Export Processing Zones

Investment Incentives for Export Processing Zones

Tax Incentives

• Import tax, commodity tax, and business tax are exempted on machinery, raw materials, fuels, materials, semi-finished products, and musters that are imported by zone businesses, and finished products transshipped by trade/warehouse operators.
• Zero Business Tax is imposed on zone businesses for exported goods, exported labor, and machinery, raw materials, materials, fuels, and semi-finished products which are sold to businesses within EPZs, businesses within science-based industrial parks, and bonded factories and warehouses.
• In accordance with the Statute for Upgrading Industries, zone businesses which are recognized as newly emerging and strategic industries are eligible for preferential tax measures such as a five-year exemption from the profit-seeking enterprise income tax and deductions on shareholder investments. Those zone businesses which are recognized as operations headquarters are eligible for exemption from the profit-seeking enterprise income tax.
• In accordance with the Tax Exemption Incentives for New Investments in the Manufacturing and Technical Service Industries, new investment projects initiated between 2002 and 2003 may apply for a five-year exemption on the profit-seeking enterprise tax.
• Investments in automation equipment, pollution control equipment/technology, R&D, and personnel training are eligible for a deduction on the profit-seeking enterprise tax for the current year.
• Foreign businesses with branch companies in the ROC which operate international logistics and distribution centers or which commission ROC businesses to provide international logistics and distribution services may apply for exemption from profit-seeking enterprise tax.
• Profit-seeking enterprise tax is imposed on transshipment operators at 10% of their revenue from transshipment business, in accordance with Article 14 of the Statute for the Establishment and Management of Export Processing Zones.
• EPZ Plants engaged in production are taxed at 1.5%, half of the commercial housing tax.
• Newly constructed standard factories within EPZs or buildings acquired lawfully from the administrative authority are exempt from contract taxes.
• Machinery and equipment in use for more than five years are exempt from custom duties when shipped out of the zones.

Investor Protection and Interests

• Foreign investors enjoy the same rights and privileges as domestic investors.
• Foreign investors may hold a 100% stake in an EPZ business, and may also negotiate joint investments with ROC government or domestic enterprises.
• Foreign and Overseas Chinese investors may apply for outward remittance of profits, capital gains and interest.
• Foreign / overseas Chinese invested companies and joint ventures who maintain a foreign /overseas Chinese shareholder stake above 45% within a period of 20 years are exempt from expropriation or government purchase.
• Intellectual property rights and ownership rights are protected by the law.
• Investments may be transferred to overseas and domestic companies, in accordance with Article 13 of the Company Law.

Competitive Advantages of Export Processing Zones

• Good geographical location, close proximity to seaports and airports: Average minimum shipping times from the Kaohsiung, Linkuang, Nantzu EPZs in Kaohsiung Harbor to major ports and cities in the Asia-Pacific region are 53 hours by sea and 2 hours 55 minutes by air. Once direct links have been established between Taiwan and China, shipments to major Chinese ports and cities, such as Xiamen or Shanghai, will take 12-50 hours by sea.
• Convenient and Simple Administrative Services (Single Window): EPZs run highly efficient administrative services, whether you are establishing a factory or dealing with administrative management. Our Single Window offers convenient services for investors and companies, including investment information / recommendations, issuance of certificates of origin, customs clearance, labor administration, industrial safety and hygiene, business registration, and construction /landscape management. In addition, personnel also provide services from the customs bureau, the tax department, and various banks.
• Can utilize the benefits of industrial clusters: Upstream, midstream and downstream industries all comprise EPZ industrial clusters, bringing lower costs and creating a competitive edge for industries.
• Automated processes for storage and customs clearance, speedy delivery of goods: EPZs use an online computer system to assist in customs clearance for all goods to ensure security and speed. Moreover, EPZs are equipped with storage and transportation centers, which can provide alongside ship and aircraft pick-up and delivery services for speedy onward shipment of goods by land, sea, or air.
• Low land rent, no burden of land purchasing costs (Leasing rates are 2.24%-5% of the government-assessed land price. Visit the EPZA website for details.
• Diversification of industries, cross-industry support: In addition to manufacturing and processing, EPZs are also open to companies engaging in trade, storage, transportation, unloading and loading, and packaging.
• Safe and clean environment, comprehensive general facilities: A police squad, fire squad and sanitation team are stationed within each EPZ to ensure personal and material security and a clean and green environment. In addition, the zones have restaurants, welfare / support centers, healthcare centers, employee hostels, childcare centers, and many sports/recreation facilities, all of which improve the quality of life for personnel working in EPZs and allow companies to save substantially on operating costs.
• The inclusion of offshore transshipment centers within the scope of EPZs brings more advantages in transporting goods: While shipments to China via a third territory (Hong Kong or Singapore) originally took five to seven days, direct shipments now take just 11-12 hours, shortening cross-strait sails and saving approximately 24% of shipping costs. Companies may bring in semi-finished goods directly from China via an offshore transportation center. The goods may be then processed at an EPZ, and thus may be marketed as a product Made in Taiwan, which will increase its value.

Comparison of Export Processing Zones and Science-based Industrial Parks

• Both EPZs and Science-based Industrial Parks enjoy the same preferential treatment on land taxes (both are classified as bonded areas) and Single Window administrative services.
• The review process for a company to enter a Science-based Industrial Park takes two months; for an EPZ, 15-30 days (A review meeting is held on the tenth day of every month; more meetings are held when necessary).
• EPZs are located near Kaohsiung Harbor, small ports and airports, Taichung Harbor, and allow for quick importing/exporting of goods.
• EPZs allow the establishment of trading, storage, and transportation companies, accommodating the diversification of industries.
• Science-based Industrial Parks are strictly limited to science and technology companies; investment thresholds are high.
• There is currently one Offshore Transshipment Center for the cross-strait transport of goods located at Kaohsiung Harbor. EPZs located in Southern Taiwan can utilize its advantages.
• EPZs and Science-based Industrial Parks are separated to avoid outflow of skilled labor and reduce turnover; small to medium sized businesses do not have to worry about competing with large-scale science and technology companies for skilled labor

Comparison of Export Processing Zones and Industrial Parks

• EPZs run a highly efficient and simple administrative system (Single Window Service)
• EPZs pay strict attention to safety and security and boast comprehensive facilities.
• EPZs include Offshore Transshipment Centers as part of their jurisdiction, allowing companies to take advantage of direct cross-strait shipping.
• Imported goods from Mainland China which are not approved for entry into the ROC can apply to enter EPZs for processing and export.

EPZs promote industrial clustering with upstream, midstream, and downstream industries

• Nantzu EPZ: sealing and packing, testing of semiconductors.
• Kaohsiung EPZ: LCD industry.
• Taichung EPZ: optics, electronics industries.
• Chungkang EPZ: manufacturing and R&D for engine components, components, and hardware.
• Pingtung EPZ: vehicle assembly and component manufacturing, manufacturing and R&D for biochemical products.

Investment threshold for the related industries above is NT$10 million.

For more information, please visit the Investment section on the EPZ website.

(Updated September 2007)

E-mail this page.