G/SCM/Q2/TPKM/2 9 
 
27 September 2021  
(21-7193) Page: 1/6 
Committee on Subsidies and Countervailing Measures  Original: English  
 
SUBSIDIES  
REPLIES TO QUESTIONS1 POSED BY THE UNITED STATES REGARDING THE NEW AND FULL 
NOTIFICATION OF THE SEPARATE CUSTOMS TERRITORY OF TAIWAN,  
 PENGHU, KINMEN AND MATSU2 
The following communication, dated and received on 22 September 2021, is being circulated at the 
request of the del egation of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu . 
 
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Question  1 
We understand that, based on the State Department's 2020 investment climate 
statement, in January  2019, the government of Chinese Taipei launched a re -shoring 
initiative aimed to lure domestic companies to shift production back to Chinese Taipei.  
a. Would Chinese Taipei please explain why this program was not included as 
part of its notification?  
b. Are any of these incentives tied to utilizing l ocal content or to the export of 
any products produced by the re -shored manufacturing?  
c. We would appreciate if Chinese Taipei would notify the program to the 
Committee.  
Reply : 
The re -shoring initiative provides a customized single -window service t o facilitate the needs of 
reshoring enterprises, as well as actively assist them with swift access to financing. In accordance 
with guidelines of project loans for the re -shoring initiative, the amount of loans and the in terest 
rates charged are decided by the banks themselves depending on how the funds will be used and 
the creditworthiness of the borrowers. The government only pays service fees to financial institutions 
for providing the capital and administering the loan s, not subsidies for businesses; therefore, no 
notification was submitted. Moreover, the re -shoring initiative does not comprise requirements 
related to utilizing local content or exporting any goods produced by re -shored manufacturing.  
 
Question 2  
 
Based on the State Department 2020 investment climate statement, we understand that 
Chinese  Taipei offers subsidies for research and development expenses for foreign 
partnership projects. Please explain why this program was not included in your 
notification to t he SCM  Committee.  
 
Reply : 
 
This project ( i.e., the Global Innovation Partnership Initiatives) was included in our notification this 
past June (G/SCM/N/372/TPKM). Please refer to the Part B of Section IV.  
 
1 G/SCM/Q2/TPKM /27. 
2 G/SCM/N/372/TPKM . G/SCM/Q2/TPKM/2 9 
 
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  Question 3  
 
Based on the State Department 2020 investment climate statement, we also understand 
that the Statute for Industrial Innovation provides the legal basis for offering tax credits 
for companies' R&D expenditures. We also understand that MOEA operates several R&D 
subsidy programs and that MOEA' s target industries for investment are IoT (including 
Asia Silicon Valley -related investments), smart machinery, biotechnology and 
biopharmaceuticals, green energy, national defense, and the circular economy. Please 
explain why this program was not include d in your notification to the SCM  Committee.  
 
Reply : 
 
Under Article 10 of the "Statute for Industrial Innovation, " research and development expenses are 
exempted from the income tax for profit -seeking enterprises and are not limited to specific sectors. 
Therefore, this program  is not subject for notification .  
 
Question 4  
 
Based on the State Department 2020 investment climate statement, we understand that 
investors may receive low -interest loans or subsidies for participating in industrial R&D 
and industry revitalization programs. Please provide additional information on this 
program and explain why this program was not included in your notification to the 
SCM Committee.  
 
Reply : 
 
The low -interest loans for R&D activities and industry revitalization programs are not limited to 
specific sectors and have been terminated. Therefore, these program s are not subject for 
notification . 
 
Question 5  
 
In its most recent Trade Policy Review, the WTO notes that "Chinese Taipei continued to 
provide tax incentives to support specific industries (Table A3.7) including: the biotech 
and pharmaceutical industry (under the Act for the Development of Biotech and new 
Pharmaceutical Industry) (Sections  2.4.1, 3.3.1.2.3, 3.3.2.2, 4.1.1 and 4.3.1); the 
automotive industry. Preferential loans through a NT$  10 billion fund remain available for 
the promotion of the aerospace industry. To boost local investment in high -tech 
industries, the authorities provide funding for medium - and long -term concessional credit 
facilities." Please explain why these programs were not included in your notification to 
the SCM Committee.  
 
Reply : 
 
1. Although the tax reduction incentive provid ed by  "the Act for the Development of Biotech and 
new Pharmaceutical Industry " is limited to research and development investments in the biomedical 
sector, this Act will expire at the end of 2021. Pending extension of this Act is still under discussion; 
therefore, notification of this program to the SCM Committee was not included.  
 
