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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) so that it can bring about changes in the economic structure of the
country.
Article 2
This Act aims to promote 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
The following terms shall have the following meanings when used in this Act:
1.“Biotech and Pharmaceutical Industry” refers to the industry that deals in 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 subject industry.
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 subject industry.
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 subject industry.
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 subject industry.
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 subject industry; 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 subject industry.
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 subject industry 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 Biotech and Pharmaceutical Industry, a Biotech and
Pharmaceutical Company that engages in the business activities identified 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 aforesaid five-year period.
With respect to the investment tax credit referred to in the first paragraph of this article, 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 has invested in brand-new machinery, equipment or
system, for such investment amount of between NT$10 million and NT$1 billion spending in the
same taxable year, it may select one of the following methods for crediting the funds so invested by
it against the profit-seeking enterprise income tax payable in the taxable year. Once the Biotech and
Pharmaceutical Company selects a method, it cannot change its selection, and the creditable amount
shall not exceed thirty percent (30%) of the profit-seeking enterprise income tax payable by it 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 by it in the then current year from the first year the
Biotech and Pharmaceutical Company has payable profit-seeking income tax; and
2. Up to three percent (3%) of the annual investment amount may be credited against the
profit-seeking enterprise's income tax payable in each of the three years from the first year the
Biotech and Pharmaceutical Company has payable profit-seeking income tax.
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 effects 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 in each taxable year.
The regulations governing the scope of eligibility for the tax credit for investment identified in the
preceding three paragraphs, the investment proposal capable of generating certain effects, the
application deadline, the 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
In order to encourage the establishment or expansion of Biotech and Pharmaceutical Companies, a
profit-seeking enterprise that (i) subscribes for the shares issued by a Biotech and Pharmaceutical
Company at the time of the latter's establishment or subsequent expansion; 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 has payable profit-seeking enterprise
income tax, 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 in accordance with 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 the new shares issued thereby and holds such shares for three (3) years, up to fifty
percent (50%) of the investment may be excluded from the individual's consolidated income 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 benefits 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 benefits 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
In order to encourage top executives and technology investors to participate in the operation of
Biotech and Pharmaceutical Companies and R&D activities, and to share their achievements, the
new shares issued by a Biotech and Pharmaceutical Company to top executives as bonus or
compensation and to technology investors in return for their contribution of technology know-how
may be elected to be excluded from their taxable income for the year in which such shares are
acquired. Once an election is made, it cannot be changed. However, if a top executive or technology
investor has elected to exclude such new shares from his/her/its 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 in
the revenue for the year of the transfer and be declared for assessment of income tax in accordance
with the Income Tax Act.
Where a top executive or an individual technology investor has elected to exclude the shares from
his/her annual 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 his/her 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 included as the revenue for the year of the
transfer and be declared for assessment of income tax 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 assessment of income tax or has declared the
price for assessment of income tax but cannot provide documentary proof of the original acquisition
price, and the taxation authority cannot find the original acquisition price.
The transfer described 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
change in ownership due to other causes.
The top executives 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; the 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 his/her costs and necessary
expenses shall be calculated at thirty percent (30%) of his/her revenue and be deducted from his/her
taxable income.
The tax benefits 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 at the place 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 mentioned above to the Competent Authority for recordation. A copy of each of the
evidentiary documents shall also be submitted to the taxation authority at the place where the
Biotech and Pharmaceutical Company is located.
The scope of expertise or technology in the Biotech and Pharmaceutical Industry referred to in
Paragraph 4, the required format, documents, deadlines and procedures for the certification and
recordation applications referred to in the preceding paragraphs, and other relevant matters shall be
prescribed by the Competent Authority.
The procedure for declaring deferral of the income tax payable on the shares acquired by the top
executives and technology investors under Paragraphs 1 and 2, the documents required to be
submitted and other related matters shall be prescribed by the Ministry of Finance.
Article 10
Biotech and Pharmaceutical Companies may grant 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 (i) by a majority vote at a board meeting attended by at
least two-thirds (2/3) of all the directors; and (ii) by 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. The amount of the stipulated price shall not be subject to
the minimum requirement, i.e., 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 top executives and technology investors shall not sell or gift the stock options received pursuant
to Paragraph 1 of this article; the same applies to those who inherited such stock options.
Paragraphs 1 to 3, 5 to 7 and 8 of the preceding article apply to 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 application for certification and recordation with
the Competent Authority. The procedure for declaring deferral of the income tax payable on the
shares acquired by those who exercise their stock options, the documents required to be submitted,
and other relevant matters shall be prescribed by the Ministry of Finance.
The requirements for applying with the Competent Authority for the issuance of stock options
pursuant to Paragraph 1 hereof, the documents required to be submitted, and other relevant matters
shall be prescribed by the Competent Authority.
Article 11
In order to introduce or transfer advanced biotech and pharmaceutical technologies, organizations
formed with government funds to provide technical assistance shall provide appropriate technical
assistance as may be necessary.
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 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 under the preceding paragraph is a
Biotech and Pharmaceutical Company incorporated and registered less than eight (8) years ago.
The determination of research personnel in public schools at the junior college level and above or
public research institutions (organizations) 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 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), act as R&D advisors or
consultants to Biotech and Pharmaceutical Companies.
Article 14
In order to expedite the review and approval of new biotech and pharmaceutical products and
facilitate the launching thereof, with respect to the steps to be taken by each central governmental
authority in charge of the subject industry before launching a new biotech and pharmaceutical,
including the review and approval of field tests, clinical trials, product registration and others, each
of the central governmental authorities in charge of the subject industry shall establish an open and
transparent procedure as well as a unified review and approval system, and shall build up
professional review capability and refine the relevant review standards.
The Competent Authority and each central governmental authority in charge of the subject industry
may provide assistance in the establishment of testing sites for products and technologies under
research and development in order to facilitate the R&D of biotech and pharmaceutical products and
technologies.
Article 15
Anyone that receives tax benefits under other laws or regulations shall not receive the tax credits
provided under this Act for the same matters.
In the event that a Biotech and Pharmaceutical Company committed a material violation of any law
governing environmental protection, labor or food safety and sanitation in the past three (3) years,
and such material violation has been confirmed by the central governmental authority in charge of
the subject industry, the Biotech and Pharmaceutical Company shall not apply for any of the tax
benefits under Article 5 or 6 hereof, its right to receive such tax benefits, if any, shall be terminated,
and it shall return any and all of the tax benefits already received in accordance with the above-cited
articles during the period of such violation.
Where a tax benefit has to be terminated or returned in accordance with the preceding paragraph,
the Ministry of Finance shall publish the name of the Biotech and Pharmaceutical Company on its
official website after the decision on the termination or return becomes final.
Article 16
For any top executive or technology investor who elects to exclude the shares from his/her/its
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), file
information on the transfer of such shares with the competent taxation authority in the prescribed
format. In the event that the Biotech and Pharmaceutical Company fails to file such information by
the deadline or files inaccurate information, the taxation authority shall order it to file a
supplemental report within a time limit and impose on the representative of the Biotech and
Pharmaceutical Company a fine equivalent to ten percent (10%) of the income that should have
been declared or has been omitted; 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 filing if the
Biotech and Pharmaceutical Company files the information before it is ordered by the taxation
authority to do so.
Where a Biotech and Pharmaceutical Company fails to file a supplemental report on the above
information by the deadline as ordered by the taxation authority, the representative of the Biotech
and Pharmaceutical Company shall be subject to a fine equivalent to fifteen percent (15%) of the
income that should have been declared or has been omitted; 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.
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