On 17 November 2022, the Executive Yuan approved a draft amendment providing tax credit on R&D and equipment investment. The proposed amendments will now be submitted to the Legislative Yuan for deliberation and are hoped to be implemented at the start of 2023.
Key provisions of the draft amendments:
I. Added provisions regarding tax credits for investments in cutting-edge, innovative R&D and advanced manufacturing process equipment.
- Eligibility requirements: During the current year, a company’s R&D expenditures and R&D intensity reach a certain scale, and its effective tax rate reaches a certain ratio (12% in 2023, and in principle, 15% beginning in 2024. However, the Executive Yuan may approve the adjustment of the 2024 ratio to 12%, and subsequently to 15% from 2025 to 2029).
- Applicable entities: Domestic companies engaged in technological innovation that also play a key role in international supply chains, regardless of industry type or category.
- Incentives: Tax credits for investments in cutting-edge, innovative R&D (with a tax credit rate of 25% of investment costs, applicable in the current year); investment tax credits for equipment purchased for use in advanced manufacturing processes (the investment amount must reach a specified level, and the tax credit rate is 5% of the purchase cost, applicable in the current year).
II. Implementation period: 1 January 2023 to 31 December 2029.
