On 11 November 2021, the National Taxation Bureau of Northern Area (NTBNA), Ministry of Finance (MOF) of Taiwan has issued a press release where it was stated that corporations filing Research & Development (R&D) expenditures as tax credits shall comply with the relevant regulations.
In particular, the R&D expenditures shall be approved for advanced innovation by central competent authorities (e.g.: Bureau of Industry, Ministry of Economic Affairs) and in accordance with the relevant regulations. Nevertheless, not all expenditures resulting from research & development departments can be declared as tax credits.
The Bureau stated further that “expenditures of consumptive equipment, materials, supplies, and samples exclusive for the research & development departments” the corporations declare as tax credits must be connected to the research projects, records or reports by complete purchasing order and requisitions, and be exclusive for the research & development departments. The fees not relative to the above-mentioned expenditures, such as routine inspective expenditures, market testing expenditures, advertising fees, travel expenses, insurance premiums, and meal expenses are not allowed to be declared as R&D expenditures.
The Bureau would like to remind profit-seeking enterprises to be aware of the above-mentioned regulations when filing R&D expenditures as tax credits and file correctly in accordance with the relevant regulations to avoid paying additional tax bills on account of the error on the tax returns.
