RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/TPKM/9/Rev.2
7 June 1999
(99-2276)
Working Party on the
Accession of Chinese TaipeiOriginal:  English
ACCESSION OF CHINESE TAIPEI
Notification Pursuant to Article XVI.1 of the GATT 1994 and
Article 25 of the Agreement on Subsidies and
Countervailing Measures
Industrial subsidies
Revision
The following communication has been received from the Representation of the Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu with the request that it be circulated to
members of the Working Party.
______________
CONTENTS
Programme Page No.
I. TAX CREDITS OR TAX EXEMPTIONS FOR DESIGNATED
ENTERPRISES
(i) Five-year tax exemption for designated enterprises 1
(ii) Accelerated depreciation against fixed assets 3
(iii) Tax credits for  the creation of internationally recognized brands
(iii) Tax credit for investment in disadvantaged region 5
II. LOANS
- Loans for Small and Medium Enterprises
(i) Specific and urgent financing and loans intended for promoting
competitiveness, for plant site relocation, for working capital needed
during periods of economic crisis and recession, and for recovery plans
from damage caused by major natural disasters7
(ii) Medium and long term loans for product marketing, and loans for
overseas investment and construction projects9
(iii) Specific loans for mutual cooperation 11
- Loans for Private Enterprises
(iv) Loans at lower market interest rates for small and medium
enterprises and private enterprises12WT/ACC/TPKM/9/Rev.2
Page ii
Programme Page No.
III. DUTY AND TAX EXEMPTIONS GRANTED TO ENTERPRISES
LOCATED WITHIN A DESIGNATED ZONE
(i) Duty and tax exemptions for high-technology industries 16
(ii) Duty and tax exemptions for in-zone enterprises 19
IV. D. RESEARCH AND DEVELOPMENT
(i) Fund granted for development of products of the ten new leading
industries22WT/ACC/TPKM/9/Rev.2
Page 1
I.  TAX CREDITS OR TAX EXEMPTIONS FOR DESIGNATED ENTERPRISES
1. Title of the programme
Five-year tax exemption for designated enterprises
2. Period covered by the notification
Fiscal years 1995-1997 (July 1994 to June 1997)
3. Policy objective and/or purpose
The primary goal of the tax incentives is to promote the development of hi-tech and high
value-added industries.
4. Background and responsible authority
(a) Laws:
- 1995 amendment to the Statute for Upgrading Industries, Article 8(1) on five-year tax
exemption
(b) Responsible authority:
The responsible authorities are the Industrial Development Bureau, the Ministry of Economic
Affairs and the Ministry of Finance.
Note: The SUI was promulgated on December 29,1990, followed by an amendment on January 10,
1995, and will cease to be effective on December 31, 1999.
5. Form
Tax exemption
6. To whom and how assistance is provided
An important technology-based enterprise or an important invested enterprise may apply
within two years from the beginning date for paym ent of the capital contributions by its shareholders
and with the approval of its shareholders meeting, to be exempted from corporate income tax.
To qualify for “important technology-based enterprises”, the following three criteria
should be met: (1)products to be produced under the investment plan should belong to the ten
emerging industries;(2)the paid-in or increased paid-in capital for the investment plan should
be over NT$ 200 million; and(3)the amount of the fund available for the purchase of brand-newmachinery/equipment in the investment plan  should be over NT$100 million. "Important
invested enterprises" include en terprises in the manufacturing as well as services industries. In
other words, the products to be produced under the investment plan are not limited to those of
the ten emerging industries. The criteria for paid-in or increased paid-in capital and the
amounts of funds for purchasing brand new equipment/machinery are different from industryto industry:WT/ACC/TPKM/9/Rev.2
Page 2
Unit: NT$ billion
Industries Paid-in capital $
(or increased paid-in capital $)Machinery purchase $
Manufacturing 2 2
Shopping mall 2 2
Transportation 2 2
Audio-visual service 0.2, 0.3, 0.6 or 1.2
for different enterprises0.2, 0.3, 0.6 or 1.2
for different enterprises
In the case of a newly incorporated enterprise, the tax exemption is for a period of five
consecutive years from the date on which it begins to market its products or to render services.
In the case of the expansion of an existing enterprise, the exemption applies to the corporate
income tax levied on the increased income derived as a result of such expansion for a period of fiveconsecutive years from the date the newly added equipment starts to operate or the rendition of
services begins; provided, however, that the exemption applies only to an expansion in the form of the
establishment of additional independent production or service units, or for increase of major
production or service equipment.
An eligible enterprise applying the tax exemption may, within two years from the date on
which it starts to market its products or to render services, defer, at its own discretion, the
commencement date of the tax exemption period.  The maximum period of such deferment is four
years.  Furthermore, the commencement date of such deferred tax exemption period should be the
beginning date of a fiscal year.
7. Amount
While the programme was passed by the Legislative Yuan in 1995, the relevant enforcement
rules were not announced by the Executive Yuan until 31 January 1996. Furthermore, it normallytakes two to three years, or longer, from the enterp rise’s proposal of investment to the sale of the
products. Therefore, there is no official statistics so far with respect to the Programme.
8. Duration
The programme was initiated in 1995. The Statute for Upgrading Industries will expire in
1999,at which time Chinese Taipei will conduct a review of the Programme.
