WORLD TRADE
ORGANIZATIONG/SCM/N/2/TPKM/Suppl.1
9 July 2002
(02-3808)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
NOTIFICATION PURSUANT TO ARTICLE 28.1(A) OF SUBSIDIES
INCONSISTENT WITH THE AGREEMENT
SEPARATE CUSTOMS TERRITORY OF TAIWAN,
PENGHU, KINMEN AND MATSU
Supplement
The following communication, dated 3 July 2002, has been received from the Permanent
Mission of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.
Revisions to the original programme, as notified in document G/SCM/N/2/TPKM, dated
19 June 2002, are shown in bold type face .
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Pursuant to Article 28.1 of the Agreement on Subsidies and Countervailing Measures, the
Government of the Separate Customs Territory of  Taiwan, Penghu, Kinmen and Matsu takes pleasure
in submitting its 2002 update notification.
On 24 April 2002, and applied retroactively from 1 January 2002, the discrepancy in the rates
of investment credit for domestic and foreign equipment under the programme of "Tax Credits for the
Purchase of Automation and Environmentally-Friendly Equipment" has been amended to apply the
same rate (13 per cent) for investment credit.G/SCM/N/2/TPKM/Suppl.1
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1. Tax credits for the purchase of automation  and environmentally-friendly equipment
1. Title of the Programme
Tax credits for the purchase of automation and environmentally-friendly equipment
2. Policy objective and/or purpose
The primary goal of the tax incentive is to achieve economic growth through industrial
restructuring by encouraging investment in certain desirable areas such as automation, energy
conservation, pollution control, reclamation of resources and reuse of industrial water.
3. The date of establishment of the programme
The programme commenced in 1990, and was amended on 24 April 2002 to provide non-
discriminatory credit from 1 January 2002.
4. Background and responsible authorities
(a) Law:
- Statute for Upgrading Industries (hereinafter   referred to as the "SUI"), Article 6.
The SUI was promulgated on 29 December 1990, and amended on 10 January 1995, and re-
amended on 31 December 1999.
(b) Responsible authorities:
Companies are required to obtain a certificate from the relevant government agency before
they can apply for the tax credits with the tax collection authorities.  The government agencies
involved for the issuance of such certificates are as follows:
(i) For the manufacturing industry and technical services industry: The Industrial
Development Bureau of the Ministry of Economic Affairs ("MOEA");
(ii) For energy saving: The Energy Comm ission, Ministry of Economic Affairs;
(iii) For the construction industry: The Construction & Planning Administration, Ministry
of the Interior;
(iv) For the wholesale industry: The Commence Department, MOEA
(v) For agricultural industry: The Council of Agriculture, Executive Yuan.(vi) Ministry of Finance
5. Form of Subsidy
Credit against Corporate income taxG/SCM/N/2/TPKM/Suppl.1
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6. To whom and how assistance is provided
A firm may gain credits up to 20 per cent of the amount of fund disbursed for any of the
following purposes against the amount of corporate income tax payable for the current year:
(a) investment in equipment for automation of production;
(b) investment in the equipment used for reclamation of resources and/or pollution
control;
(c) investment in the equipment for energy saving and/or recycling of industrial water.
(d) Investment in the equipment for the reduction of greenhouse gas emission on the
enhancement of energy efficiency.
In case the amount of corporate income tax levied for the current year is less than the amount
of tax credit, the balance of tax credit may be carried over to the next four years.  The total amount ofinvestment credit against tax in each year should not exceed fifty per cent (50 per cent) of the amount
of corporate income tax levied in the then curren t year.  However, this limitation should not apply to
the final year.
The scope of application, implementation period and tax credit rate should be prescribed by
the Executive Yuan and is subject to adjustment once every two years.
All firms, regardless of their industry categories, are eligible for the tax credit; therefore, the
support should not be specific within the meaning of Article 2 of the Agreement.
The amended single rate of investment credit applicable is 13 per cent for the
procurement of either domestically manufactured or imported equipment for automation.
The amount of investment credits in the equipment for the reduction of greenhouse gas
emission on the enhancement of energy efficiency is not available since it was a new clause added in
December 1999. The amount of other investment credits for the most recent three years are listed as
follows:G/SCM/N/2/TPKM/Suppl.1
Page 4         (Unit:  thousand NT)
FY 1998 FY 1999 FY 2000
No. of Cases Amount of Tax
ReductionNo. of Cases Amount of Tax
ReductionNo. of Cases Amount of Tax
Reduction
Investment credit for procurement offoreign manufactured equipment for
Automation736 1,902,000 7,553 6,489,405 19,161 14,859,619
Investment credit for procurement of
domestically manufactured equipment
for automation3,098 20,368,023 1,489 3,594,101 3,928 8,137,703
Investment credit for procurement of
domestically manufactured equipment
for pollution control71 121,546 125 201,248 211 347,655
Investment credit for procurement of
foreign manufactured equipment for
pollution control28 39,021 29 22,999 61 204,147
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