RULES ON TAX RELIEF FOR INVESTMENT IN B2B SYSTEMS

11/01/2000

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Under the Key Points Concerning Investment Tax Relief for Companies' Expenditure on the Introduction of Electronic Systems (Key Points), companies may apply to offset against tax their spending, if incurred between 1 July and 31 December 1999, on the introduction of busi-ness-to-business electronic systems. The Min-istry of Finance announced related Matters for Attention under Tai-Tsai-Sui No.0890455127 dated 18 August 2000. The main points are as follows:

Introduction of business-to-business electronic systems is defined as: utilizing Internet-related information technologies and management methods to transform the core operations and procedures of an enterprise or its upstream or downstream supply chain, in order to raise the overall operating efficiency of the enterprise. But the introduction of company-internal electronic systems other than to facilitate the introduction of business-to-business systems, and the introduction of business-to-consumer systems, do not qualify for the incentives.

Expenditures eligible for tax relief and specific provisions.

Wages and salaries:

1.For company personnel or individual con-sultants involved in the introduction of electronic systems, where their academic training does not correspond to the work concerned, professional background in-formation such as exam certificates and documents showing work experience should be submitted for approval.

2.The wages and salaries of personnel in-volved only part-time in the introduction of electronic systems do not qualify if their actual participation was less than 50% of their total working hours (including over-time). Salaries of personnel whose par-ticipation was 50% or more of their work-ing hours are eligible pro rata to their actual participation.

Hardware and software:

1.Eligible hardware is limited to computer equipment, network and telecommunica-tions equipment, peripheral equipment and other related devices. The items purchased or leased must be all-new equipment.

2.Eligible software includes system and util-ity software, company-internal application software to facilitate the use of busi-ness-to-business systems, electronic com-merce software suitable for busi-ness-to-business applications, and other related software.

3.Software and hardware are limited to cur-rent-year purchases as defined by the de-livery date.

4.Certification should be obtained from a relevant specialist organization that the hardware and software purchased are of a class of electronic software or handware system.

Outsourced services: The service provider must not be an individual person, and the software whose planning, development or in-troduction is outsourced must be certified by a relevant specialist organization as an elec-tronic software system for a company.

Relevant specialist organizations

The following reference list is provided; however where certain relationships of inter-est with the applicant company exist, an in-stitution should decline to issue certifications:

1.Institutes of higher education: National Chung Hsing University, National Cheng Kung University, Chung Yuan Christian University, Fu Jen Catholic University, National Sun Yat-Sen University, Shih Hsin University, Chaoyang University of Technology, National Taichung Institute of Technology, and Dahan Institute of Tech-nology.

2.Corporate bodies: China Productivity Center, Taiwan Textile Federation, Cor-porate Synergy Development Center, Metal Industries Research and Develop-ment Center, and Institute for Information Industry.

Other provisions

1.Program content: The application for tax relief should be accompanied by the com-pany's program for the introduction of electronic systems. Its content should in-clude implementation period, funding re-quirements program manager and team members (divided into full- and part-time), method of implementation and work cate-gories, equipment requirement, individual outside consultants and their fees, and cost of outsourced services.

2.Retroactive eligibility: Where a company has already filed its corporate income tax return for the relevant year before the Matters for Attention came into effect, it may apply to the tax collection authorities with the submission of relevant documents for investment tax relief within three months after their entry into force.

3.No double relief: Where a company's in-troduction of hardware and software is al-ready eligible for tax relief under the Stat-ute for Upgrading Industries or other leg-islation, it may not further benefit from incentives under the Key Points.

4.The relevant certifications submitted for inspection must conform to the prescribed categories and formats.