WORLD TRADE  
ORGANIZATION  G/SCM/N/155/TPKM 
5 September 2007 
 (07-3752) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1  
of the GATT 1994 and Article 25 of the Agreement  
on Subsidies and Countervailing Measures  
  
THE SEPARATE CUSTOMS TERRITORY OF TAIWAN,  
PENGHU, KINMEN AND MATSU 
 
  The following communication, dated 10 August 2007,  is being circulated at the request of the 
Delegation of the Separate Customs Territory  of Taiwan, Penghu, Kinmen And Matsu.   
 G/SCM/N/155/TPKM 
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  TABLE OF CONTENTS 
 
 
  Page
 
 
I. AGRICULTURE .................................................................................................................... ..4 
A. SUPPORT FOR RICE .......................................................................................................................4  
B. SUPPORT FOR SORGHUM AND FEED CORN ..................................................................................5  
C. MEASURES FOR SWEET POTATOES , ADZUKI BEANS , MUNG BEANS , AND OTHER 
MISCELLANEOUS CROPS ..............................................................................................................6  
D. SUPPORT FOR TOBACCO LEA VES ................................................................................................7  
E. SUPPORT FOR VEGETABLES ........................................................................................................9  
F. SUPPORT FOR SUGAR ................................................................................................................10  
G. INTEREST  SUBSIDY..............................................................................................................11  
II. FISHERIES ...................................................................................................................... .......13  
A. FISHING VESSELS BUY-BACK PROGRAMME .............................................................................13  
B. REWARD FOR CLOSING FISHERY SEASON ................................................................................15  
C. EXTENSION OF RE-USE OF POND WATER USED IN AQUACULTURE ..........................................16  
D. FISHING VESSELS MARINE INSURANCE REWARD .....................................................................17  
E. AQUA-CULTURAL FACILITIES LOAN.........................................................................................18  
F. FISH PRODUCTS MARKET STABILIZATION FUND .....................................................................19  
G. FISHING VESSELS REDUCTION PROGRAMME ............................................................................20  
III. INDUSTRY....................................................................................................................... .......21  
A. TAX CREDITS OR TAX EXEMPTIONS FOR DESIGNATED ENTERPRISES ......................................21  
1. Five-year tax exemption for the emerging , important and strategic industries................21  
2. Tax credit for investment in a disadvantaged region ..........................................................23  
B. LOANS - LOANS FOR SMALL AND MEDIUM -SIZED ENTERPRISES (SMES)................................24  
1. Specific and urgent financing and loans intended for working capital needed 
during periods of economic crisis and recession, and for recovery plans from damage caused by majo r natural disasters...........................................................................24
 
2. Medium- and long-term loans for pro duct marketing and loans for overseas 
investment and construction projects ...................................................................................26  
LOANS FOR PRIVATE ENTERPRISES .......................................................................................................27  
3. Loans for small and medium-sized ent erprises and private enterprises ...........................27  
C. DUTY AND TAX EXEMPTIONS GRANTED TO ENTERPRISES LOCATED WITHIN A 
DESIGNATED ZONE...................................................................................................................28  
1. Duty and tax exemptions for high-technology industries....................................................28  
2. Duty and tax exemptions for in-zone enterprises.................................................................30  
3. In light of the scope and nature of the pr ogrammes granted, it is not yet possible 
to determine what, if any, trade effects may result from this subsidy programme ..........32   G/SCM/N/155/TPKM 
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  D. SUBSIDIES FOR THE ESTABLISHMENT AND OPERATION OF PETROLEUM FACILITIES 
IN MOUNTAIN AND OFFSHORE AREAS .....................................................................................32  
IV. RESEARCH AND DEVELOPMENT ..................................................................................33  
A. FUNDS GRANTED FOR DEVELOPMENT OF PRODUCTS OF THE NEW LEADING 
INDUSTRIES ............................................................................................................................... 33 
B. FUNDS GRANTED FOR PROMOTING DEVELOPMENT OF INDUSTRIAL TECHNOLOGY ...............35  
C. FUND GRANTED FOR ENCOURAGING EXPLORATION AND DEVELOPMENT OF OIL 
AND NATURAL GAS RESERVES ................................................................................................36  
 G/SCM/N/155/TPKM 
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  I. AGRICULTURE 
A. S
UPPORT FOR RICE  
1. Title of the programme  
 
 Support for rice.   
 
