Newsletter
TAX CREDITS FOR INVESTMENTS IN EARTHQUAKE DISASTER ZONES
To encourage companies to invest in or increase their investment in the disaster area caused by the 21 September 1999 earthquake, the MOEA promulgated Regulation Governing Tax Credits for Companies' Investments in Designated Zones Within the 21 September Earthquake Disaster Area on 28 June 2000, pursuant to Article 42 of the Temporary Statute on Reconstruction Fol-lowing the 21 September Earthquake. The term designated zones in the regulation means in Miaoli county: Cholan township and Tai-an rural township; in Taichung county: Taiping city, Tali city, Wufeng rural township, Fengyuan city, Shihkang rural township, Tungshih township, Hoping rural township and Hsinshe rural town-ship; and in Nantou county: all 13 rural town-ships, urban townships and cities. The regula-tions defines the term certain investment amount as referred to in the above statute as a total sum of investment of at least NT$10 million for the purchase of new machinery, equipment or buildings for production or operating purposes. The wording hiring a certain number of addi-tional employees refers to the increases of the number of employees at least 20, calculated ac-cording to the average monthly figure over a full year.
Up to 20% of the investment in the purchase of new machinery, equipment or buildings in ac-cordance with an eligible investment plan can be offset against the corporate income tax payable in the accounting year in which the investment plan is completed. If the full amount cannot be offset in the first year, the remainder may be offset over the subsequent four years.
The regulation is effective from 5 February 2000 to 4 February 2005. Any company meeting the requirements for entitlement to tax credits should apply within that period to register its investment plan with the local county government where the machinery, equipment or buildings are to be lo-cated. Documents to be submitted include the investment plan and a photocopy of the company business license or the form for the pre-registration of the company's name. The time limit for completing a registered invest-ment plan is two years. If it cannot be done within that time due to special circumstances, an extension may be applied for. The maximum extension period is two years. Once the invest-ment plan has been completed, the company should submit documents evidencing completion to the county government where the original registration was made. A tax credit eligibility certificate would then be issued, on the basis of which the company may then apply for tax credit with the tax collection authorities.