9. Trade effects or related statistical data
In light of the scope and nature of the programme, it is not possible to determine what, if any,
trade effects  may result from this programme.WT/ACC/TPKM/9/Rev.2
Page 3
1. Title of the programme
Accelerated depreciation against fixed assets
2. Period covered by the notification
Fiscal years 1995-1997 (July 1994 to June 1997)
3. Policy objective and/or purpose
The measure is intended to encourage structural adjustment by labour-intensive industries
through automation of their operation.
4. Background and responsible authorities
(a) Laws :
- Statute for Upgrading Industries (hereinafter referred to as the “SUI”) Sub-paragraph
(2), Paragraph 1 of Article 5
(b) Responsible authorities:
- the Industrial Development Bureau, Ministry of  Economic Affairs
- Ministry of Finance
Note: The SUI was promulgated on December 29, 1990 and an amendment on 10 January 1995, and
will cease to be effective on December 31, 1999.
5. Form
Accelerated appreciation against profit-seeking enterprise  corporate  income tax.
6. To whom and how assistance is provided
In order to facilitate the adjustment of industrial structure and improvement of the economic
scale of operation and process of production, companies which are incorporated pursuant to the
Company Law and belong to the designated industries can have the service life of their machinery and
equipment accelerated by one-half of the number of years set forth under the Income Tax Law.  If the
period so derived is short of a full year, the portion short of a full year should not be counted.
In case of under-depreciation during the accelerated service life, asset depreciation may
continue for one year or several years within the service life of such asset as specified by the Income
Tax Law until permissible depreciation is fully made.
The scope of industries eligible for this tax benefit and the duration of the measure is
prescribed by the Executive Yuan and subject to review once every two years.
7. Amount
The Programme has never been operational because the scope of the “specifically designated
industries” has not been defined by Chinese Taipei since the promulgation of this provision; also, it is
because the current Schedule of Fixed Assets Service Life has been constantly adjusted downward byWT/ACC/TPKM/9/Rev.2
Page 4
the Ministry of Finance. As a result, there has been no application for the tax benefit under the
Programme.
8. Duration
The programme was initiated in 1991. The Statute for Upgrading Industries will expire
in 1999 at which time Chinese Taipei will conduct a review of the Programme.
9. Trade effects or related statistical data
In light of the scope and nature of the programme, it is not possible to determine what, if any,
trade effects which may result from this programme.WT/ACC/TPKM/9/Rev.2
Page 5
1. Title of the programme
Tax credit for investment in disadvantaged region.
2. Period covered by the notification
The fiscal year 1997 (July 1996 to June 1997).
3. Policy objective and/or purpose
With the aim of achieving balanced economi c growth within the territory of Chinese
Taipei, the means of tax credit is used to encourage investment in disadvantaged geographic
regions.
4. Background and authority
(a) Law:
Statute for Upgrading Industries (hereinafter referred to as the "SUI"), Article 7.
(b) Responsible authority
The Industrial Development Bureau, Ministry of Economic Affairs.
Note: The SUI was promulgated on 29 December 1990 followed by an amendment on
10 January 1995, and will cease to be effective on December 31, 1999.
5. Form
Tax credit against corporate income tax.
6. To whom and how assistance is provided
Any company incorporated under the Co mpany Law, which makes investment in
designated industries in a region with scanty natural resources or with slow development, may
gain credits of up to twenty per cent of the total amount of its investment against the corporate
income tax levied in the then current year, provided it meets the threshold of capital or the
threshold number of employees.  If the amount of corporate income tax levied in that year is less
than the tax credit, the balance of the tax credi t may be applied against the corporate income
tax levied in the ensuing four years.
The eligible geographical regions are the last ranking eight counties in Chinese Taipei in
terms of population, employment rate, communication facilities, tax revenue, average regular
income per household, infrastructure, and other indices, plus Kinmen County and Lien-chiangCounty. The latter two Counties are two small offshore islands with slow economic
development. They would always be eligible if the aforementioned criteria are applied on them.
The designated industries referred to above include all manufacturing industries and
several service industries.
The threshold capital means th e total amount used in procuring brand-new machinery,
equipment and building aggregates to NT$25 million. The minimum number of employeesWT/ACC/TPKM/9/Rev.2
Page 6
means the monthly average of the number of newly employed employees in a full year amounts
to fifty (50) persons or more.
The criteria used by Chinese Taipei are more  stringent than those under Article 8 of the
SCM Agreement. The reason for Chinese Taipei’s  adoption of factors other than the two
economic indicators prescribed by the SCM Ag reement is mainly based on the consideration
that these criteria reflect the real conditio n of scanty resources and the slow economic
development in the areas concerned. If the SC M’s index were applied, more regional zones
would be eligible for tax credits.
7. Amount
(a) Since the programme's inception, the total accumulated amount is:
NT$700,929,000 (fiscal years 1993-1997)  (US$1=NT$27.81, June 1997 rate)
(b) For the fiscal year 1997:
NT$316,056,000
(c) Statistical data available for the three most recent years:
FY 1995 FY 1996 FY 1997
239,173,000 143,173,000 316,056,000
8. Duration
The programme was initiated in 1993. The Statute for Upgrading Industries will expire
in 1999, at which time Chinese Taipei will conduct a review of the Programme.WT/ACC/TPKM/9/Rev.2
Page 7
II. LOANS
- Loans for Small and Medium Enterprises
1. Title of the programme
Specific and urgent financing and loans intended for  promoting competitiveness, for plant
site relocation, for working capital needed during  periods of economic crisis and recession,
and  for recovery plans from damage caused by major natural disasters.