2. Period covered by the notification  
  2003-2005.   
 
3. Policy objective and/or purpose
 
 
 The policy objectives are to en sure the security of the food supply by balancing supply and 
demand for rice, and to stabilize rice prices fo r the maintenance of farmers' income.   
 
4. Background and responsible authorities  
  (a) Law and regulation:   Agriculture Development Act.   
    Food Administration Act.   
  (b) Responsible authority: Council of Agriculture.   
 
5.  Form of the subsidy/to whom and how the subsidy is provided
 
 
 There are three types of purchase - planned purchase, supplementary purchase and additional 
purchase.  The planned purchase is made at guarantee d prices.  Guaranteed prices are determined by 
taking into account production costs.  The prices have been set at NT$21 per kilogram for Japonica-
type rice and NT$20 for Indica-type rice.  The quantity of the planned purchase has been limited to 1,920kg per hectare for the first crop and 1,440kg for the second crop.  Supplementary purchases have 
been made to supplement shortages on the planne d purchase quantity.  Supplementary rice purchase 
prices are set at NT$18 per kilogram for Japonica-type rice and NT$17 for Indica-type rice.  The quantity of the supplementary purchase has been limi ted to 1,200kg per hectare for the first crop and 
800kg for the second crop.  An additional purchase was made in the second crop in 2003.  The prices 
for additional purchase are set at NT$16.6 per kilogram for Japonica-type rice and NT$15.6 for Indica-type rice.  The quantity of the additional purchase has been limited to 3,000kg per hectare for 
the first crop and 2,360kg per hectare for the second crop.   
  Planned, supplementary and additional rice pur chases are made availabl e to the farmers who 
produce rice in paddy fields and follow the irrigational rotation scheme for planting and not planting.  
For those who produce rice in both the upland areas and in the paddy fields but do not follow the 
government scheduling for planting, only suppleme ntary and additional purchases are permitted.  
Farmers are free to decide whether they want to sell products to the government or not.   
 
6.  Amount of the subsidy
 
  NT$1,961 million, NT$711 million and NT$558 million for 2003, 2004 and 2005 
respectively. 
 7.  Duration of the subsidy and/or any other time-limits attached to it
 
 
 The duration of the subsidy is not specified.     G/SCM/N/155/TPKM 
 Page 5 
 
 
  8. Statistical data  
Unit:  1,000 MT. 
Item Year Production Consumption Import Export 
2003 1338.3 1329.2 144.6 69.7 
2004 1164.6 1322.4 144.7 6.4 Rice 
(brown) 2005 1187.6 1329.8 144.6 8.1 
 
 B. S
UPPORT FOR SORGHUM AND FEED CORN  
1.  Title of the programme  
 
 Support for sorghum and feed corn.    
2.  Period covered by the notification
 
  2003-2005.   
 
3.  Policy objective and/or purpose
 
 
 The policy objectives are to maintain sorghum  and feed corn production and to facilitate 
implementation of the adjustment of paddy field utilization.    
4.  Background and responsible authorities
 
  (a) Law and regulation:   
Regulation for the Purchase and the Sale of Dryland Food Crops.   
 
 (b) Responsible authority:  Council of Agriculture.   
 5.  Form of the subsidy/to whom and how the subsidy is provided
 
 
 Purchase prices are determined by adding the net profits on rice to the production costs of each.  The purchase quantities are limited to 5,000 ki lograms per hectare for feed corn and sorghum.  
The purchase prices have been set at NT$15 per k ilogram for feed corn and NT$14 for sorghum.  
When the actual yield per hectare is above the pur chase quantity limit, farmers may sell their products 
to the government at the import prices.   
 
