Taiwan's Brand New Industrial Innovation Act Passed into Law


May 4, 2010

The controversial Industrial Innovation Act was proposed many months ago to replace the earlier expired Statute for Upgrading Industries, and was eventually passed the third reading at the legislature on Friday, April 16. The most noticeable features of the new law is for the government to provide a tax credit for corporate spending on research and development (R&D) up to a maximum of 15% of such spending provided that the amount of deduction will not exceed 30% of the tax payable of the year. Any unapplied tax credit may be carried forward for 5 years. In addition, the new law also aims to bring the current corporate income tax rate from 20% down to 17%, aiming to boost the overall competitiveness of the business and investment environment. Pursuant to the new law, the government will establish a national development fund to invest in green energy, agricultural technology, etc. and incubate businesses with distinct Taiwanese cultural features.