The Statute for Industrial Innovation, enacted in 2010, has undergone multiple amendments in response to shifts in the global economy and industrial development trends, and has effectively improved Taiwan's industrial innovation, industrial environment and overall competitiveness. With the statute's tax incentives for investments in smart machinery, fifth-generation (5G) mobile communication systems and information security scheduled to expire at the end of 2024, as well as to align with the latest global trends in innovative artificial intelligence (AI) applications, energy conservation and carbon reduction, the Executive Yuan approved another round of amendments on December 19, 2024. These amendments aim to guide industries to invest in equipment that contributes to achieving AI and low-carbon transformation goals.
Key Amendments
■ Extend tax incentives for equipment investment, expand scope of eligible investments and increase expenditure cap: Extend tax incentives for investments in smart machinery, 5G and information security to December 31, 2029. Expand scope of items eligible for tax incentives to include AI products and services, as well as energy-saving and carbon-reduction initiatives. Increase the expenditure cap to qualify for tax incentives to NT$1.8 billion (US$55 million). These changes serve to accelerate digital and low-carbon transformations across industries.
■ Optimize tax incentives for investments in startups: For venture capital limited partnerships investing in startups, lower the minimum paid-in capital threshold to qualify for tax incentives to NT$150 million (US$4.6 million), and increase the required investment amount or ratio starting from the third year after establishment. Ease the qualifying conditions for angel investor tax incentives to boost startup fundraising, such as extending the eligible age for startups to under 5 years and requiring a minimum NT$500,000 (US$15,300) investment with a holding period of 3 years in a startup.
■ Safeguard key technologies: Strengthen the regulatory mechanism for outbound investments. In addition to prior approval for investments exceeding specific amounts, approval will also be required for investments in specific countries, regions, industries or technologies to prevent the outflow of critical technologies.