Newsletter
STATUTE FOR UPGRADING INDUSTRIES AMENDED
The amended Statute for Upgrading Industries received its final reading in the Legislative Yuan on 28 December 1999, and came into effect on 1 January 2000. The main points are as follows:
Tax credits are to remain available for ten years, until 31 December 2009.
Companies' expenditure on investments in automation, or in equipment or technology for resource recycling, pollution control, reduction of carbon dioxide emissions or enhancement of energy efficiency may be offset against corporate income tax for the year in which it is incurred, at rates from 5% to 20%. Amounts not offset against the year in question may be offset over the four subsequent years.
The tax credit rate for investments in R&D and personnel training is raised to 25%.
The statute seeks to encourage investment in new important strategic industries of major importance for economic development, of high risk and requiring assistance to become established. As an incentive, corporate shareholders in qualifying companies may offset 20% of their investment against corporate income tax, and individual shareholders 10% against personal income tax. The tax credit rate for individual shareholders will be reduced by 1% every two years. Alternatively, at the choice of the company, it may enjoy five years' exemption from corporate income tax.
Deferred payment of income tax on share dividends is abolished.
When companies merge, tax incentives enjoyed by the dissolved company under the statute remain available to the surviving company.
Land used for industrial zones' exclusive harbors and wharves is to be state owned. However, the land for an exclusive wharf needed for the operation of a factory and built within an industrial zone's exclusive harbor on land contiguous with the factory site, may be obtained by way of a lease.
New provisions are made regarding the establishment and application of industrial zone development and management funds. When land or buildings within an industrial zone developed by a government agency is sold, the purchaser must pay a percentage of the purchase price into the relevant fund, to be used for industrial zone development and facilities. If an enterprise within an industrial zone expands its operations, it must pay 10% of the official value of the additional land area into the fund of the local municipal, county or city government.
Furthermore, if any donation of greenbelt area is not completed before 31 December 1999, the enterprise may either choose to donate greenbelt area in accordance with Article 32-1, Paragraph 3 before amendment (by way of a gift to the state, in the form of greenbelt area around the plant, equivalent to 30% of the total area for which a change of use is applied for) or follow the new provisions.