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Article 1
This Act is enacted in order to promote the development of the biotech and pharmaceutical industry
in the Republic of China (Taiwan), to position it as a main driver of economic transformation.
Article 2
This Act governs matters concerning the development of the biotech and pharmaceutical industry.
Matters not provided for in this Act shall be governed by other relevant laws; provided, however,
that where the provisions of such other laws are more favorable than those contained herein, the
provisions of such other laws shall prevail.
Article 3
The authority in charge of the implementation of this Act is the Ministry of Economic Affairs (the
“Competent Authority”).
Article 4
For the purposes of this Regulation, the following definitions apply:
1.“Biotech and Pharmaceutical Industry” refers to the industry that deals with New Drugs, New
Dosage Forms, High-Risk Medical Devices, Regenerative Medicine, Precision Medicine, Digital
Medicine, Innovative Technology Platforms Dedicated to Biotech and Pharmaceutical Industry and
Other Strategic Biotech and Pharmaceutical Products used by human beings, animals and plants.
2.“Biotech and Pharmaceutical Company” refers to a company in the Biotech and Pharmaceutical
Industry that is organized and incorporated in accordance with the Company Act and engages in any
of the following business activities approved by the Competent Authority:
(i)the research, development and manufacture of New Drugs, New Dosage Forms, High-Risk
Medical Devices, Regenerative Medicine, Precision Medicine, Digital Medicine, Innovative
Technology Platforms Dedicated to Biotech and Pharmaceutical Industry and Other Strategic
Biotech and Pharmaceutical Products; and
(ii)the contract development and manufacture of New Drugs, New Dosage Forms, High-Risk
Medical Devices, Regenerative Medicine, Precision Medicine, Digital Medicine and Other
Strategic Biotech and Pharmaceutical Products.
3.“New Drug ” refers to a drug that has a new ingredient, a new therapeutic effect or a new
administration method, and “New Dosage Form” refers to a new dosage form of a pharmaceutical
preparation, as approved by the central governmental authority in charge of the industry concerned.
4.“High-Risk Medical Device” refers to a Class III medical device or a Class II medical device of
which the approval requires clinical trials, as approved by the central governmental authority in
charge of the industry concerned.
5.“Regenerative Medicine” refers to a drug, medical device, product or technology that uses cells or
genes to reconstruct or repair the structure or function of the human body for the purpose of
treatment or prevention of diseases, as approved by the central governmental authority in charge of
the industry concerned.
6.“Precision Medicine” refers to an innovative product or technology that analyzes the relationship
between the physiological and pathological characteristics of an individual and the mechanism and
extent of a disease through genetic sequencing, molecular identification, metabolite analysis or
other omics-based tests, in order to provide predictive, preventive, diagnostic and therapeutic
functions for treating diseases, as approved by the Competent Authority in conjunction with the
central governmental authority in charge of the industry concerned.
7.“Digital Medicine” refers to an innovative product or technology that is applied in the field of
healthcare with big data, cloud computing, Internet of Things (IoT), artificial intelligence and/or
machine learning technologies, and is used to enhance the prevention, diagnosis and treatment of
diseases, as approved by the Competent Authority in conjunction with the central governmental
authority in charge of the industry concerned; provided that the medical device software of artificial
intelligence or machine learning technology shall be subject to the approval of the central
governmental authority in charge of the industry concerned.
8.“Innovative Technology Platforms Dedicated to Biotech and Pharmaceutical Industry” refers to a
platform for products or technologies with high research and development (“R&D”) risk,
importance and innovation that specializes in the research, development and manufacture activities
identified in Subparagraph 3 or 5 above, or in the development and manufacture of New Drugs,
New Dosage Forms or Regenerative Medicine identified in Item (ii) of Subparagraph 2 above, as
approved by the Competent Authority in conjunction with the central governmental authority in
charge of the industry concerned and the Ministry of Finance.
9.“Other Strategic Biotech and Pharmaceutical Product” refers to a biotech and pharmaceutical item
having a strategic development direction designated by the Executive Yuan and announced by the
Competent Authority after being approved thereby.
