萬國法律事務所

A bill aimed at encouraging industrial innovation was passed by the Legislative Yuan on April 16, 2010, and lawmakers hope the act will provide incentives to enterprises to engage in industrial innovation and job creation by granting tax benefits as well as subsidies from the government.

Under the act, enterprises can report up to a 15 percent deduction of capital investment in research and development projects in their corporate income tax return filed for the fiscal year in which such investment is made. The offset figure is capped at 30 percent of the corporate income tax must be paid for that fiscal year.

The act also authorizes municipal and county governments to develop plans for establishing industrial innovation parks and the government authorities in the process of establishing such parks may take the land by eminent domain or alter the use of the land from its original purpose when necessary. To prevent possible land speculation, the act stipulates that at least 60 percent of the land shall be allocated for establishing the industrial innovation parks, 20 percent reserved for public facilities and only 10 percent may be allowed for constructing residential buildings.

In addition, to encourage small- and medium-sized enterprises to create employment opportunities, the act provides that government agencies may provide subsidies to these enterprises for recruiting employees. The details regarding the condition for application as well as the amount of any subsidies will later be established by the relevant authorities after consultation with the Council of Labor Affairs.

As for the controversial cut-down on the corporate income tax rate, the lawmakers have scheduled a vote to amend the current Income Tax Act, which will possibly lower the corporate income tax rate from the current 20 percent to 17 percent for all profit-seeking enterprises.