Cabinet introduces investment tax credit for AI, carbon emissions

Taipei, Dec. 19 (CNA) The Executive Yuan on Thursday approved proposed amendments to the Statute for Industrial Innovation, introducing an investment tax credit for capital investment in artificial intelligence (AI) and carbon emissions reduction technology.

Currently only investment between NT$1 million (US$30,675) and NT$1 billion in smart machines, the introduction of 5G mobile technology and cybersecurity intelligence products, as well as software and hardware technology and services, are eligible for a one-year 5-percent tax credit or an annual 3-percent cut over a three-year period on a case-by-case basis.

Under a proposed amendment to Article 10-1 of the statute, investment in AI and carbon emissions reduction technology will also be eligible for tax credits.

This will help businesses promote AI applications, boost competitiveness and meet the global zero emissions goal by 2025, according to the amendments passed during the weekly Cabinet meeting.

The ceiling on investment will also be lifted to NT$1.8 billion to help companies shift to AI-assisted equipment and achieve carbon efficiency.

In addition, the effective period of Article 10-1, which is set to end on Dec. 31, 2024, will be extended for another five years to Dec. 31, 2029.

To promote the development of innovative startups, proposed amendments to Article 23-1 and 23-2 broaden the scope of investors eligible for tax credits to cover 2-5 year-old innovative startups created by individuals with more than NT$500,000 in investment.

To protect Taiwan's key technology, proposed amendment to Article 22 mandates that overseas investment over NT$3 billion, up from NT$1.5 billion, and those in some specific industries in certain countries or areas, such as Iran and Iraq, must first obtain government permissions, Rio Lu (呂貞慧), deputy-director of the Department of Investment Review under the Ministry of Economic Affairs, told reporters following the meeting.

According to Lu, so-called specific industries refer to carbon fiber for military use, satellite space technology, agricultural variety cultivation, semiconductor-related technology, post-quantum technology and others, pending further supplementary provisions.

Investors without prior approval could face a fine between NT$50,000 and NT$1 million, and they could be fined NT$500,0000-NT$10 million if they fail to abide by the rule.

The amendments must clear the legislative floor before taking effect.