2. Period covered by the notification
Fiscal years 1995-1997 (May 1992 to June 1998  July 1994 to June 1997 )
3. Policy objective and or/purpose
The qualified SMEs which meet the following conditions are entitled to apply for the
financing and loans:
(a) Specific financing is provided for management plans to enhance competitiveness, expand
R&D, prevent environmental contamination, invent new products, and upgrade product
quality, etc.
(b) Urgent financing is provided for the provision of working capital during periods of significant
financial crisis, recession, and major natural disasters.
(c) The loans are provided for helping enterprises restructure during periods of economic crisis
and recession, replace machinery, and purchase new automated equipment.
4. Background and responsible authorities
(a) Laws:
- Statute for the Development of SMEs (Articles 9,15,16,17,18)
- Regulation for Collection and Payment, Management and Operation of the Fund for
the Development of SMEs
- The Fund for the Development of SMEs was established Based on Article 9 of
Statute for the Development of SMEs.
(b) Responsible authorities:
The responsible authority  is the Ministry of Economic Affairs.
Note: While the SME Development Fund was planned to be NT12 billion, its accumulated
amount reached 9.1 billion as of the end of fiscal year 1997.
5. Form
Financing and loan.WT/ACC/TPKM/9/Rev.2
Page 8
6. To whom and how assistance is provided
All enterprises which meet the Criteria for  Identification of SMEs set by the Executive Yuan
are eligible for application.
According to the “Standards for Recognition as SME”, published by the Ministry of
Economic Affairs, SME refers to an enterpri se which is a company or commercial enterprise
registered in accordance with the law with capitalization or business volume below the following
thresholds:
(a) for enterprises engaged in manufacturing, construction, mining, or excavating business,
paid-in capital of less than NT$60 million.
(b) for enterprises engaged in agriculture, loggin g, fishing, the raising of livestock, utilities,
commerce, transport, warehousing, communicat ions, finance, insurance, real estate,
commercial, social or individual services, with annual business volume of less than
NT$80million in the previous year.
The loan granted is shared by the SME Development Fund and other participating banks on a
25/75 per cent basis.  The ceiling interest rate is 1 per cent above the prime rate of Bank of Taiwan.
7. Amount
Statistics for Specific Programmes: Loaned by the Fund for the Development of SMEs
 Unit: million NT
Title of Programme FY
1994
1995FY 1995
1996FY 1996
1997
Specific financing for enhancing competitiveness 922 834 879
Loans for helping enterprises restructure and plant site
relocation1,002 825 578
Urgent financing for the provision of working capital during
periods of significant financial crisis, recession00 0
Urgent financing for major natural  disasters 111 0 35
8. Duration
The programmes are not subject to any fixed completion date.
9. Trade effects or related statistical data
Given the fact that in Chinese Taipei 98 per cent of enterprises can meet the criteria set by the
Executive Yuan and be termed as SMEs, it is difficult to estimate the trade effects of these
programmes.WT/ACC/TPKM/9/Rev.2
Page 9
1. Title of the programme
Medium and long term loans for product marketing, and loans for overseas investment and
construction projects
2. Period covered by the notification
Fiscal years 1995-1997 (July 1994 to June 1997)
3. Policy objective and or/purpose
Those programmes are implemented with the purpose of providing SMEs with financial
assistance in exploring new markets for their machinery and equipment, in investing and establishing
plants in foreign countries, and in undertaking the overseas contracts for construction projects.
4. Background and responsible authorities
(a) Laws:
- Statute for the Development of SMEs ( Articles  9,15,16)
- Regulation for Collection and Payment, Management,  and Operation of the Fund for
the Development of SMEs ( it is stipulated in Article 9 of Statute for the
Development of SMEs)
(b) Responsible authority:
The responsible authority is the Ministry of Economic Affairs.
5. Form
Loan
6. To whom and how assistance is provided
(a) All enterprises which meet the Criteria for Identification of SMEs set by the Executive Yuan
are eligible to apply.
(b) The approved application for loans are implemented by commercial banks; however, the
capital needed is provided entirely by the SME Development Fund.
7. Amount
Loaned by the Fund for the Development of SMEs:
FY 1995         NT$23 million
FY 1996         NT$157 million
FY 1997         NT$281 million
8. Duration of subsidy
The programmes are not subject to any fixed completion date.WT/ACC/TPKM/9/Rev.2
Page 10
9. Trade effects or related statistical data
Given the fact that in Chinese Taipei 98 per cent of enterprises can meet the criteria set by the
Executive Yuan and be termed as SMEs, it is difficult to estimate the trade effects of these
programmes.WT/ACC/TPKM/9/Rev.2
Page 11
1. Title of the programme
Specific loans for mutual cooperation
2. Period covered by the notification
Fiscal years 1996 1995 -1997 (July 1996 1994  to June 1997)
3. Policy objective and/or purpose
The programme is implemented to encourage SMEs’ prosperity through their mutual
cooperation.
4. Background and responsible authority
(a) Law
- Statute for the Development of SMEs ( Articles 7, 9,   25)
- Regulation for Collection and Payment, Management, and Operation of the Fund for
the Development of SMEs
(b) Responsible authority
The responsible authority is the Ministry of Economic Affairs.
5. Form
Loan
6. To whom and how assistance is provided
All enterprises which meet the Criteria for Identification of SMEs set by the Executive Yuan
are eligible to apply.
The granted loans are provided by the SME Development Fund and other undertaking banks
on a 50/50 basis. The interest rate is 1 per cent lower than the prime rate of Bank of Taiwan.
7. Amount
No loan has been granted during fiscal years 1995-1997.