2. Regarding  the tax incentive  to support the automotive industry, vehicles are taxable commodities 
under the regulations of the Commodity Tax Act. Whether vehicles are manufactu red domestically 
or imported from abroad, they shall be subject to the commodity tax in accordance with the Act. For 
the purpose of environmental protection, we encourage consumers to purchase new vehicles to 
replace their used ones in order to reduce thei r burden to comply with environmental requirements. 
Hence, we revised and augmented Article 12 -5 of the Commodity Tax Act, which allows a reduced 
commodity tax for the purchase of new vehicles manufactured domestically or imported from abroad 
to replace us ed ones and satisfies the related requi rements. The said tax incentive is  directly 
beneficial to consumers for the purpose of environmental protection; it is not a subsid y that is specific 
to certain enterprises or industries.  
 G/SCM/Q2/TPKM/2 9 
 
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  3. Regarding preferential loans for the aerospace industry, no enterprise ha s applied for the 
"Aerospace Industry Preferential Loans Program ". As this program is currently being evaluated, 
notification will be given if necessary.  
 
Question 6  
 
In its most recent Trade Policy Review, the WTO notes that Chinese Taipei maintains a 
program for the "Encouragement of Newly Emerging, Important, and Strategic 
Enterprises by providing up to a 20% tax credit."  
a. What cons titutes a newly emerging, important, or strategic enterprise?  
b. Please explain why this program was not included in your notification to 
the SCM  Committee.  
 
Reply : 
 
Since this program was terminated at the end of 2009, hence is not subject for notification. 
Regarding the information in our latest trade policy review, all the recipients of this program had 
been approved before the end of 2009; however, some of the tax exemptions were postponed and 
still valid after 2009.  
 
Question 7 (fisheries, including aquaculture)  
 
Please explain why the following fish -related programs were not included in your 
notification to the  SCM Committee:  
• Subsidy Operations for the Installation of Automatic Ship Identification Systems 
on Fishing  Vessels (Support for fishing vessels to install one automatic ship 
identification system ship platform);  
 
Reply :  
 
Please find a supplementary notification  below3: 
 
1. Title of the programme  
 
Subsidy Operations for the Installation of Automatic Identification System and Vessel Monitoring 
System  on Fishing Vessels   
 
2. Period covered by the notification  
 
2019-2020. 
 
3. Policy objective and/or purpose  
 
This programme is to improve the safety of fishing vessel navigation and operation.  
 
4. Background and responsible authorities  
 
Laws and regulation s: Directions for the Installation of Automatic Identification System and 
Vessel Monitoring System on Costal and Offshore Fishing Vessels . 
Authorit ies: Fisheries Agency, Council of Agriculture.  
 
5. Form 
 
Grant.   
 
 
3 Please also see G/SCM/N/372/TPKM/Suppl.1.  G/SCM/Q2/TPKM/2 9 
 
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  6. To whom and how assistance is provided  
 
The programme provides grants to cover a portion of the installation  costs for Automatic 
Identification System and Vessel Monitoring System  for fishing vessels . 
 
7. Amount  
 
The total amount for the programme was NT$12.24 million in 201 9 and NT$3.92 million in 2020.  
 
8. Duration  
 
The d uration of the subsidy is not  specified.  
 
9. Trade effects or related statistical data  
 
N/A. 
 
• Project for Establishing a High -Efficiency Modern and Friendly Aquaculture 
Fisheries Production Model Plan and Subsidizing Equipment (Support for building 
indoor demonstration aquaculture production facilities as well as varied small 
fishing equipment);  
 
Reply : 
 
In order to  strengthen the resilience of inland aquaculture to climate change, enhanc e food security , 
and ensur e sustainable fisheries in response to the impact s of extreme weather, the Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Matsu  follows the guidel ines of the FAO and 
implements the aforementioned  projects to upgrade inland aquaculture management and immediate  
monitoring system s. 
 
This project aims to upgrade old and high energy -consuming equipment  by subsidizing the purchase 
of new and environmental ly friendly equipment. Participants of the project are obliged to provide 
relevant pictures /photos , e-files, models, etc. within 2 years after  the new equipment has been  
purchased or installed  to demonstrate the promotion of this project, which  are display ed through 
documents, websites, and exhibitions.  
 