Regarding the Biotech and Pharmaceutical Company referred to in Subparagraph 2 of the preceding
paragraph, the approval criteria, the documents required to be submitted, the application procedures
for approval, the revocation or termination of the approval, and other relevant matters shall be
prescribed by the Competent Authority.
Article 5
For the purpose of promoting the advancement of the Biotech and Pharmaceutical Industry, a
Biotech and Pharmaceutical Company engaged in the business activities specified in Item (i),
Subparagraph 2, Paragraph 1, Article 4 hereof may, for a period of five years from the time it is
subject to the profit-seeking enterprise income tax, enjoy a reduction in its profit-seeking enterprise
income tax payable by up to twenty-five percent (25%) of the total funds invested in R&D activities
identified in Subparagraphs 3 to 9, Paragraph 1, Article 4 hereof each year.
The total amount of investment credited against the profit-seeking enterprise income tax payable by
a Biotech and Pharmaceutical Company in each year under the preceding Paragraph shall not
exceed fifty percent (50%) of the amount of the profit-seeking enterprise income tax payable by the
Biotech and Pharmaceutical Company in a year; provided, however, that this restriction shall not
apply to the amount of investment to be credited in the last year of the aforementioned five-year
period.
With respect to the investment tax credit referred to in the first paragraph of this article, the
regulations governing the scope of its application, authority in charge of granting the approval,
deadline for filing applications, application procedures, valid period, tax credit rate and other
relevant matters shall be prescribed by the Competent Authority in conjunction with the Ministry of
Finance.
Article 6
Where a Biotech and Pharmaceutical Company invests in brand-new machinery, equipment or
system, for production and manufacturing, and the total expenditure amounts to between NT$10
million and NT$1 billion spending within the same taxable year, it may select one of the following
methods to offset the profit-seeking enterprise income tax payable for that taxable year. Once the
Biotech and Pharmaceutical Company selects a method, it cannot be altered, and the amount of tax
credit each year shall not exceed thirty percent (30%) of the profit-seeking enterprise income tax
payable in the then-current year:
1. Up to five percent (5%) of the annual investment amount may be credited against the
profit-seeking enterprise income tax payable in the current year from the first year the Biotech and
Pharmaceutical Company incurs payable profit-seeking income tax liability; and
2. Up to three percent (3%) of the annual investment amount may be credited against the
profit-seeking enterprise's income tax payable each year, over a period of the three years from the
first year the Biotech and Pharmaceutical Company incurs profit-seeking income tax liability.
Where the Biotech and Pharmaceutical Company referred to in the preceding paragraph is eligible
for the investment credit under the preceding paragraph as well as other types of investment credit
in the same year, the total amount creditable in that year shall not exceed fifty percent (50%) of its
profit-seeking enterprise income tax payable in the then-current year, unless the then-current year is
the final year for using such credit.
The Biotech and Pharmaceutical Company referred to in the preceding paragraph applying for the
investment credit under Paragraph 1 shall submit an investment proposal capable of generating
certain benefits to the Competent Authority for approval on a case-by-case basis. Each Biotech and
Pharmaceutical Company may apply for such investment credit only once per taxable year.
With respect to the investment tax credit referred to in the preceding three paragraphs ,the
regulations governing its scope of eligibility, investment proposal capable of generating certain
benefits, application deadline, application procedure, calculation of the total creditable amount in
the then-current year, and other relevant matters shall be prescribed by the Competent Authority in
conjunction with the Ministry of Finance.
Article 7
To encourage the establishment or expansion of Biotech and Pharmaceutical Companies, a
profit-seeking enterprise that (i) originally subscribes for or underwrites shares issued by a Biotech
and Pharmaceutical Company; and (ii) has been a registered shareholder of the Biotech and
Pharmaceutical Company for a period of three (3) years or more, may, for a period of five (5) years
from the first year it incurs profit-seeking enterprise income tax liability, enjoy a reduction in its
profit-seeking enterprise income tax payable by up to twenty percent (20%) of the total amount of
price paid for the subscription of the shares in such Biotech and Pharmaceutical Company; provided
that such Biotech and Pharmaceutical Company has not applied for exemption from profit-seeking
enterprise income tax or shareholder investment credit based on the subscription price under any
other laws. The total amount creditable in each year shall not exceed fifty percent (50%) of the
profit-seeking enterprise income tax payable in the then-current year.
