Profit-seeking Enterprises Applying for Investment Tax Credit Should Pay Attention to Application Deadline for the Recognition of R&D Activities and Project Expenses to Competent Authorities.
According to the National Taxation Bureau of Taipei, Ministry of Finance, companies or limited partnerships that invest in R&D expenses may, in accordance with Article 10 of the Statute for Industrial Innovation, choose to offset up to fifteen percent of the R&D expenses against the profit-seeking enterprise income tax payable in the then-current year, or to offset up to ten percent of the R&D expenses against the profit-seeking enterprise income tax payable in the three subsequent years. Once the incentive is chosen, it cannot be changed, and the creditable amount shall not exceed 30 percent of the profit-seeking enterprise income tax payable in the then-current year.
The Bureau explained that, if a company or a limited partnership has not violated the laws related to environmental protection, labor safety and health, or food safety and sanitation laws in the past three years, and if the company or limited partnership intends to apply for investment tax credit for R&D expenses, the company or limited partnership shall apply for the recognition of R&D activities by submitting relevant documents to competent authorities within three months prior to the beginning of the current year's profit-seeking enterprise income tax return filing period to the deadline of such period.
The Bureau gave an example. If the fiscal year of a company or limited partnership is on a calendar year basis, the company or limited partnership shall apply for the recognition of R&D activities from February 2024 to the end of May 2024 if the company or limited partnership intends to apply for the investment tax credit for R&D expenses for 2023. The date of application shall be determined by the date on which the application documents are delivered to competent authorities. For postal delivery, the application shall be sent by registered mail, and the postmark date on the day of delivery shall be used as the date of application, and the application shall not be processed if it is submitted after the deadline. In addition, if there are: (1) proprietary technologies purchased or used exclusively for R&D purposes; (2) professional or specialized databases, software programs, and systems purchased exclusively for R&D purposes; (3) expenses incurred for commissioning research to foreign universities, colleges, or research institutes or for hiring full-time faculty members from foreign universities, colleges, or research institutes; and (4) expenses incurred for conducting joint R&D activities with domestic and foreign companies, universities, colleges, or research institutes, which are intended to apply for project recognition, the applicant shall submit an application to competent authorities together with an application for recognition of the R&D activities.
Lastly, the Bureau would like to remind companies or limited partnerships that intend to apply for the investment tax credit under Article 10 of the Statute for Industrial Innovation for R&D expenses for the year 2023 that they should apply for the recognition of R&D activities and project expenses to competent authorities within the aforementioned period so as not to jeopardize the right to apply for the tax credit.
(Contact Person: Tsai, Chief of the Profit-seeking Enterprise Income Tax Division; Tel: 2311-3711 ext. 1284)
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=095c63c3b03b4132b0f4767db3232cc3