8. Duration
The programme is not subject to any fixed completion date.
9. Trade effects or related statistical data
No data availableWT/ACC/TPKM/9/Rev.2
Page 12
- Loans for Private Enterprises
1. Title of the programme
Loans at lower market interest rates for small and medium enterprises and private
enterprises
2. Period covered by the notification
The year of 1998 (Jan. 1998 to Dec. 1998)
3. Policy objective and/or purpose
The programmes are implemented with the purpose of improving production
technology and product quality, promoting industrial upgrading and achieving environment
protection through lower interest rate loans for the procurement of automation equipment,
pollution control facilities, energy-saving facilities and to assist in the upgrading of small andmedium enterprises.
4. Background and authority
(a) Laws and regulations:
Statute for Upgrading Industries (hereinafter referred to as the “SUI”), Sub-
paragraphs(2)(3), Paragraph 1 of Article 21.
(b) Responsible authorities:
- the principle of the loan is made by the Development Fund, Executive Yuan
- the loan is granted by public/private banks
5. Form
Lower interest rate loans: the financial sources of the loans are the Development Fund
(25 per cent) and the bank (75 per cent) for each loan.
6. To whom and how assistance is provided
(a) These lower interest rate loans are available to all enterprises and are not limited to a
specific industry or enterprise.
(b) Different ceilings are set for different types of  loan. In addition, only a percentage of the
total procurement amount is eligible for the loan. The amount of the granted loan is
decided by the bank, based on the financial situation of the applicant.
7. Amount
There are no official statistics with respect to the programme.
8. Duration
The projects will be implemented until the expiration of the SUI.WT/ACC/TPKM/9/Rev.2
Page 13
9. Trade effects or related statistical data
(a) Trade effects:
The programme is mainly used in promoting industry upgrading, in light of the scope
and nature of the programme, it is not possible to determine what, if any, trade effects
which may result from this programme.
(b) Related statistical data:
Total amount of loans granted in 1998
Unit: hundred million NT$
Name of Project Number of granted
casesTotal amount of granted
loans
Loans for the procurement of automation
equipment895 686.72
Loans to assist in the upgrading of small
and medium enterprises3,179 228.77
Loans to private enterprises for the
procurement of pollution control facilities126 56.01
Loans for the procurement of energy-
saving facilities39 44.29
Loans Provided for the Procurement of Automation Equipment
(the Eighth Term* - October 1998 to December 1998)
Unit: thousand NT
Total
Industry Cases Amount
Machinery 28 1,047,294
Electronics Information 230 17,570,343
Precision Machinery 3 84,289
Transport Parts 24 2,014,943
Metal 43 4,719,605
Chemicals & its Processed Products 67 4,595,413
Petrochemical 3 280,290
Textiles & Processing 46 4,968,049
Paper & Paper Products 18 715,496
Utility (includes water, electricity and gas) 0 0
Wood & Bamboo Products & Furniture 1 33,600
Foods 21 1,282,641Manu-
facturing
Other Manufacturing 22 3,301,868
Sub Total 506 40,613,831
Transport, Warehousing and Communications 8 1,249,000
Mining 3 14,600
Construction 2 50,900
Commerce 4 143,014
                                                     
* The eighth term is still on-going.WT/ACC/TPKM/9/Rev.2
Page 14
Total
Industry Cases Amount
Industry & Business, Social and Individual Services 1 400,000
Other Industries 0 0
Total 524 42,471,345
Note 1: The granted loan is provided by the Development Fund (25 per cent) and the bank (75
per cent) for each loan.
Note 2: The numbers provided above clearly indicate that funding is granted to all types of
industry and is not limited to a particular type of industry.
Loans Provided to Private Enterprises for th e Procurement of Pollution Control Facilities
(the Fifth Term* - November 1998 to December 1998
Unit: thousand NT
Total
Industry Cases Amount
Machinery 3 16,600
Electronics Information 8 551,526
Precision Machinery 0 0
Transport Parts 0 0
Metal 3 58,292
Chemicals and its Processed Products 6 755,564
Petrochemical 4 803,790
Textiles and Processing 5 85,002
Paper & Paper Products 0 0
Utility (includes water, electricity and gas) 0 0
Wood & Bamboo Products & Furniture 0 0
Foods 1 8,900Manu-facturing
Other Manufacturing 2 13,300
Sub Total 32 2,292,974
Transport, Warehousing and Communications
Mining 1 3,300
Construction 0 0
Commerce 0 0
Industry & Business, Social and Individual Services 1 119,200
Other Industries 2 245,000
Total 36 2,660,474
Note 1: The granted loan is provided by the Development Fund (25 per cent) and the bank (75
per cent) for each loan.
Note 2: The numbers provided above clearly indicate that funding is granted to all types of
industry and is not limited to a particular type of industry.
                                                     
* The fifth term is still on-going.WT/ACC/TPKM/9/Rev.2
Page 15
Loans for the Procurement of Energy-Saving Facilities
(the First Term* - April 1995 to December 1998
Unit: thousand NT
Total
Industry Cases Amount
Machinery 0 0
Electronics Information 6 746,700
Precision Machinery 0 0
Transport Parts 0 0
Metal 1 28,000
Chemicals and its Processed Products 5 1,287,111
Petrochemical 3 888,000
Textiles and Processing 5 1,517,154
Paper & Paper Products 2 770,000
Utility (includes water, electricity and gas) 6 1,245,400
Wood & Bamboo Products & Furniture 0 0
Foods 1 175,000Manu-
facturing
Other Manufacturing 0 0
Sub Total 29 6,657,365
Transport, Warehousing and Communications 42 2,866,859
Mining 0 0
Construction 0 0
Commerce 0 0
Industry & Business, Social and Individual Services 0 0
Other Industries 1 400,000
Total 72 9,924,224
Note 1: The granted loan is provided by the Development Fund (25 per cent) and the bank (75
per cent) for each loan.
