To promote the circulation and application of the results of innovation or R&D, where a domestic 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 percent of his/her/its R&D expenditures 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 or limited partnership, the company or limited partnership may choose between the tax credit against its R&D expenditures under this Paragraph and the investment tax credit under Article 10.
Where a domestic 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 taxable income in the year such shares are acquired. Once a choice of 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 taxable income 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 gift 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.
The transfer under the preceding two paragraphs refers to purchase, sale, gift, distribution as estate, cancellation of shares as a result of capital reduction, corporate liquidation, or change in ownership due to other causes.
Where an individual's income is calculated in accordance with Paragraph 1, 2 or 3 hereof but is not declared or proved by any documents, the sum of his/her costs and necessary expenses shall be calculated at 30 percent of his/her revenue, the transfer price, the market price of the shares at the time of the gift or distribution as estate, or the market price of the shares on the date of book-entry transfer, and be deducted from the individual's taxable income.
The incentives under Paragraph 2 are available only if the company issuing shares submits the required documents and information in the prescribed format to the central authority in charge of relevant enterprises for certification in the year it accepts contributions in exchange for its shares. A copy of the results of the certification shall also be delivered to the taxation authority at the place where the company is located.
Where a domestic individual intends to apply for the tax benefit under Paragraph 3, the company issuing those shares shall submit documents prepared in the prescribed format to explain the services regarding application of the intellectual property rights provided by the individual to the company to the central authority in charge of the relevant enterprises for recognition when it applies for the certification under the preceding paragraph. In the year when the individual has held the shares and provided services regarding application of the intellectual property rights to the company for two years, the company shall submit documents proving the individual’s shareholding and services mentioned above to the central authority in charge of the relevant enterprises for recordation. A copy of the proof shall be delivered to the taxation authority at the place where the company is located.
The regulations governing the scope of application of the R&D expenditures deductible from the taxable income under Paragraph 1, the application deadline, the application procedure, the approving authority, and other related matters shall be prescribed by the central competent authority in consultation with the Ministry of Finance.
The scope of the intellectual property rights in the R&D results under Paragraphs 1 and 2, and the formats, the application deadlines and procedure, and the formats of the required documents under Paragraphs 6 and 7 shall be prescribed by the central competent authority.
The regulations governing the procedure for deferred payment and assessment on shares acquired with the transferred or licensed intellectual property rights in R&D results under Paragraphs 2 and 3, the documents to be submitted, and other related matters shall be prescribed by the Ministry of Finance.