Finalization on Technical Investment Receiving Postponed Levy of Income Tax for Five Years Traced back to January 1 last year and Started Implementation.

E050108Y5 Feb. 2005（E63）

The Legislative Yuan passed the final read on amendment regarding technical investment in Article 19ter and quarter of the Statue of Upgrading Industries on January 7. The implementation date may be traced back to January 1 last year. In order to reduce the shock that the new policy regarding the postponed income tax for technical investment may bring to the burgeoning industries to the lowest, after negotiation with every economy department and the Legislative Yuan, it is decided that the benefit of postponing levy for five years as long as shareholders acquire 20% interest in the invested company, and the number of shareholders does not exceed five.

Article 19ter stipulates that postponed levy of income tax on technical investment is limited in conditions. First, the investor must invest in a burgeoning industry and must acquire more than 20% shares of the company. Also, the number of shareholders in the said trading of stocks with technology must not exceed five. Then the said shareholders may not need to pay income taxes when receiving the stocks but choose to postpone paying until the fifth year of share acquisition.

In addition, to solve the problem that the research and development process in biotechnology may require more than five years, Article 19 quarter is also amended to provide stock option to the owner of technology for burgeoning industries as biotechnology industry as a feedback for trading with technology. It is also stipulated that only when using stock option will income tax be levied.

Amendments on Technical Investment in the Statue of Statue of Upgrading Industries
Amendment	Content
Postponed levy of income tax on technical investment	Over 20% of technical investment and the shareholders are no more than five people may receive a postponed levy of income tax for five years
May issue stock option to obtain the skills	Acquired price shall not be less than its worth in accordance with regulations on employees’ acquisition of stock option
Applicable industries	Burgeoning industries approved by the Ministry of Economic Affairs