 Purchases at the above-mentioned prices are ma de available to the farmers whose production 
of feed corn or sorghum has been purchased by the government in the base year (1994-96) and the 
year preceding the current year.  The purchase of so rghum has been limited to the first crop grown in 
the western plain area.  The first and second crops of  feed corn have been purchased in the western 
mountainous area and the eastern region, while on ly the second crop has been purchased in the 
western plain area.  The farmers are free to decide whether or not they want to sell products to the 
government.   
 
6. Amount of the subsidy
 
 
 NT$520 million, NT$487 million and NT$409 million for 2003, 2004 and 2005 respectively.   
 7. Duration of the subsidy and/or any other time-limits attached to it
 
 
 The duration of the subsidy is not specified.   G/SCM/N/155/TPKM 
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  8. Statistical data
 
  Unit:  1,000 MT. 
Item Year Production Consumption Import Export 
2003 53.1 4885.9 5106.5 1.3 
2004 45.6 4737.3 4891.4 2.4 Feed corn 
2005 41.8 4749.4 5059.1 0.5 
2003 17.5 87.1 69.5 0.0 
2004 12.8 64.7 51.9 0.0 Sorghum 
2005 8.3 83.9 75.6 0.0 
 
 
C. MEASURES FOR SWEET POTATOES , ADZUKI BEANS , MUNG BEANS , AND OTHER 
MISCELLANEOUS CROPS  
1. Title of the programme  
 
 Measures on sweet potatoes, adzuki beans, mung beans and other miscellaneous crops.   
 
2. Period covered by the notification  
  2003-2005.   
 
3. Policy objective and/or purpose
 
 
 The policy objectives are to facilitate implem entation of the adjustment of paddy field 
utilization and to strengthen the farmland environm ental conservation plan for sustainable use of 
farmland as the structure of agricultural production undergoes adjustment.   
 
4. Background and responsible authorities  
 
 (a) Law and regulation:   Agriculture Development Act.    
 (b) Responsible authority:   Council of Agriculture.   
 5. Form of the subsidy/to whom and how the subsidy is provided
 
 (1) Diversion payment:   
  Eligibility for receiving the diversion payment is granted to those who follow the diversion 
programme from rice production to diversion crops  and produce diversion crops in the following 
categories:    
a. Growing rice in the base year (1994-2003);  or, 
b. Growing guaranteed price purchase crops of f eed corn, sorghum or sugarcane in the base 
year;  or, 
c. Registering as set-aside or diversion under "Rice Production and Rice field Diversion 
Projects" in the base year.   
 
 Diversion crops are selected according to s upply and demand conditions for such crops as 
sweet potatoes, adzuki beans, mung beans and ot her miscellaneous crops (yam, buck wheat, millet, 
sesame, etc.).  Diversion payments are made at NT$22,000 per hectare.   
  G/SCM/N/155/TPKM 
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   (2) Bonus payment:   
  In addition to the diversion payment, there is a bonus payment of NT$4,000 per hectare for 
the group diversion.   
 6. Amount of the subsidy
 
 
 NT$1,082 million, NT$939 million and NT $961 million for 2003, 2004 and 2005 
respectively.   
 7. Duration of the subsidy and/or any other time-limits attached to it
 
 
 The duration of the subsidy is not specified.    
8. Trade effect
 
  After the three stages of the rice diversi on programme had been implemented, the acreage 
planted in rice went down from 645,855 hectares to  269,120 hectares;  that is a decrease of 
58.3 per cent between 1983 (the year prior to the implementation of the projects) and 2005.  The 
production of rice was also down from 2.48 million tons to 1.19 million tons, a decline of 52 per cent.  
The quantity of rice purchased by the government was reduced from 1.1 million tons to 0.21 million 
tons, a decrease of 81 per cent.  Measures relating to sweet potatoes, adzuki beans, mung beans and 
other miscellaneous crops have  contributed to reductions in the production of rice.   
 
