REVISED TAX CREDIT RULES FOR ELECTRONIC SYSTEMS EXPENDITURE

07/01/2001

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Companies investing in internal electronic sys-tems may apply for investment tax credit under the Key Points Concerning Investment Tax Credit for Corporate Expenditure on Introduc-tion of Electronic Systems. On 16 April 2001, the Ministry of Finance (MOF) reissued the key points together with its explanatory notes. The main differences from the previous explanatory notes released on 18 August 2000 are as follows:

Where internal electronic systems are intro-duced to facilitate the introduction of busi-ness-to-business electronic systems, the pro-gram must be completed within two years.:

Turnkey systems and embedded software are added to the list of eligible software.

Soochow University and Da Yeh University are added to the reference list of specialist organizations.

The key points stipulate that the following evi-dential documents should be submitted for claiming the tax credit:

Wages and salaries: Company organization chart; list of employees involved in the intro-duction of electronic systems; daily work logs of such employees or related documents (showing work performed and time spent); schedule of total working hours actually spent on related work by persons involved part-time in the introduction of electronic systems and supporting documents; list of individual con-sultants with relevant supporting documents such as contracts of engagement.

Cost of hardware purchase: List of items purchased; contracts and quotations; photo-copies of proofs of payment; company plan-ning documents for the introduction of elec-tronic systems and related records or reports; documents issued by specialist organizations sufficient to show that the hardware concerned is for use in running business electronic sys-tems software; and other related documents.

Cost of software purchase: List of items pur-chased; contracts and quotation; photocopies of proofs of payment; company planning documents for the introduction of electronic systems and related records or reports; docu-ments issued by specialist organizations suf-ficient to show that the software purchased is for use in electronic business systems; and other relating documents.

Fees for outsourced services: Photocopies of contracts and quotations; photocopies of proofs of payment; company planning docu-ments for the introduction of electronic system and related records or reports; documents is-sued by specialist organization sufficient to show that the software planned, developed or installed by the external service provider is of a type suitable for use in electronic business systems; and other supporting documents.