• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 5/16/2014

Taiwan - Changes to R&D expense guidance rules 

May 16: The Ministry of Finance and Ministry of Economic Affair on 6 May 2014 issued a third amendment to the research and development (R&D) guidance rules.

The R&D guidance rules are known, in English, as “guideline to utilization of investment tax credit for R&D expense,” and the third amendment includes provisions that address the following:

  • “Creative activities” of companies in the “cultural and creative” industry sectors may now qualify as R&D activities.
  • Companies that do not have a dedicated R&D department may nevertheless be treated as having an R&D department if relevant expenses for personnel involved in R&D can be clearly segregated from non-R&D activities.

The amended guidelines also clearly provide that if a company has repeated environmental or labor or food safety violations, it cannot apply for the investment tax credit.

KPMG observation

The third amendment did not include a provision allowing taxpayers an option to elect to reduce the credit percentage from 15% to 10% and extend the use period to three years. Thus, companies still cannot carry forward the investment tax credit for use in future years.

Read a May 2014 report [PDF 98 KB] prepared by the KPMG member firm in Taiwan: Key amendments to “Guideline to Utilization of Investment Tax Credit for R&D Expense”

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