Taiwan’s legislature gives greenlight to amendment to the Act for Development of Biotech and New Pharmaceuticals Industry

E211221Y9 Jan. 2022(E266)
 The amendment to the Act for the Development of Biotech and New Pharmaceuticals Industry cleared its third reading at the Legislative Yuan on December 21, 2021 and the Act is renamed as the “Act for the Development of Biotechnology and Pharmaceutical Industry” (a tentative English translation).  

 Ever since July 4, 2007 when the Act for the Development of Biotech and New Pharmaceuticals Industry was promulgated and enforced, the Act has been facilitating the innovative development of Taiwan’s biotech, medical, and pharmaceutical industries and leading to these industries’ production of biotech and pharmaceutical products with high added value through enforcement of tax benefit measures.  With many biotech and pharmaceutical products of Taiwan launched, Taiwan’s new drugs and high risk medical devices have been introduced into the international market.  

Key points of the amendment are summarized as follows.  

1.  The period of enforcement of the Act is extended until the end of 2031.  

2.  Expansion of scope of applicability:  The scope of the administration and applicability of the Act are broadened to cover, in addition to new drugs and high risk medical devices, also new dosage form preparations, regenerative medicine, precision medicine, digital health, the innovative technology platforms especially for biotechnology and pharmaceutical industries, and also contract development and manufacturing organizations.  Moreover, “emerging biotech and pharmaceutical products” are redefined as “other strategic biotech and pharmaceutical products”.  

3.  Tax incentives for R&D:  A biotech and pharmaceutical company that is engaged in research, development, and manufacturing may enjoy a reduction of its profit-seeking enterprise income tax payable for up to 25% of its total funds invested in research and development for a period of five years from the time it is subject to that tax.  

4.  Tax incentives for investment in new machinery and equipment:  A biotech and pharmaceutical company that invests at least TWD10 million up to TWD1 billion in one year in new machinery, equipment, or system for manufacturing will receive a 5% reduction of its profit-seeking enterprise income tax for that year or 3% reduction of the same tax for three consecutive years, and the tax reduction is up to 30% per year.  

5.  Tax reduction for corporate shareholders investment:  A profit-seeking enterprise that makes capital investment by cash in any biotech and pharmaceutical company will receive a reduction of its profit-seeking enterprise income tax for 20% of its investment, up to 50% thereof per year.  Moreover, the contract development and manufacturing companies engaged in biotech and pharmaceuticals to which a profit-seeking enterprise makes investment are limited to those that are not listed on the Taiwan Stock Exchange nor on the Taipei Exchange, or those TWSE or TPEx listed companies that have been incorporated for less than ten years.  

6.  Tax reduction for individual shareholders investment:  For any individual shareholder who makes investment in cash in one biotech and pharmaceutical company that is neither listed on the Taiwan Stock Exchange nor on the Taipei Exchange, the individual shareholder can receive an income tax reduction up to 50% his/her investment for two years, provided that his/her investment is more than TWD1 million and his/her shareholding in that company continues for three consecutive years.  The tax reduction is up to TWD5 million per year.  

7.  Tax benefits to high-level professionals and technology investors:  The high-level professionals who acquire shares as considerations and technology investors who acquire shares through exchange of technology or those who acquire shares by holding share subscription warrant and have held their shares and taken up employment or provided technical services for two consecutive years may choose to have the tax on them to be levied on the basis of the “actual price at the time of transfer” or “then-current price or the actual price at the time of purchase”, whichever is lower.  

 Greenlight to the amendment of the Act for the Development of Biotechnology and Pharmaceutical Industry is a milestone for the development of Taiwan’s biotech and pharmaceutical industry, which will bring new energy to the industry, spur advanced medicine and cross-sector collaboration, develop high-tech products, facilitate equal development of R&D and manufacturing, invite private investments, and strengthen the incentives to talent retention and talent recruitment.  (Released 2021.12.21) 
/CCS

TIPLO ECARD Fireshot Video TIPLOBrochure_English TIPLO News Channel TIPLO TOUR 7th FIoor TIPLO TOUR 15th FIoor