Where the Biotech and Pharmaceutical Company described in the preceding paragraph engages in
the business activities described in Item (ii), Subparagraph 2, Paragraph 1, Article 4 hereof, it is
eligible for the tax credit hereunder only if it is not listed on the Taiwan Stock Exchange and the
Taipei Exchange, or is a company listed on the Taiwan Stock Exchange or the Taipei Exchange but
was incorporated and registered less than ten (10) years ago.
If the profit-seeking enterprise described in Paragraph 1 is a venture capital company (“VC”), its
corporate shareholders may, for a period of five years from the fourth anniversary of the date on
which the VC becomes a registered shareholder of the subject Biotech and Pharmaceutical
Company, enjoy a reduction in their profit-seeking enterprise income tax payable based on the total
deductible amount enjoyed by the VC under Paragraph 1 hereof and the shareholders' respective
shareholdings in the VC. The total amount creditable in each year shall not exceed fifty percent
(50%) of the profit-seeking enterprise income tax payable in the then-current year.
With respect to the investment tax credit applicable to the shareholders of the profit-seeking
enterprises described in Paragraph 1 hereof and the VCs described in the preceding paragraph, the
requirements, deadline for filing applications, application procedures, valid period, tax credit rate
and other relevant matters shall be prescribed by the Competent Authority in conjunction with the
Ministry of Finance.
Article 8
Where an individual invests at least NT$1 million in cash in one year in a Biotech and
Pharmaceutical Company that is not listed on the Taiwan Stock Exchange or the Taipei Exchange,
and acquires newly issued shares of such company, and holds such shares for a period of three (3)
years, up to fifty percent (50%) of the investment amount may be deducted from the individual's
consolidated income each year, within two years commencing from the third anniversary of such
shareholding, provided that the aggregate amount deductible from an individual's consolidated
income each year shall not exceed NT$5 million.
Where the Biotech and Pharmaceutical Company described in the preceding paragraph engages in
the business activities described in Item (i), Subparagraph 2, Paragraph 1, Article 4 hereof, it is
eligible for the tax incentives hereunder only if it is a company incorporated and registered less than
ten (10) years ago; where it engages in the business activities described in Item (ii), Subparagraph 2,
Paragraph 1, Article 4 hereof, it is eligible for the tax incentives hereunder only if it is a company
incorporated and registered less than five (5) years ago.
The qualifications of the individuals, the application deadline, the application procedure, the
calculation of the shareholding period, the authority in charge of granting the approval, and other
relevant matters under Paragraph 1 hereof shall be prescribed or designated by Competent Authority
in conjunction with the Ministry of Finance.
Article 9
To encourage top executives and technology investors to participate in the operation of Biotech and
Pharmaceutical Companies and R&D activities, and to share in their operational achievements, the
new shares issued by a Biotech and Pharmaceutical Company to top executives as bonuses or
compensation and to technology investors in return for their technology know-how contributions
may be excluded from their taxable income for the year in which such shares are acquired. Once
this choice is made, it cannot be altered. However, if a top executive or technology investor chooses
to exclude such new shares from their taxable income for the year in which such shares are acquired,
when the shares are transferred (including a book-entry transfer to a securities depository account),
the total transfer price of such shares, or the market price thereof at the time of gifting or
distribution as estate or on the book-entry transfer date, shall be included as income in the year of
the transfer and be declared for income tax assessment in accordance with the Income Tax Act.
Where a top executive or an individual technology investor chooses to exclude the shares from their
taxable income for the year in which such shares are acquired in accordance with the preceding
paragraph, and has held such shares and continued to be employed by or provide services relating to
their technology know-how to the Biotech and Pharmaceutical Company for at least two years, if
the shares are transferred (including a book-entry transfer) at a price (either the total transfer price
or the market price at the time of gifting or distribution as estate or on the book-entry transfer date)
higher than the market price or purchase price at which such individual acquired such shares, such
original acquisition price instead shall be used as the revenue amount for the year of the transfer and
be declared for income tax assessment in accordance with the Income Tax Act. However, the above
provisions shall not apply if the top executive or the individual technology investor has not declared
the price of the shares for income tax assessment or has declared the price for income tax
assessment but cannot provide documentary proof of the original acquisition price, and the taxation
authority cannot verify the original acquisition price.
