DIRECTIONS CONCERNING ABOLISHMENT OF STATUTE FOR UPGRADING INDUSTRIES

09/01/2009

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Provisions under Chapter II and Article 70-1 of the Statute for Upgrading Industries (SUI) regarding incentives and benefits will remain effective only until December 31, 2009. Legislators are deliberating a draft of the Statute for Innovation Industries (SII) to replace the SUI. The SII retains only part of the incentives and benefits stipulated under the SUI, including tax credit for funds invested in research and development and personnel training, tax exemption for income received by operational headquarters from its foreign associated enterprises, and exemption from profit-seeking enterprise income tax for logistics distribution centers in Taiwan. Other incentives and benefits under the SUI will not be applicable after January 1, 2010.
The Ministry of Finance and the Ministry of Economic Affairs (MOEA) jointly issued the "Directions Concerning Abolishment of the Statute for Upgrading Industries" to remind companies to apply for eligible incentives and benefits before December 31, 2009 and indicate that they could continue to enjoy the incentives and benefits under the SUI for a certain period, for which the key items are as follows:
	l	For a company requiring an upgrade of the equipment or technology used for automation of production or energy saving, if the company procures the equipment or technology before December 31, 2009 and the equipment or technology can be delivered within two years of the date of procurement, the company may credit 5% to 20% of the amount of funds invested in the equipment or technology against the amount of profit-seeking enterprise income tax payable for five consecutive years.
	l	For a company planning to invest in a county or township with scanty natural resources or that is underdeveloped, if the company applies to the competent authorities for permission before December 31, 2009 and completes the investment plan afterward, the company may credit up to 20% of the total amount of its investment against the amount of profit-seeking enterprise income tax payable for five consecutive years.
	l	A company that applies before December 31, 2009 to the Industrial Development Bureau of the MOEA (IDB) for approval for investing in a newly emerging, important or strategic industry and completes the investment plan afterward, the company may be exempt from profit-seeking enterprise income tax for five consecutive years.
	l	For a company within the manufacturing industries and the technical service industries that is newly incorporated or has undergone an expansion by capital increase, if the company applies to the IDB for permission before December 31, 2009 and completes the investment plan afterward, it may be exempt from profit-seeking enterprise income tax for five consecutive years.