The MOEA made an advanced announcement about the sub-laws of the “Act for the Development of Biotech and Pharmaceutical Industry” to expand the tax incentives, including a tax deduction for biocompanies’ investment in machinery and equipment. The draft covers the definition of the application scope, the application methods and penalties for false claims. The stakeholders could comment on the draft within 30 days.
The “Act for the Development of Biotech and Pharmaceutical Industry” was revised and announced at the end of last year. Its implementation is now extended to the end of 2031 with an expanded application scope. Biotech companies whose annual investment in brand new machinery, equipment or systems are between NT$10 million and 1 billion could apply for a maximum of 30% income tax relief.
There are two ways to claim the tax relief. The eligible companies could choose either to deduct 5% of the expenditure from the income tax in the same year, or to deduct 3% of the expenditure in 3 years.
The MOEA recently announced related sub-laws. Firstly, it clearly defines the machinery and equipment which have to be the machinery, equipment or systems purchased for the manufacturing of new drugs, high-risk medical devices or precision medicine, etc. The “system” is defined as the software required for improving the output of the machinery and equipment.
Secondly, biotech companies eligible for the tax relief should upload relevant information and supporting documents in accordance with relevant regulations and complete the online application. The application can be made from the 4th months before the start of the annual investment tax declaration period. The supporting documents include: uniform invoices, delivery certificates, import certificates, etc. In situation of financial leasing, a lease contract can be submitted, too.
Thirdly, the authority clearly spells out the penalty for false claims. Those who were found guilty of fraud will be handled according to the Income Tax Act and the Tax Collection Act. The draft also stipulates that tax relief cannot be applied repeatedly for the same investment expenditure.
The revised “Act for the Development of Biotech and Pharmaceutical Industry” also includes a tax incentive for angel investors. Individual investors who have invested more than NT$ 1 million in the same year in one unlisted biotechnology and pharmaceutical company and have obtained its new shares for 3 years are eligible for the deduction of 50% of the investment amount from the personal income tax in 2 years with a cap of NT$5 million .
【2022-06-01/ Economic Daily】
