Tax credit rate on R&D raised to 30%

On March 14 the Executive Yuan invited the Ministry of Finance and related ministries to a discussion, in which decision was made that the tax credit rate on investments on R&D and personnel training should be raised to 30% from 25% last year.  Further, the restrictions on companies applicable to such tax benefits are canceled from this year.  Therefore, it is estimated that the amount of business income tax credit will exceed NT$10b for the first time.  It is expected that the Executive Yuan will expedite the finalization, promulgation, and implementation of new policy, and the new policy will apply retrospectively as of January 1, 2002. 

According to the old rules on tax credit on R&D and personnel training, only companies expending more than NT$1.5m on R&D and more than NT$0.3m on personnel training were entitled to tax benefits.  Restrictions of the like no longer exist in the new policy to be promulgated by the Executive Yuan.  Additionally, provisions about punishments are added to the Statute for Upgrading Industries for untrue tax declaration of R&D and personnel training.  If a company's declaration is found to be seriously departing from the truth, such company will not be able to enjoy tax credit benefits for the following three years.

Source: Commercial Times 03/15/2002