To further encourage companies and individuals to conduct innovation activities, enhance the circulation and application of R&D results, and assist companies to retain talents, the Statute for Industrial Innovation was amended on 30 December 2015.  The amendments include (i) an extension of the period for the application of tax incentives, and (ii) the deferral of declaration of taxable income on the acquisition of stocks through contributing R&D results as capital contribution and employee stock rewards, and took effect on 1 January 2016.  The key changes are as follows:

  1. For corporations
    1. A corporation may choose to credit (i) up to 15% of its total expenditure on research and development against its corporate income tax payable for that year, or (ii) up to 10% of its total expenditure on research and development against its corporate income tax payable for that year or the following two years, provided that (a) the amount of credit claimed for each year may not exceed  30% of the corporate income tax payable by the corporation for that year, and (b)  the corporation did not commit any material violation of any law on environmental protection, labor, or food safety and sanitation in the past three years.
    2. A corporation which generates income from transferring or licensing any intellectual property that it developed may claim a deductible expense equivalent to 200% of its total expenditure on research and development that year.  A corporation may choose to apply either such 200% expense deduction or the 15%/10% tax credit described in the preceding paragraph.
    3. For a corporation which transfers or licenses any intellectual property that it developed to another corporation that is listed or traded over-the-counter as the consideration for subscribing the new shares to be issued by the latter, it may defer the declaration of such consideration (equivalent to the value of the new shares) as taxable income until (i) the fifth year following the year of subscribing said new shares, or (ii) the year of transferring said new shares.
    4. For a corporation which transfers or licenses any intellectual property that it developed to another corporation that is not listed nor traded over-the-counter as the consideration for subscribing the new shares to be issued by the latter, it may defer the declaration of such consideration as taxable income (equivalent to the amount of the transfer price) until the year in which said new shares are transferred.
  2. For Individuals
    1. An individual who receives a payment for the transfer or licensing of any intellectual property that he/she developed may claim a deductible expense up to 200% of the expenditure on research and development incurred that year against said payment to arrive at his/her taxable income.  Alternatively, he/she may report 70% of the payment received as taxable income.
    2. For an individual who transfers or licenses any intellectual property that he/she developed to a corporation that is listed or traded over-the-counter as the consideration for subscribing the new shares to be issued by the latter, the value of the new shares, after deducting all relevant costs and expenses, should be deemed the individual's taxable income.  Alternatively, he/she may report 70% of said value as taxable income.  Moreover, the individual may defer the declaration of such taxable income until (i) the fifth year following the year of subscribing said new shares, or (ii) the year of transferring said new shares.
    3. For an individual who transfers or licenses any intellectual property that he/she developed to a corporation that is not listed nor traded over-the-counter, he/she may defer the declaration of such consideration (equivalent to the amount of the transfer price) as taxable income until the year in which said new shares are transferred.   The individual may deduct all relevant costs and expenses from the transfer price for the calculation of taxable income.  Alternatively, he/she may report 70% of the transfer price as taxable income.
    4. An employee who receives stock rewards from his/her employer may defer the declaration of taxable income on such stocks by five years, provided that the total value of such stock rewards received in a year does not exceed NT$5 million.