Note 2: The numbers provided above clearly indicate that funding is granted to all types of
industry and is not limited to a particular type of industry.
                                                     
* The first term is still on-going.WT/ACC/TPKM/9/Rev.2
Page 16
III. Duty and Tax Exemptions Granted to Enterprises Located within a Designated Zone
1. Title of the programme
Duty and tax exemptions for high-technology industries
2. Period covered by the notification
Fiscal year 1995-1997
3. Policy objective and/or purpose
This programme is implemented with a view to stimulate the research and innovation of
industrial technology and to promote the development of advanced technology industries in Chinese
Taipei. The “Science-Based Industrial Park”(“the Park”) has been established by introducing the
sophisticated industries and personnel with advanced technological background within a designated
zone.
4. Background and the responsible authorities
(a) Law and regulation:
- Statute for the Establishment and Administration of a Science-Based Industrial Park
(Articles 15 and 17);
- Implementing Regulation of Statute  for the Establishment and Administration of a
Science-Based Industrial Park
(b) Responsible authorities:
- The Park is managed by the Park Administration;
- The policy-making body is the National Science Council of the Executive Yuan.
5. Form
The subsidy programme will be implemented in the form of duty and tax exemptions
6. To whom and how assistance is provided
(a) All high-tech industries located in the Park are exempted from Corporation income taxes for
five consecutive years from any date selected by them within their first two profit makingyear.
(b) All park enterprises are entitled to the following exemptions:
(i) customs duties, commodity tax, and business tax on imported machinery and
equipment, raw materials, commodities, fuel, and semi-finished products; and
(ii) commodity tax and business tax on exported goods or labour services.
Note 1: Park enterprises include high-tech industries and other enterprises in the Park relevant to the
production and sale of high-tech products. Such enterprises may include businesses dealingWT/ACC/TPKM/9/Rev.2
Page 17
with storage and transportation, packing, main tenance, leases on machinery and equipment,
and managerial or technological consultation and services.
Note 2: According to Section 2, Paragraph 1, Article 3 of the Commodity Tax Statute and
Article 7 of the Business Tax Statute, exports can be exempt from commodity tax, andthe business tax rate on exported goods is ze ro. These tax treatments are not specific to
enterprises located in the Park, as they are generally available for exported goods,
regardless of whether the manufacturers are located in the Park.
7. Amount
Not available
1995-1996 Corporate Income Tax Exemption in
Science-Based Industrial Park (By Sectors)
Unit: USD 1 million
Sector FY1995 FY1996
Integrated circuit 314 182
Computer 7 22
Telecom 6 3
Opto-electronics 1 2
Machinery 0.27 2
Biotechnology
Total 328 211
1995-1996 Tax Credit against Corporate Income Tax in
Science-Based Industrial Park (By Sectors)
Unit: USD 1 million
Sector FY1995 FY1996
Integrated circuit 70 59
Computer 16 15
Telecom 2 2
Opto-electronics 0.23 1
Machinery 0.15
Biotechnology
Total 89 77
Note: The assistance hereof is granted based on Article 6 of the Statute for Upgrading
Industries. Therefore, the assistance is not available only for Park Enterprises. All firmsmeeting the requirements of the said Article 6 are eligible for the assistance. However,
the amount provided hereof only represents the tax credit enjoyed by Park enterprises
under such assistance.WT/ACC/TPKM/9/Rev.2
Page 18
1995-1997 Duty & Business Tax Exemption for
Imported Machinery and Equipment
Unit: USD 1 million
Fiscal Year Import Value for
M&EAmount of Import Duty
ExemptionAmount of Business Tax
Exemption
1995 1,513 113 76
1996 3,287 247 164
1997 3,359 252 168
Note: The amount of import duty exemption for various tariff lines other than machinery and
equipment is not available because of the lack of statistics for imports into the Park by
tariff line. Since the duty rate applied aga inst each tariff line differs, we can not
calculate the exempted duty amount for all th e imports into the Park unless we have the
import statistics of the Park by tariff line.
1995-1997 Business Tax Exemption for All Imports
Unit: USD1million
Fiscal
YearTotal Import Value Total Amount of Business Tax
Exemption
1995 4,478 224
1996 8,020 401
1997 7,462 373
Note: Exchange rate in FY 1995: USD1=NT$26.16
FY 1996: USD1=NT$27.08
FY 1997: USD1=NT$27.52
8. Duration
There is no time limit attached to the programme.
9. Trade effects or related statistical data
FY 1995 FY 1996 FY 1997
Number of approved park enterprises 24 20 42
Total import value
(million NT)117,153 217,182 205,017
Total export value
(million NT)145,273 230,025 194,124
In light of the scope and nature of the programmes granted, it is not possible to determine
what, if any, trade effects which may result from this subsidy programme.WT/ACC/TPKM/9/Rev.2
Page 19
Title of the programme
Duty and tax exemptions for in-zone enterprises
1. Period covered by the notification
Calendar year 1994-1996.
2. Policy objective and/or purpose
Export  Economic  processing zones have been established for the purpose of promoting
investment and international trade.
