The legislature’s passage last week of amendments to the Act for Industrial Innovation (產業創新條例) would help retain crucial technologies at home and promote the adoption of artificial intelligence (AI) and carbon-reduction technologies, the Ministry of Economic Affairs (MOEA) said on Friday.
Under the amendment to the act’s Article 22, companies investing in certain countries, industries or technologies are required to obtain government approval if their investments are above a designated threshold, have a potentially negative impact on national security or economic development, obstruct the government’s ability to abide by international protocols, or contravene labor laws.
Article 22 had previously only required companies making overseas investments of more than NT$1.5 billion (US$45.99 million) to obtain prior approval from the authorities, the ministry said.
Photo: George Tsorng, Taipei Times
Under the new Article 67-3, companies failing to gain prior government approval for investing in designated countries face fines ranging from NT$50,000 to NT$1 million, with repeated contraventions subject to higher fines of between NT$500,000 and NT$10 million, the ministry said.
Previously, the regulation only applied to companies’ investment amount, with investments above the NT$1.5 billion threshold requiring prior approval and those below subject to post-review. The revised rule stipulates that investments in some designated regions and industries also need to gain prior regulatory permission, Department of Investment Reviews Deputy Director-General Su Chi-yen (蘇琪彥) said.
Under the amended Article 10-1, investments in AI and energy-saving projects are eligible for tax deductions, alongside existing categories such as smart machinery, 5G systems and cybersecurity applications, the Industrial Development Administration (IDA) said.
The maximum tax deduction rate for such investments is 5 percent, as the law aims to encourage companies to adopt digital tools such as AI and cloud computing to enhance operational agility and reduce carbon emissions, it added.
In addition, the cap on eligible investments is to be raised from NT$1 billion to NT$2 billion, which means that companies previously only eligible for a maximum tax deduction of NT$50 million could now apply for a deduction of up to NT$100 million, with the incentive remaining effective until the end of 2029, IDA Deputy Director-General Chen Pei-li (陳佩利) said.
To support domestic start-ups, newly amended Article 23-1 lowers the minimum paid-in capital requirement for limited partnership venture capital firms to NT$150 million from NT$300 million, while major shareholders are required to increase their investments in the start-ups from the third year onward to ensure access to funding during the early establishment stage, Chen said.
“We made this decision following the concept of pass-through tax, which is levied only on shareholders rather than on companies, to help ease financial pressure on start-ups,” she added.
Investing in companies designated as national strategic industries are to benefit from a maximum personal income tax deduction of NT$5 million, up from NT$3 million previously, as part of the ministry’s plan to support start-ups, Chen said.
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