Newsletter
INVESTMENT TAX CREDIT CLARIFIED FOR VENTURE CAPITAL INVESTMENT ENTERPRISES
Article 8 of the Statute for Upgrading Industries provides that in order for stockholders of venture capital investment enterprises to receive investment tax credit, the enterprises must actually invest in a technology-based enterprise. On 28 April 1999, the Ministry of Finance (MOF) announced that the meaning of "actually invest in a technology-based enterprise" is limited to subscriptions of initial issues or cash offer subscriptions of technology-based enterprises. The meaning does not include shares of technology-based enterprises purchased on the open market by venture capital investment enterprises, or shares distributed by technology-based enterprises due to capitalization of earnings or reserves. In other words, venture capital investment enterprises must use cash for subscriptions to shares of technology-based enterprises designated by the MOF in order for their shareholders to enjoy the 20% investment tax credit.