The term "transfer" in the two preceding paragraphs refers to the purchase and sale, gifting,
distribution as estate, cancellation of shares as a result of capital reduction, corporate liquidation, or
ownership changes due to other causes.
"Top executives" as referred to in Paragraph 1 hereof are those who have biotechnology and
pharmaceutical-related expertise or skills and hold the position of CEO or a managerial officer, at
the minimum, in a Biotech and Pharmaceutical Company; "Technology investors" referred to in
Paragraph 1 hereof are the investors that provide a Biotech and Pharmaceutical Company with the
technology know-how that it needs in return for the acquisition of its shares.
Where an individual technology investor's income is calculated in accordance with Paragraph 1 or 2
hereof but is not declared or substantiated by any documents, the sum of their costs and necessary
expenses shall be calculated at thirty percent (30%) of their revenue and be deducted from their
taxable income.
The tax incentives under Paragraphs 1 and 2 are available only if the Biotech and Pharmaceutical
Company submits the required documents and information in the prescribed format to the
Competent Authority for certification in the year in which its top executives or technology investors
acquire the shares issued. A copy of the results of the certification shall be provided to the taxation
authority where the Biotech and Pharmaceutical Company is located.
In the year in which the top executives or individual technology investors to whom Paragraph 2
applies have held the shares and been employed by or provided the services relating to their
technology know-how to the Biotech and Pharmaceutical Company for two (2) years, the Biotech
and Pharmaceutical Company shall submit documents proving such individuals' shareholding and
services aforementioned to the Competent Authority for recordation. A copy of each of the
evidentiary documents shall also be submitted to the taxation authority where the Biotech and
Pharmaceutical Company is located.
The scope of biotech and pharmaceutical expertise or technology referred to in Paragraph 4, the
required format, documents, deadlines and procedures for certification and recordation referred to in
the preceding paragraphs, and other relevant matters shall be prescribed by the Competent
Authority.
The procedure and required documents for declaring deferral of the income tax payable on the
shares acquired by the top executives and technology investors under Paragraphs 1 and 2, and other
related matters shall be prescribed by the Ministry of Finance.
Article 10
Biotech and Pharmaceutical Companies may issue stock options to their top executives and
technology investors referred to in the preceding article, provided that the proposal on the issuance
of such stock options has been approved by (i) a majority vote at a board meeting attended by at
least two-thirds (2/3) of all the directors; and (ii) the Competent Authority.
Holders of the stock options as described in the preceding paragraph may subscribe for a specific
number of shares at the stipulated price, which may be lower than the par value of the share, as
prescribed under Article 140 of the Company Act.
Article 267 of the Company Act shall not apply in the event that a Biotech and Pharmaceutical
Company issues new shares pursuant to Paragraph 1 of the preceding article.
The stock options obtained by top executives or technology investors under Paragraph 1 of this
article shall not be sold or gifted. The same restriction applies to those who inherited such stock
options.
The income tax payable on the shares acquired by the top executives or technology investors via the
exercise of their stock options, as well as the Biotech and Pharmaceutical Company's submission for
certification and recordation with the Competent Authority, shall be governed by Paragraphs 1 to 3,
5 to 7, and 8 of the preceding article. The procedure for declaring deferral of the income tax payable
on the shares acquired through the exercise of stock options, the required documents, and other
relevant matters shall be prescribed by the Ministry of Finance.
The requirements, required documents, and other relevant matters for applying for the Competent
Authority’s approval to issue stock options pursuant to Paragraph 1, shall be prescribed by the
Competent Authority.
Article 11
To strengthen the introduction and transfer of biotech and pharmaceutical technologies,
organizations established with government funds to provide technical assistance shall provide the
necessary technical assistance accordingly.
Article 12
Research personnel in public schools at the junior college level and above or public research
institutions (organizations) that provide key technologies to start-up Biotech and Pharmaceutical
Companies shall not be subject to Article 34 of the Act of Governing the Appointment of Educators
and Paragraph 1, Article 13 of the Civil Servants Work Act, which prohibit business operation and
limit the total shares held in a business to ten percent (10%), or Article 13 Paragraph 2, and Article
14 of the Civil Servants Work Act, which restrict research personnel from holding other positions
concurrently. Nevertheless, relevant provisions under the Act on Recusal of Public Servants Due to
Conflict of Interest shall still apply.
