We would like to inform you that the amendment bill on reducing corporate income tax rate from 20% to 17% was passed on 28 May 2010. This 17% tax rate applies to income tax returns for the period starting from 1 January 2010.

Furthermore, according to the Statute for Industrial Innovation, which came into force on 14 May 2010, a Taiwan company is entitled to apply a tax credit of up to 15% of the amount invested in research and development ("R&D Tax Credit"); provided, however, that the amount of R&D Tax Credit cannot exceed 30% of its income tax payable for that year, and that unused R&D Tax Credit cannot be carried over.

This is different from the provisions under the Statute for Upgrading Industries, which was abolished on 31 December 2009. Under said Statute, a Taiwan company was entitled to a tax credit of up to 30% of the amount invested in R&D and personal training, but such tax credit cannot exceed 50% of income tax payable for that year. Furthermore, any unused credit can be carried over for four years and can be fully applied in the last year of carry-over.

If you have any questions, please feel free to contact any one of us at the following contact information:

Josephine Peng (jopeng@leeandli.com; 886-2-27153300, ext. 2706)

Frank Lin (franklin@leeandli.com; 886-2-27153300, ext. 2121)

Jill Niu (jillniu@leeandli.com; 886-2-27153300, ext. 2457)

Dennis Yu (dennisyu@leeandli.com; 886-2-27153300, ext. 2143)