Investment Tax Offsets Offered Biotech and New Pharmaceutical Companies

        Taiwan ’s economic transition, along with its economic and overall national competitiveness, will get a boost from the promulgation of the Biotech and New Pharmaceutical Development Act on July 4. The Act offers a 35% tax offset from the profit-seeking-enterprise income tax for investment in R&D and personnel training by biotech companies, and a 20% offset for investment in shares in such companies so long as the shares are held for at least three years. These tax incentives will be available to the end of 2021.

        The new Act provides a number of tax incentives to stimulate the upgrading of the biotech and new pharmaceutical industries, including the deduction of up to 35% of spending on R&D and personnel training from the profit-seeking-enterprise income tax. This deduction can be spread over five years, beginning with the first year in which a profit is made. The other main tax deduction, of up to 20% of the cost of acquiring shares in a biotech or new pharmaceutical company, begins in the fourth year following acquisition of the shares and can be spread over five years, starting from the first year in which the profit is made.

        Incentives are also offered, in view of the knowledge-intensive nature of biotech and new pharmaceutical industries, to encourage high-level professionals and technology investors to participate in company operations and R&D. Those who procure shares by providing technology can enjoy delayed payment of taxes until the year in which the shares are transferred, given as a gift, or distributed as inheritance, and the tax will be calculated on the actual price of the shares at the time minus the cost of acquisition. To help the relevant industries attract outstanding personnel and acquire technology, the Act also allows biotech and new pharmaceutical companies to issue stock warrants and sell them at under par value to their high-level professionals and technology investors, with taxes being levied according to actual value at the time of transfer.

        The new Act also relaxes restrictions on concurrent jobs for researchers in government agencies, including the Academia Sinica, so that, with the permission of the original employing agency, a researcher may act as founder, director, or technical consultant to a biotech or new pharmaceutical company without being subject to the restrictions imposed by the Public Functionary Service Act. Researchers employed by academic and research organizations also may, with the permission of the original employer, serve as consultant to biotech or new pharmaceutical companies. To view the content of the Biotech and New Pharmaceutical Development Act, please consult this website: http://jirs.judicial.gov.tw/index/htm.

Maximum Service Term of Foreign Workers in Taiwan Extended to Nine Years

        Under the newly promulgated revision of the Employment Services Act, from July 13 the maximum term of employment in Taiwan for foreign workers is extended to nine years. Employers can apply for the new extension when they apply for a change in recruitment permit. Employers are permitted to apply for an extension, or for re-hiring, of foreigners who are working in Taiwan or who have returned to their home countries after working in Taiwan . Blue-collar foreign workers who have been employed in Taiwan for six years are still required to leave Taiwan for at least one day when their period of employment on the island has been extended to nine years.

        The Council of Labor Affairs points out that the extension of the maximum term of employment in Taiwan provided by the revision of Article 52 of the Employment Services Act allows employers to make better use of foreign labor and to save money on personnel training, and that it will have a positive effect on the stability of labor-ownership relations, the reducing of labor-ownership disputes, and the disappearance of foreign workers.

        For more related information, please go to this website: http://www.cla.gov.tw/cgi-bin/Message/MM_msg_control?mode=viewnews&ts=4694a3e8:68e8&theme=&layout=.

        To view the contents of the revision, please consult http://www.lawbank.com.tw/fnews/news.php?keyword=&sdate=&edate=&type_id=19&total=21410&nid=50556.00&seq=32

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