Many foreign-invested companies in Taiwan are unaware that Taiwan provides substantial R&D and investment tax credits for technology, AI, and advanced manufacturing activities.
With the filing deadline for FY2025 claims approaching on June 1, 2026, eligible companies should review their structures and expenditures now.
📌 Key Taiwan Tax Incentives
✅ Article 10-1 – Equipment Investment Tax Credit
• 5% current-year credit or 3% over 3 years
• Expanded in 2025 to include:
AI / machine learning / LLM systems
Smart machinery
Cybersecurity
Energy-saving and carbon reduction equipment
The maximum eligible investment amount was also increased to NTD 2 billion.
⚠ Common Issues We Frequently See
Many foreign-invested enterprises unintentionally lose these incentives because of:
• Missing the MOEA pre-registration requirement
• Missing the June 1 filing deadline
• Including non-qualifying expenditures
• Improper intercompany R&D arrangements
In practice, we have seen Taiwan R&D centers of foreign groups leave substantial tax credits unused simply because the intercompany arrangements were not properly structured or documented.
📍Example
A Taiwan R&D subsidiary with:
• NTD 117 million qualifying R&D expenditure could potentially obtain:
➡ NTD 17.55 million direct corporate income tax credit
This is a direct reduction of corporate income tax payable, not merely a deduction.
💬 LY CPA Perspective
Taiwan’s R&D and investment tax incentives remain one of the most practical and valuable tax benefits available to technology-focused businesses operating in Taiwan.
However, timing and documentation are critical.
For groups with cross-border R&D arrangements, transfer pricing and contractual structures should also be reviewed carefully to avoid jeopardizing both:
• the tax credit position, and
• transfer pricing compliance.
⏰ Important Deadlines
• June 1, 2026:
Final deadline for FY2025 tax credit claims
• May 27, 2026:
Special deadline for certain transitional Article 10-1 extension applications
If your Taiwan entity incurred R&D or AI equipment investment expenditures during 2025, now is the time to assess eligibility.
🔗 LY CPA – Domestic Tax Advisory
🔗 LY CPA – Tax Health Check
