunction with the Ministry of Finance.