3. Background and responsible authorities
 (a) Laws:
- Statute for Establishment and Administration of Export  Economic  Processing Zones
(the EPZ Law)( Article 1,5,13)
- Measures for the Screening of Application for Establishment of Enterprises in Export
Economic  Processing Zones
- Categories of Industry Permissible to be established in Export  Economic  Processing
Zones
(b) Responsible authorities
- Export processing zones are managed by the Export  Economic  Processing Zone
Administration.
- The policy-making body is the Ministry of Economic Affairs.- The task of reviewing the eligibility of enterprises established in export
 economic
processing zones shall be undertaken by the Export  Economic  Processing Zone
Administration together with the other government agencies involved.
Note: In-zone enterprises include industries authorized to be engaged in manufacture, processing,
assembly, research and development, trade, consultation, technical services, warehousing,transportation, stevedoring, packing, repair, and other related business approved by the
Ministry of Economic Affairs in exporting
 economic  processing zones.
5. Form
Duty and tax exemptions6. To whom and how assistance is provided
All in-zone enterprises industries are en titled to the following exemptions:
(a) Import duty, commodity tax, and business tax on imported machinery and equipment.WT/ACC/TPKM/9/Rev.2
Page 20
(b) Import duty, commodity tax, and business tax on imported raw and consumption materials,
fuels, semi-finished products, samples, and finished products for transhipment by traders and
warehousing operators.
(c) Deed tax when acquiring a new standard plant building in the export  economic  processing
zone or acquiring a building from the Export  Economic  Processing Zone Administration.
It should be noted that all machinery and equipment within five years after import and other
imported goods are not entitled to duty and tax exemptions when they are shipped to leviable areas
from export  economic  processing zones. Moreover, products manufactured by in-zone enterprises
shall be subject to customs duties, commodity taxes, and business taxes on ex-factory prices minus
value-added basis  when they are shipped to leviable areas.  While customs duties would be applied
on the basis of ex-factory prices minus value added resulting from manufacturing or processing
activities in the EPZs, other taxes would be based on the ex-factory price.
7. Amount
Not available
Percentage of EPZ Payable Tax to Export Value
Unit: thousand USD
Item           Ye ar 1996(Jan.-Dec.) 1997(Jan.-Dec.)
Imported Machinery Equipment 200,447 545,365
Imported Machinery Equipment Custom
Duty5,011 13,634
Export Value Total 6,897,065 7,934,118
Percentage 0.07% 0.17%
Average Percentage 0.12%
Export and Import Value Total 10,884,117 13,040,026
Percentage 0.05% 0.10%
Average Percentage 0.08%
Item           Ye ar 1996(Jan.-Dec.) 1997(Jan.-Dec.)
Raw Material 3,786,605 4,560,543
Raw Material Custom Duty 189,330 228,027
Export Value Total 6,897,065 7,934,118
Percentage 2.75% 2.87%
Average Percentage 2.81%
Export and Import Value Total 10,884,117 13,040,026
Percentage 1.74% 1.75%
Average Percentage 1.74%
8. Duration
There is no time limit attached to the programme.WT/ACC/TPKM/9/Rev.2
Page 21
9. Trade effects or related statistical data
1994 1995 1996
Number of approved in-zone enterprises 233 235 231
Total import value
(million US dollar)2,801 3,777 3,987
Total export value
(million US dollar)4,780 6,271 6,897
In light of the scope and nature of the programmes granted, it is not possible to determine
what, if any, trade effects may result from this subsidy programme.WT/ACC/TPKM/9/Rev.2
Page 22
IV. RESEARCH AND DEVELOPMENT
1. Title of the programme
Funds granted for development of products of the ten new leading industries.
2. Period covered by the notification
The fiscal year 1997 (July 1996 to June 1997)
3. Policy objective and/or purpose
    In order to encourage research and developm ent of new leading products and upgrade the technical
capability of new leading industries, the programme grants funds for private enterprises.
4. Background and authority
(a) Laws and regulations:
Measures for Assistance in the Development of New Leading Products, is promulgated on
April 26, 1991, and is amended on June 30, 1995.
(b) Responsible authority:
The Industrial Development Bureau, Ministry of Economic Affairs
5. Form
Fund  Grant and interest-free loan
6. To whom and how assistance is provided
(a) Any company incorporated under the Company Law with sound financial standing,
possessing a research and development department with sufficient R&D specialists in ChineseTaipei, which have actually made R&D achievements, may apply for the assistance fund
relating to the development of a product within the scope of one of the ten (10) newly
emerging industries, i.e., communication, information, consumer electronics, aerospace,
medical and health care, pollution control, advanced materials, semi-conductors, specialty
chemicals and pharmaceuticals, and precision machinery and automation. The ten new
leading industries were selected based on six selection criteria:
1. Great market potential
2. High linkage with other industries
3. High added value
4. Advanced technical level
5. Low pollution
6. Less dependence on energy supply
(b) In light of the broad nature of the industries, it is not possible to list the specific
products covered by the ten new leading indus tries. However, the general scope of each
industry is provided in Attachment I.WT/ACC/TPKM/9/Rev.2
Page 23
(c) To encourage the development of the goods/ products covered by the ten new leading
industries, Chinese Taipei formulated the “Programme for the Development of Critical
Component and Parts.” The Programme is an illustrative list of the goods/products
covered by the ten new leading industries and it involves assistance measures only under
the “Measures for Assistance in the Develo pment of New Leading Products.” For the
corresponding relation of the goods/products under the Programme to the ten new
leading industries, please see Attachment II.