A start-up Biotech and Pharmaceutical Company referred to in the preceding paragraph is a Biotech
and Pharmaceutical Company incorporated and registered within eight (8) years.
The determination of research personnel in public schools at the junior college level and above or
public research institutions (organizations) as described in Paragraph 1, the types and number of
jobs that research personnel may concurrently hold, the percentage of investment in the form of
technology know-how as capital, disclosure of relevant information on business operation, recusal
due to conflict of interest, supervision, audit, and other matters to be observed shall be prescribed by
the Executive Yuan in conjunction with the Examination Yuan.
Article 13
In order to advance the technologies in the Biotech and Pharmaceutical Industry, to enhance the
R&D collaboration among industrial players, public institutions and the research and academic
sectors, and to promote the advancement of the Biotech and Pharmaceutical Industry, research
personnel in public schools at the junior college level and above or public research institutions
(organizations) may, subject to the consent of their schools or institutions (organizations), serve as
R&D advisors or consultants to Biotech and Pharmaceutical Companies.
Article 14
To expedite the review and approval of new biotech and pharmaceutical products and facilitate
product launch, each central competent authority in charge of the industry concerned shall establish
open and transparent procedures and a unified review system for the necessary pre-market approvals,
including field tests, clinical trials, product registration and others. Furthermore, these authorities
shall develop professional review capabilities and refine the relevant review standards.
To facilitate the R&D of biotech and pharmaceutical products and technologies, the Competent
Authority and each central governmental authority in charge of the industry concerned may provide
assistance in establishing testing sites for products and technologies under research and
development.
Article 15
Any persons or entities that receives tax incentives under other laws or regulations shall not receive
the tax credits provided under this Act for the same matters.
If a Biotech and Pharmaceutical Company has, within the past three (3) years, committed a material
violation of any law governing environmental protection, labor or food safety and sanitation, as
confirmed by the central governmental authority in charge of the industry concerned, the Biotech
and Pharmaceutical Company shall be ineligible to apply for any of the tax incentives under Article
5 or 6 hereof. Additionally, its right to receive such tax incentives, if any, shall be terminated, and
any tax benefits already received during the period of such violation in accordance with the
aforementioned articles shall be recovered.
Where a tax incentive has to be terminated and recovered in accordance with the preceding
paragraph, the Ministry of Finance shall publish the name of the Biotech and Pharmaceutical
Company on its official website once the decision on the termination or recover becomes final.
Article 16
For any top executive or technology investor who chooses to exclude the shares from their taxable
income for the year in which such shares are acquired pursuant to Paragraph 1, Article 9, or
Paragraph 5, Article 10 hereof, the Biotech and Pharmaceutical Company shall, prior to January 31
following the year in which such shares are transferred (including a book-entry transfer), submit a
declaration detailing the transfer of such shares to the competent taxation authority in the prescribed
format. Failure to submit the report by the deadline or the submission of an inaccurate declaration
will result in the taxation authority ordering a supplemental report within a specified period and
imposing a fine on the representative of the Biotech and Pharmaceutical Company a fine equivalent
to ten percent (10%) of the unreported or underreported income; provided that the fine does not
exceed NT$500,000 and is no less than NT$50,000. The fine shall be reduced by fifty percent (50%)
for the delayed submission if the Biotech and Pharmaceutical Company submits the declaration
before being ordered to do so by the taxation authority.
Where a Biotech and Pharmaceutical Company fails to submit a supplemental declaration by the
deadline as ordered by the taxation authority, the representative of the company shall be subject to a
fine equivalent to fifteen percent (15%) of the unreported or underreported income; provided that
the fine does not exceed NT$1 million and is no less than NT$100,000.
Article 17
This Act shall come into force on the date of its promulgation and shall remain in effect until
December 31, 2031, except that the valid period for Articles 5 to 10, as amended on December 21,
2021, shall be from January 1, 2022 to December 31, 2031. |