The Taipei National Taxation Bureau has issued guidance on investment tax credits under Article 10-1 of the Industrial Innovation Act for smart machinery, 5G, cybersecurity AI, and energy-saving technologies.
Taiwan’s Taipei National Taxation Bureau of the Ministry of Finance has issued guidance on claiming tax credits for investments in smart machinery, 5G systems, cybersecurity, and artificial intelligence solutions, as well as energy-saving and carbon-reduction technologies.
The Taipei National Taxation Bureau of the Ministry of Finance has stated that companies or limited partnerships that invest in new smart machinery for their own use, the introduction of fifth-generation (5G) mobile communication systems, information security products or services, artificial intelligence (AI) products or services, or new hardware, software, technologies, or technical services related to energy conservation and carbon reduction, in order to improve operational or production efficiency, provide smart services, enhance information security, or improve energy efficiency, may apply for investment tax credits if they submit a profitable investment plan to the relevant central competent authority and the plan is approved on a special basis.
The Bureau explained that companies or limited partnerships whose total investment expenditures in the same tax year amount to TWD 1 million or more but less than TWD 2 billion may choose to:
- Deduct up to 5% of the expenditure amount from their corporate income tax payable in the year of delivery, or
- Deduct up to 3% of the expenditure amount from their corporate income tax payable in each of the following three years after the year of delivery.
The tax deduction shall not exceed 30% of the corporate income tax payable in the current year, and the method of deduction must be selected when filing the corporate income tax settlement declaration for the year of delivery. This choice cannot be changed after the expiration of the settlement declaration period for that year.
If other investment deductions are applied concurrently in the same tax year, the total amount of deductions shall not exceed 50% of the corporate income tax payable in the current year. However, if the current year is the last year for deduction under other laws and the deduction amount is unrestricted, the 50% limit does not apply.
The Bureau further emphasised that companies or limited partnerships wishing to apply for the investment tax credit must log in to the application system established by the Ministry of Economic Affairs (website: https://www.idbtax.org.tw/) starting four months before the beginning of the corporate income tax settlement and declaration period for the current year of delivery, and no later than the declaration period deadline.
Applicants must complete the form according to the prescribed format and upload supporting documents related to the investment plan and expenditure items. Late applications or paper applications will not be accepted. Only one application is allowed per tax year.
For example, if the fiscal year 2025 follows the calendar year and a company wishes to apply for the investment tax credit, it should log in to the Ministry of Economic Affairs system between January and May 2026 to submit its application.
Once the system confirms the completion of the application, applicants cannot reapply or modify submitted documents. When filing the corporate income tax settlement and declaration for the year of delivery, applicants should complete the form according to the prescribed format and attach the relevant documents for verification by the local tax authority to determine the eligible investment tax credit.
The Bureau urges companies or limited partnerships wishing to apply the provisions of Article 10-1 of the Industrial Innovation Act to strictly observe the above timelines and operational procedures to ensure their eligibility for the investment tax incentives.