(d) The assistance funds granted total no more than fifty percent (50 per cent) of the amount of
the following expenses incurred exclusively for the development of new leading products:
1. Personnel costs incurred for full-time and/or part-time research personnel;
2. Costs of consumable instruments and raw materials;
3. Costs for use and maintenance of R&D equipment;
4. Costs for technology transfer; and
5. Domestic and overseas travel expenses.
(e) In 1995,Chinese Taipei amended the “Measures for Assistance in the Development of New
Leading Products”. The amended Article 10 provides that: “the total amount of assistance and
matching funds to be allocated to a leading product development plan shall be limited to no
more than 50 per cent of the total amount of the budgeted development costs.”  While the
assistance fund may be defined as a grant, the matching fund is an interest-fee loan, whoserepayment must be started upon the first anniversary of the completion of R&D. In addition to
the repayment term (two to five years) for the matching fund, a private enterprise receiving
the matching fund must, starting from the sale of the funded product, pay a quarterly feed-
back fee, in an amount ranging from 1 per cent to 4 per cent of the sales amount of such
product. The total amount of the budgeted development costs should be expended exclusivelyon the following items:
1. Personnel costs for research personnel, technical personnel and other assistants
employed exclusively for performing research work;
2. Costs of instruments, equipment, land and buildings exclusively and permanently
used for research activities except those used for commercial basis;
3. Costs of consultation solely for the purpose of research activities and the same
services, including expenditures for purchase of research results, technical know-
how, patents, etc.;
4. Indirect costs arising directly from research activities; and
5. Running expenses for materials, supplies and similar expenditures arising directly
from research activities.
7. Amount
 (1) Since the program's inception, the accumulated assistance fund by the end of fiscal year
1997 is NT$5,375,348,560(Fiscal years 1992-1997)
(2) the fiscal year 1997:
 NT$327,128,000 and a breakdown of those products are as follows:
Unit: thousand NT
Name of Project (or Sector) Amount
Precision Machinery and Automation 72,008
Communication 26,290
Information 7,440WT/ACC/TPKM/9/Rev.2
Page 24
Consumer electronics 17,390
Aerospace 0
Medical and health care 0
Pollution control 0
Advanced materials 59,700
Semi-conductors 15,970
Specialty chemicals and pharmaceuticals 128,330
(a) Since the programme's inception, the a ccumulated grant is NT$ 5,266,646,560 as at the
end of fiscal year 1998 (fiscal years 1992-1998) and the accumulated interest-free loan is
NT$5,484,898,090.
(b) For fiscal year 1998: NT$882,038,000** of gran t and interest free loan respectively. A
breakdown of the products involved is as follows:
Unit: thousand NT
Name of Project (or Sector) Grant Interest-free loan
Precision machinery and automation 214,938 214,938
Communication 69,230 69,230
Information 40,670 40,670
Consumer electronics 177,460 177,460
Aerospace 0 0
Medical and health care 0 0
Pollution control 0 0
Advanced materials 59,700 59,700
Semi-conductors 36,250 36,250
Specialty chemicals and pharmaceuticals 223,790 223,790
Total 882,038 882,038
Note:
* In addition to the repayment of the in terest-free loan, a manufacturer who receives
assistance from the Programme is also requi red to pay a feedback contribution in an
amount equal to 1 per cent to 4 per cent of it s sales derived from the sale of the newly
developed products.
** Exchange rate on June 1998 is USD1=NT$34.39
8. Duration
There is no time limit attached to the programme.
9. Trade effects or related statistical data
It is not possible to determine what, if an y, trade effects may result from this subsidy
programme.WT/ACC/TPKM/9/Rev.2
Page 25ATTACHMENT I
1. Communications Industry
General Scope:
Wired CPE
Customer Premises Equipment (CPE)
Wireless CPE
Products
Switching Equipment
Network Equipment
Transmission Equipment
Precision parts and componentsCommunications
IndustryWT/ACC/TPKM/9/Rev.2
Page 26
2. Information Industry
General Scope:
Information software manufacturers
Software Packages
Professional services
Network services
Transmission systems
System integrationThree dimensional virtual simulation equipmnet
(3D/VR)Computer system manufacturing
Peripheral equipment manufacturing
Important precision parts & componentsmanufacturing
Information hardware manufacturers
Information software manufacturers
Software Packages
Professional services
Network services
Transmission systems
System integrationTerminal equipment
Input devices
Storage devices
Output devices
Three dimensional virtual simulation equipmnet(3D/VR)InformationIndustryWT/ACC/TPKM/9/Rev.2
Page 273. Consumer Electronics Industry
General Scope:
Consumer Electronic Industry
Audio products
Video products
Other consumptive products
Important Precision Parts & ComponentsWT/ACC/TPKM/9/Rev.2
Page 28
4. Semiconductors Industry
General Scope:
Semiconductors Industry
Semiconductor manufacturing industry
Wafer
Integrated circuit
Transistor
Diode
Important precision parts and components
