Taiwan passes amendment to include tax credits for AI investments

Taipei, April 18 (CNA) Taiwan's Legislative Yuan on Friday passed a law amendment to include tax credits for businesses that invest in artificial intelligence (AI) and carbon emissions reduction technologies.

Under the amended Statute for Industrial Innovation, the ceiling for the amount eligible to be claimed as tax credits in the same taxable year has also been raised from NT$1 billion (US$30.67 million) to NT$2 billion.

Previously, only investments in smart machines, 5G mobile technology and cybersecurity intelligence products, as well as software and hardware technology and services, were eligible to apply for the tax credits.

The effective period of this measure will last until Dec. 31, 2029.

However, in order to protect Taiwan's competitiveness and key technologies, businesses that invest overseas in "certain countries" or "specific industries" must first obtain government permission to apply for tax credits.

According to Lu Tseng-hui (呂貞慧), deputy-director of the Department of Investment Review under the Ministry of Economic Affairs, in December last year, "certain countries" include Iraq or Iran, while the 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$500,000-NT$10 million if they fail to correct, suspend, or withdraw these investments after receiving warnings.

Meanwhile, in a bid to promote the development of innovative startups, the revised law also broadened the scope of investors eligible for tax credits to cover innovative startups created by individuals with more than NT$500,000 in investment.

Furthermore, individuals investing in key industries would enjoy a maximum income tax deduction of NT$5 million, up from NT$3 million prior to the law amendment.