After securing legislative passage for an amendment to the Act for the Development of Biotech and Pharmaceutical Industry by the legislature in 2021, the Ministry of Finance (MOF) and the Ministry of Economic Affairs (MOEA) are now working to finalize eight sublaws, including those stipulating tax incentives. Both the MOF and MOEA confirmed that the amendment will maintain the same tax incentive terms. The terms stipulate that to enjoy a tax deduction equivalent to 25 percent of research and development costs, a company’s research and development expenditure must reach at least 5 percent of net sales or 10 percent of paid-in capital.

An MOEA official said that the MOEA’s new regulation for verification of biotechnology companies have been made more stringent, and eligible companies must pass the verification process to be able to take advantage of the tax incentives. The official said that the MOEA and the MOF have reached a consensus on the matter and are readying to publish a preview of related sublaws.

The official further said that in consideration of the fact that some companies are still operating within the timeframe of the tax incentives that were set prior to the amendment and have not made a profit, to prevent the inconsistencies between firms, the amount of tax reduction have not been changed.

As the scope of the Act for the Development of Biotech and Pharmaceutical Industry now include digital medicine, innovative startups and new technology platforms, to attract more applicants and maximize positive impacts on the industry, officials are hoping to adopt easier eligibility requirements. Officials added that following minor revisions, the bill is expected to be previewed in the following week and published in July.

[2022-6-13/Commercial Times]