• Incentives for the Production of  Canned Fisheries Products and Preserved Food 
Production (Rewards for certain types of canned food or preserved seafood 
products caught in Chinese  Taipei's waters. The largest reward is for black tuna, 
NT$ 15 per kg.  While we understand this was part of Ch inese Taipei's special 
COVID -19 relief measures, the connection to the pandemic is not clear);  
 
Reply : 
 
In response to the outbreak of Covid -19, our government raised  the alert level to prevent cluster 
infection s. Because dining in restaurant s was prohibit ed, consumption habits and preference for 
buying fish changed, which  caused a  decrease  in the sales of fishery products. Compared to other 
fisheries, the negative impact on Bluefin tuna was the most severe because it is popularly served  as 
sashimi in many restaurants. In addition, the delivery of Bluefin tuna is also demanding. If it is not 
instantly frozen, it will spoil easily. In order to  reduc e adverse effects on  fisheries and revive the 
industry, our government introduced a short -term program from  April 20, 2020 to October 31, 2020 
that encouraged the fishing industry to produce and develop products for long -term storage as an 
emergency response and relief measure .  
 
• Smart Breeding Equipment Subsidy (Assistance for the installation of water 
monitoring systems, remote control feeding systems, cloud storage systems and 
other "smart" facilities);  
 
Reply : 
 
The aquaculture in the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu  has faced 
severe challenges in recent years, including climate change  and labor shortage. Thus, the G/SCM/Q2/TPKM/2 9 
 
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  government followed FAO guidelines and implemented the aforementioned  projects to upgrade 
inland aquaculture management and immediate monitoring system s, decrease  the impact  of 
extreme weather, and reduce intensive labor. More specifically, these projects aim to improve inland 
aquaculture resilience to climate change and ensure the food security.  (This program is the same as 
the "Project for Establishing a H igh-Efficiency Modern and Friendly Aquaculture Fisheries Production 
Model Pl an and Subsidizing Equipment ".) 
 
• Regulations for Promoting Export Sales of Fishery Products Regulations (Multiple 
support measures encouraging the export of various aquatic product s. While we 
understand this was part of Chinese Taipei's special COVID -19 relief measures, 
the connection to the pandemic is not clear);  
 
Reply : 
 
Since the outbreak of COVID -19, the cost for export freight is much higher than before. As a short -
term goal  to alleviate  pressure on the domestic market and stabiliz e the export market, the 
government implemented some measures in accordance with  the "Special Act for Prevention, Relief 
and Revitaliza tion Measures for Severe Pn eumonia with Novel Pathogens ".  
 
• Incentives for the Trading of Chilled Tuna in Coastal Waters (Rewards ‒ NT$  30 
per kg before 21  July 2020, and NT$  20 per kg from 15 April to 31  July 2021 ‒ 
for the trading of chilled tuna caught along Chinese Taipei's coast. While we 
understand this was part of Chinese Taipei's special COVID -19 relief measures, 
the connection to the pandemic is not clear);  
Reply : 
In response to the outbreak of Covid -19, our government raised  the alert level to pre vent cluster 
infection s. Because dining in restaurant was prohibited, consumption habits and preference for 
buying fish changed, which  caused a  decrease  in the sales of fishery products. Compared to other 
fisheries, the negative impact on Bluefin tuna was the most severe since it is popularly served  as 
sashimi in many restaurants. In addition, the delivery of Bluefin tuna is also demanding. If it is not 
instantly frozen , it will spoil easily. Since  the pandemic caused  the price of frozen tuna to drastically  
drop, which  negative ly affected  the industry, this program was enacted  to provide short -term relief 
to the industry.  
 
• Preferential Oil Price Standards for Fisheries Power Oil (Support for the purchase 
of "power oil," which includes, diesel, mixed fuel oil and diesel oil, "marine fuel 
oil," and gasoline);  
 
Reply : 
 
Our current fuel subsidy does not target certain fisheries or specific fishing methods. Any fishing 
vessel will be subsidized as long as it complies with relevant laws and regulations. We did n ot notify 
the Standards because they are not for specific fishing vessels and do not fall under the scope of a 
notification document.   
 
• Promotional Incentive Subsidies for Fishing Vessel Insurance Incentive for 
fishing vessels to participate in fishing vessel insurance programs. (Support for 
small fishing vessels: NT$  4,000, NT$  6,000, or NT$  8,000 depending on 
vessel  tonnage);  
Reply : 
 
This program  was stated in our notification to the SCM Committee this past June in the Section I I of 
FISHERY, Pa rt C "FISHING VESSELS MARINE INSURANCE REWARD " (G/SCM/N/372/TPKM) . 
 
• Relevant Equipment Installed by Fishers in Response to International Fisheries 
Organizations or Management Needs (Support for required equipment 
installations; maximum amount of NT$  54,000, and may not exceed 70% of each 
vessel's installation costs).  
 G/SCM/Q2/TPKM/2 9 
 
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  Reply : 
 
We are unable to identify t he subsidy referred  to in this program. Please provide more information 
if possible .  
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