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.
- 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
Science Parks
Tax Incentives
- No import customs duties, commodity tax, or business tax are imposed on machinery, equipments, raw material, supplies, fuels, semi-finished products, and samples and finished products for trade imported for its own use. The above items are exempt from the process of tax exemption: warranty, bookkeeping, and bond.
- Park enterprises that export products or labor services are subject to zero enterprise tax.
Protection of Investor Rights
- Foreign investors enjoy the same privileges and rights as domestic investors.
- Foreign investors can hold 100% equity in park enterprises, and can seek the government of the Republic of China and local enterprises as joint investors.
- Profits, capital gains and interest from investments by foreigners or overseas Chinese are eligible for transfer overseas upon application.
- Where the equity stake of foreign investors, overseas Chinese investors or a combination thereof shall exceed 45% in a particular enterprise, the government provides its assurance that, within 20 years beginning on the day of operation, the government will not purchase such equity stake.
- The foreign investor may apply for a one-time overseas transfer of the investment amount upon the approval of the authority.
- Intellectual property rights and ownership rights are protected under law.
- Upon approval by the Park Administration, a science industry enterprise may engage in import and export businesses related to its business.
Government Participation in Investment
- Investors can apply for government participation in investments, with the maximum investment amount capped at 49% of principal. Agencies representing the government include National Development Fund and other development funds.
- National Development Fund, Executive Yuan
Contact information: 7th Fl., 49 Guanqian Rd., Taipei telephone: 886-2-2389-0633 contact Business Unit.
Capitalization of Technology Know-hows
Upon certification by authentic organizations in form of technology capitalization evaluation documents, together with approvals of shareholders’ broad, a Park tenant company may apply to the Division of Business Services of the Science Park Administration to issue new stocks or to register modifications of new stocks regarding innovative technology know-hows.
Capital Raising
In case of capital raising demand, local or foreign investors may raise capital via assistances of the Taiwan Venture Capital Association. The Association includes more than 180 venture companies in Taiwan and holds regular seminars and meetings, offering useful information for mutual interaction. Contact information of the Association is as follows.
Address: Room 301, No. 142 Section 3, Min-Chuang East Road, Taipei City
Tel: +886-2-25450075 Fax: +886-2-27132362
Website: http://www.tvca.org.tw
Incentives for Research and Development
- The Science Park Administration provides Park tenants innovative technology industry-academia cooperation project grants, with a maximum grant of ten million NTD. The grant, however, could not exceed 50% of project budget.
- R&D expenses can be deducted from corporate income tax up to 15% but the total deducted expenses can not exceed 30% of the total corporate income tax.
- R&D equipments can be exempted from import duties.
Incentives Regarding the Act Governing Biotech and New Medicine Industry Development
- Investment Deduction
- Listed shareholders investing in biotech or new medicine corporations more than three years can be exempted from corporate income tax within a period of five years up to a total of 20% of the price of stock shares gained. For entities of venture capitalists, corporate income tax can be exempted from the fourth year of stock shares gained, with the same period of five years.
- R&D and Talent Cultivation Expenditure
- 35% of R&D expenditure can be deducted from corporate income tax within a period of five years since a real corporate profit gain.
- Amount of R&D expenditure exceeding the averaged amount of former two years, the exceeded portion of R&D expenditure enjoys a deduction rate of 50% from corporate income tax.
- Attraction of R&D Talent
- Technology tradeoff income enjoys suspended levy of income tax, where tax levying year can be suspended to a time point when stock shares are transferred, given as presents, or distributed inherited assets, based on the real transacted price subtracting the gained cost, no limit for the suspended tax payment period.
- If government employees are main providers for emerging corporate biotech or medicine technologies, the government employees can possess more than 10% of the corporate shares as the corporation starts and can act as the corporation initiators, presidents, or technology consultants, out of the confinement of the Act Governing Government Employee Services. R&D staff of academia or research institutes can act as R&D consultants in the biotech medicine corporation.
