Electronic component search engine Up to 50% tax deduction
The Taiwan, China Economic Department said that after decades of development, Taiwan, China's industry has built an innovative, resilient and efficient industrial chain that can quickly adapt to market changes and become the backing of the international economic and trade chain. In recent years, with major global events interfering with the operation of the supply chain, countries have introduced huge subsidies and expanded tax incentives for their key industries in order to achieve the autonomy of key industries.
It is reported that for companies with technological innovation and a key position in the international supply chain, this amendment provides 25% of prospective innovation R&D expenditure to offset the profit making enterprise income tax payable in the current year, and 5% of the expenditure on purchasing new machines or equipment for advanced manufacturing processes can be offset against the profit making enterprise income tax payable in the current year, and there is no upper limit for the expenditure on such machines or equipment, The total amount of the two deductions shall not exceed 50% of the profit seeking enterprise income tax payable in the current year.
In the part of effective tax rate, the Taiwan, China Economic Department pointed out that, for the policy purpose of giving consideration to tax preference and paying reasonable tax burden, it was formulated by referring to the 15% tax rate of the OECD global enterprise minimum tax burden system.
In view of the different international promotion schedules, the ratio of effective tax rate will be set at 12% in 2023 and 15% from 2024 during the appropriate buffer period for the industry. In 2023, the minimum tax burden system for global enterprises will be reviewed and adjusted to 12% by the administrative department in Taiwan, China, China.
In addition, the Taiwan, China Economic Department said that it would actively communicate and coordinate with relevant departments in the future to strive for the early completion of the law amendment procedure, so as to implement it as scheduled from January 1, 2023 to December 31, 2029.
As for whether there are specific industry categories applicable to the tax incentives, officials from Taiwan, China's economic department responded that there is basically no limit on industry categories. As long as they meet the requirements of R&D expenses, R&D density to a certain scale, and effective tax rate to a certain ratio, they can apply, and semiconductor, 5G, electric vehicles, low orbit satellites and other industries can apply.
At the same time, officials from the Taiwan, China Economic Department pointed out that the draft does not limit whether it is a local manufacturer in Taiwan, China, as long as it has a research and development center or subsidiary in Taiwan, China and does relevant research and development.
Who can benefit from the heated discussion?
After the formal adoption of the revised draft, it triggered a wide range of discussions in the semiconductor industry in Taiwan, China, China. What are the responses or interpretations of the parties to the draft? One side said that it was a success, while the other side asked for more and called for supporting measures.
People in the financial industry: The higher the threshold of scale, the fewer applicable enterprises. If the threshold of R&D expenses is set at NT $10 billion, TSMC, MediaTek and Novatek all meet the applicable conditions. However, if the threshold is lowered to NT $7 billion, UMC, ASE, Nanyake, Philippine and Realtek can be included in the safety list. If it is lowered to NT $5 billion, more applicable manufacturers will be included.
Industry insiders of semiconductor factories: In addition to the benefits of Taiwan factories introducing advanced manufacturing processes, including ASML, which has announced the expansion of investment in New North, the application materials, Colin R&D, Micron and other large factories actively attracted by the government are also applicable, which is expected to expand the clustering effect.
TSMC: It will continue to invest in Taiwan, China, China, and is happy to see this bill succeed.
UMC.
MediaTek: At present, the details of relevant laws are still being understood, and it is hoped that in the future, the details of relevant laws will have supporting measures to meet different needs for semiconductor design and manufacturing. On the whole, from the perspective of the current international competition situation of the global semiconductor industry, it will provide better incentives for Taiwan, China semiconductor enterprises willing to increase R&D investment, have the opportunity to increase the international competitiveness of the industry, further enhance the overall industrial value of Taiwan, China semiconductor, and will be of great help to Taiwan, China semiconductor industry.
ASE.
Huang Chongren, Chairman of PSMC: From the perspective of the threshold for the preliminary formulation of the Taiwan version chip bill, it is almost customized for a few TSMC companies. If only TSMC is favored, it is absolutely unfair and unreasonable. It will represent the Taiwan, China Semiconductor Industry Association of China and oppose it to the end!
SEMI International Semiconductor Industry Association: affirms and supports the administrative department to go on the road through the revised draft of the Industrial Innovation Regulations. The substantial benefits of the regulations, such as R&D investment deduction and tax preference, will help to plant the momentum of Taiwan, China's semiconductor industry development, enhance international competitiveness, and become a strong backing for the industry.
Cao Shilun, SEMI's global marketing chief and president of Taiwan, China, China: under the intense international competition pressure and geopolitical influence, this industrial policy will help to consolidate the key position of Taiwan, China's semiconductor industry in the global supply chain, and hope that the semiconductor industry will continue to improve its global leading edge, and drive more other related industries in Taiwan, China, China to go to the international market and expand their territory, Make greater contributions to the economic development of Taiwan, China, China, and jointly create prosperity.
Liu Peizhen, Director of the Industrial and Economic Database of Taiwan, China Economic Research Institute, said that "each is very important" in the three aspects of tax incentives, talent retention, and localization of materials and equipment, which are all related to the medium and long-term development of Taiwan's semiconductor industry. Among them, the implementation of the new tax measures can achieve results in the short term; The cultivation of talents should focus on medium - and long-term planning; The materials and equipment will be effective in the long run, and this part needs to be promoted as soon as possible.
Competition of industrial policies among countries/regions
As the driving force of a series of electronic devices, semiconductor has been widely used in smart phones, cloud servers, modern cars, infrastructure, national defense systems and other key areas. After more than 30 years of development, the semiconductor industry has formed a relatively complete and stable global supply chain. The United States has the most advanced design, the European automotive chip industry ranks first in the world, Asia is at the forefront of wafer manufacturing, and Southeast Asia focuses on packaging and testing. In this global semiconductor supply chain, all countries and regions are interdependent. However, in recent years, a series of factors, such as geopolitics, epidemic situation, and tight production capacity, have profoundly affected the global semiconductor industry. Countries/regions have gradually realized the importance of building local supply chains, and have issued policies to support industrial development. In this regard, Jiwei.com also briefly combed this for readers' reference.
