UPDATE ON STRATEGIC IN-DUSTRY INCENTIVES

11/01/2000

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The Council for Economic Planning and De-velopment (CEPD) has given its initial approval to plans put forward by the Industrial Develop-ment Bureau (IDB) to add a further 140 products to the list of those eligible for tax incentives for emerging strategic industries under the Statute for Upgrading Industries. It also intends to abolish the minimum capital requirement for firms applying for such incentives, thus making small and medium-sized enterprises eligible re-gardless of their scale of production, as long as their products fall within the approved catego-ries.

The CEPD also states that in future the criteria to qualify as an emerging strategic industry will be as follows:

Conducive to economic development, high added value, market potential, and synergistic effects on other industries;

High risk, long payback period, a high degree of technological uncertainty; and

Requiring government assistance to become established, having a high import substitution value, being the subject of major policy measures, not yet in production or being pro-duced only by a small number of manufac-turers.

In principle, a product must meet the above three criteria to qualify for the tax incentives. But other products not meeting the above conditions may be eligible if they are the subject of incen-tives in neighboring countries.

Following its initial approval, the CEPD will request the IDB to draft amendments to the relevant statutory provisions and undertake fur-ther discussion. Once a consensus has been reached, the plans will be presented to the Ex-ecutive Yuan for approval before being officially announced and implemented.