No Tax Rebate for Research & Development (R& D) Funds of Foreign Enterprises with No Operation Base in Taiwan.

The Ministry of Finance and the Ministry of Economics Affairs have jointly concluded not to allow tax rebate premiums for R&D funds of enterprises with headquarters out of Taiwan or enterprises with no fixed place of operating business in Taiwan.  This policy will not permit a tax rebate for R & D funds, or for personnel training expenses that are applied by R&D centers of Taiwan based-foreign enterprises and companies, which did not establish legally in accordance with the Corporate Law of Taiwan.  The amendment of Guidelines for Investment Rebates, which is applicable for companies’ R&D and personnel training contains:

I.           　Expressly exclude those funds for research and development raised outside of Taiwan to be declared for the tax credit, including enterprises that have no fixed place of businesses in Taiwan, foreign enterprises whose head quarters are not in Taiwan, or enterprises that did not organize or establish in accordance with the Corporate Law.  All the above do not apply in the scope of Statute for Upgrading Industry with regard to the tax rebates.
　The term “fixed place of businesses” refers to administrative offices, branches or sub-branch offices, business offices, and others in Item 1, Article 10 of the Income Tax Act.

II.         　Expressly legislate that the range for the deductible tax focuses on the new technology meaning the R& D projects shall be engaged in exploiting new products, new technology, break through to the current products or production techniques. (2004.7)

CYJ/SH