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June 27, 2017

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Industrial innovation bill passed

TAIPEI, Taiwan -- The Legislative Yuan ratified yesterday the Statute for Industrial Innovation (SII) with an aim to encourage business investment despite boycott from lawmakers of the opposition Democratic Progressive Party (DPP).

The legislators started the final reading of the bill in the morning and completed the ratification procedure at close to 10:00 p.m. mainly because of filibusters by DPP lawmakers.

Legislative Speaker Wang Jin-pyng announced the passage of the bill, which was endorsed by lawmakers of the ruling Kuomintang that controls a massive majority of the legislative seats, after their DPP colleagues walked out of the conference hall as boycott against certain regulations in the new law in late evening,

But the DPP agreed to open new consultations with KMT lawmakers next week on the proposed revision of the income tax regulations with the possibility of cutting the business income tax rate to 17 percent for all profit-seeking enterprises. The DPP had proposed to shave the tax rate to 17.5 percent.

The SII was originally scheduled for enactment in January to fill the void left by the expiration of the Statute for Industrial Upgrading at the end of 2009, but its passage was repeatedly delayed as several of its provisions met strong criticism from the DPP.

Under the new rules, enterprises can offset up to 15 percent of capital investment in research and development projects from their corporate income tax payment.

But the offset figure should not exceed 30 percent of the business income tax paid in a certain year.

Municipal and county governments can now draft development strategies for local industries while the governing agencies at the central government will be able to assist the development parks.

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Such development parks entitled to government investment incentives will not be confined only to manufacturing industries as in previous incentive regulations, but will also cover those in the fields of culture, innovation and creation, medical treatment, environmental protection, and technologies as well.

To prevent possible land speculation by larger business groups, the SII stipulates that investors of such development parks or zones are required to allocate at least 60 percent of the land area for its establishment purpose rather than for other intentions like constructing residential or commercial buildings.

There should also be at least 20 percent of the area reserved for public facilities while space for residential areas is limited to no more than 10 percent.

Tao encourage the small- and medium-sized enterprises to strengthen innovation, upgrade manpower capability, and create employment opportunities, the responsible central government agency can provide subsidies to the SMEs.

The qualifications and quotas of the new employees will be set by the designated agency.

According to the SII, the Executive Yuan (Cabinet) is required to set up a "national development fund" to help accelerate the economic transition via measures like engaging in investment or providing financial support for investors.

Premier Wu Den-yih personally offered his thanks to lawmakers for the ratification of the important bill that will encourage the continuing business investments in Taiwan.

Wu acknowledged the final version of some of the rules in the new statute are better than the draft initially drawn up by his Cabinet.

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