[News] Four Semiconductor Applicants for Taiwan’s Chip Act Tax Incentives – TSMC and MediaTek Expected to Benefit

The application period for the tax incentives under Taiwan’s Chip Act ended in late May. According to a report from the Economic Daily News, the Ministry of Economic Affairs announced on June 3rd that four semiconductor-related companies have applied, with the review process expected to be completed by mid to late July. Reportedly, it is said that major semiconductor companies, such as TSMC and MediaTek, have submitted their applications.

Under this act, eligible companies can benefit from certain tax deduction measures, including a 25% tax deduction for expenses on cutting-edge innovative R&D expenses and a 5% deduction on expenses of advanced process equipment, reportedly to be the most generous tax deduction measures ever in Taiwan.

The first round of applications from enterprises was accepted in February of this year, with the deadline on May 31st.

Regarding the eligibility criteria, according to the investment deduction measures announced by the Ministry of Economic Affairs, an eligibility company’s R&D expenses must reach NTD 6 billion, while its R&D intensity be at least 6%, and expenditures on equipment for advanced processes must reach NTD 10 billion.

The aforementioned criteria are not restricted by industry category. However, an effective tax rate of 12% for 2023 is required to qualify for the tax reductions under Article 10-2 of the Statute for Industrial Innovation.

Per the same report, it is understood that in 2023, there are nine listed companies meeting the two major thresholds, namely, reaching the NTD 6 billion threshold for R&D expenses and an R&D intensity of 6%, of which TSMC and MediaTek may potentially benefit from.

The Industrial Development Bureau stated that only four companies have applied for the tax benefits under the Taiwan Chip Act. They did not disclose the names of these companies, only mentioning that all applicants are semiconductor-related firms. It is widely anticipated that TSMC and MediaTek, the two most competitive companies in the country with the highest investment in R&D, are likely to benefit from the Taiwan Chip Act.

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• [News] Taiwan’s Chip Act Takes Effect in February, TSMC to Benefit from Historic Tax Incentives

(Photo credit: TSMC)