Semiconductor material industry
Si Silicon GaP gallium phosphide GaN gallium nitride
GaAs gallium arsenide GaSb gallium stibnide ZnS zinc sulfide
InP indium phosphide InAs Indium arse nide AIGalnP Aluminum gallium indiu m
phophide
Semiconductor service industryWT/ACC/TPKM/9/Rev.2
Page 295. Precision Machinery and Automation Industry
General Scope:
Flexible manufacturing cell (FMC), flexible manufacturing syst em (FMS), computer integrated manufacturing system (CIM)
Automatic industrial machinery
Automation parts
Industrial controller
Precision inspection
Automatic engineering service
Precision power
Co-generation equipment’s
Electrical power equipment manufacturing and system designWT/ACC/TPKM/9/Rev.2
Page 30
6. Aerospace Industry
General Scope:
Aviation
Aerospace Industry
SpaceComplete aircraft products
(civilian aircraft, military aircraft)
Engine and parts components
Maintenance and ground support equipment
Flight control and airport information system
Training
Launch systems
Satellites (communication, meteorology, remote sensing)
Ground receiving system (radio signal, TV receiving equipment)
System equipment (communication, control, power system)
Experimental equipment (weightless condition, crystal growth)WT/ACC/TPKM/9/Rev.2
Page 317. Advanced Materials Industry
General Scope:
Advanced
materials industry
High performance composite materials
Special alloy steels
Precision ceramics
Engineering plastics
High grade fibre materialsWT/ACC/TPKM/9/Rev.2
Page 32
8. Specialty Chemicals and Pharmaceuticals Industry
General Scope:
Specialty Chemicals Industry
Specialty Chemicals and
Pharmaceuticals Industry
Pharmaceuticals IndustryLiquid dye,
Polymeric Surfactant
Bio-tech products
Catalysts
Silicon Compounds
Performance chemicals
High-value added key intermediates
Agricultural pesticides
Controlled-release medicines,
Scientific Chinese herbal medicines
Novel/New drugs
Bulk pharmaceuticalsWT/ACC/TPKM/9/Rev.2
Page 339. Medical and Health Care Industry
General Scope:
Medical and Health Care Industry
Diagnostic equipment
Clinical test agent
Biomedical material and elementautomatic clinical analyzers
biomedical testing reagents
hard tissues, soft tissues, liquid tissues,
artificial organs, blood contact tubes, band
elements,WT/ACC/TPKM/9/Rev.2
Page 34
10. Pollution Control and Treatment Industry
General Scope:
Pollution control equipment
Pollution Control and Treatment
Industry
Environmental technical & engineering services
Waste TreatmentDetection
Waste reduction
Treatment agent
Environmental engineeringevaluation
Engineering technique
Engineering Planning and design
Construction, installation and test running
Engineering administration and supervising
Waste recovery plantWT/ACC/TPKM/9/Rev.2
Page 35
ATTACHMENT II
1 Communications industry
2 Information industry
3 Consumer electronics industry
4 Semiconductors industry
5 Precision machinery and automation industry
6 Aerospace industry
7 Advanced materials industry
8 Specialty chemicals and pharmaceuticals industry
9 Medical and health care industry
10 Pollution control and treatment industry
Critical Components and Products List
1. Critical Products
Name of Critical ProductsCorresponding
industry
1. Improved/Enhanced Definition TV 3
2. Digital Audio Tape Recorder 3
3. Projection TV 3
4. Electronic Still Camera 3
5. Multifunction Clinical Automatic Analyzer 9
6. Ultrasonic Automatical Diagnostic & Medical Equipment 9
7. Engineering Workstation 2
8. Multi-processor System 2
9. High Resolution Page Printer 2
10. Optical Disk Drive 2
11. Micro Disk Drive 2
12. Digital Mobile Phone 1
13. Aircraft 6
14. IC Memory 2
15. Digital Storage Oscillator, >100M 5
16. Wire Cutting Machines 5
17. Robots 5
18. Numerically Controlled Injection Moulding Machines 5
19. Co-generation Equipment 5
20. Multimedia System & Server 2
21. β-carotene 8
22. Breathable Fabric & Product 7WT/ACC/TPKM/9/Rev.2
Page 36
2. Critical Components
Name of Critical ProductsCorresponding
industry
1. FUZZY IC 4
2. Converter 5
3. Above 25 inch Catch Ray Tube; 16x9 Widescreen Cathod Ray Tube 3
4. Silicon Wafer 4
5. Liquid Crystal Display 3
6. Digital Audio Tape Recorder Mechanism 3
7. Dynamic RAM, >4M 4
8. Static, RAM, >1M 4
9. Af-zoom Camera Lense 3
10. Watch Movement 5
11. Digital Signal Process IC 4
12. Radio Frequency Module IC 4
13. Parts for Aircraft 6
14. Etching Aluminum Foil 3
15. Thin Film Disk 3
16. Charged Couple Device 4
17. Light Emitting Diode Dice 4
18. High Resolution Laser Engine 2
19. Aspherical Molding Lens 3
20. Built-in Main Spindle 5
21. Jet Engine Compressor Blade/Turbin Blade 6
22. Transmission/Brake System for Bicycle Products 5
23. Electronic Control System for Automobile 5
24. 4-Stroke Gas Engine for Automobile 5
25. Lithium Battery 2
26. Micro Motor 2
27. 32 Bit CPU 2
28. System Software & Software Tool 2
29. Thermal Printer Head 1
30. ISDN Interface IC 4
31. Silicon-Electrical Steel Sheet (in Coil) 7
32. Linear Guide 5
33. Read/Write Head for Disk Driver (Thin Film Head) 2
34. p-Hydroxy Phenyl Glycine 8
35. CNC Controller 5
36. Copper Alloy Plate & Sheet for Lead Frame 7
37. Broadband Communications IC 4
38. Laser Diode Chip 4
39. Scroll Refrigerant Compressor 5
40. IC Packaging Resin 8
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