 
D. S
UPPORT FOR TOBACCO LEA VES  
1. Title of the subsidy programme  
 
 Support for tobacco leaves.   
 2. Period covered by the notification
 
 
 Fiscal years 2002/03-2004/2005 (July 2002 - June 2005).    
3.  Policy objective and/or purpose
 
  The purposes of the programme are to mainta in the tobacco and wine monopoly and improve 
the quality of tobacco leaves produced.   
 4. Background and responsible authorities
 
 
 (a) Law and regulation:   
  The Provisional Statute for Monopoly of Tobacco and Wine in Taiwan Province.   
 
 (b) Authorities:   The Taiwan Tob acco and Wine Monopoly Bureau.   
Ministry of Finance.   
 Note
:  The Provisional Statute for the Monopoly of Tobacco and Wine in Taiwan Province was 
abolished on 1 January 2002.  The Taiwan Tobacco and Wine Monopoly Bureau was replaced by the 
Taiwan Tobacco & Liquor Corporation from 1 July 2002.   G/SCM/N/155/TPKM 
Page 8  
 
  5. Form of the subsidy/to whom and how the subsidy is provided
 
  (1) Guaranteed purchase price:   
 
 The Taiwan Provincial Tobacco and Wine Monopoly Bureau (TWMB) purchased tobacco leaves from domestic producers at the guaranteed price, which was provisionally determined by the 
Committee for Evaluating the Tobacco  Leaves Price, and then approved by the Provincial Finance 
Department.  Both the production costs and the quali ty of the tobacco leaves were taken into account 
during the price determination process.  Producer s needed to get permission from the bureau and 
contract with it before planting.  Under a monopol y, farmers were obliged to sell all the tobacco 
leaves produced to the TWMB according to the Provi sional Statute.  Permission to plant depended on 
the level of demand and planting conditions.  Since the Provisional Statute for the Monopoly of 
Tobacco and Wine in Taiwan Province was abolis hed on 1 January 2002, the permission granted to 
farmers to plant has been cancelled. Instead of a guaranteed price purchase system, therefore, the 
Taiwan Tobacco & Liquor Corporation now makes a purchase under restricted price tendering 
according to the Government Procurement Act.    
 (2) Interest grants:   
  The Taiwan Provincial Tobacco and Wine M onopoly Bureau pre-paid for tobacco leaves 
during the growing season and made loans to tobacco farmers.  The grants have been cancelled since 
the Taiwan Provincial Tobacco and Wine Monopoly Bureau was replaced by the Taiwan Tobacco & Liquor Corporation.   
 
 (3) Fertilizer grants:   
 
 The Bureau also provided tobacco farmers with  fertilizer based on the needs in different 
areas, to control the quality of tobacco leaves.  The grants have  been cancelled since the Taiwan 
Provincial Tobacco and Wine Monopoly Bureau was replaced by the Taiwan Tobacco & Liquor 
Corporation.    
6. Amount of the subsidy
 
  NT$ 480.19 million, NT$ 501.39 million and NT$ 250.49 million for the fiscal years 
2002/03, 2003/04 and 2004/2005 respectively.   
 7. Duration of the subsidy and/or any other time-limits attached to it
 
 
 The duration of the subsidy is not specified.    
8. Statistical data
 
  Unit:  Ton 
Item Year Production 
(Crop year) Consumption Import Export 
2003 5,243 11,489 9,467 3,221 
2004 5,490 7,578 4,466 2,378 Tobacco leaves 
2005 2,743 3,528 6,744 5,959 
  G/SCM/N/155/TPKM 
 Page 9 
 
 
  E. SUPPORT FOR VEGETABLES  
1. Title of the subsidy programme  
 
 Support for vegetables.   
 2. Period covered by the notification
 
 
 2003-2004.   
 
3. Policy objective and/or purpose  
 
 The purpose is to stabilize supply and demand through the holding of summer vegetables 
during the summer (Typhoon) seasons.    
4. Background and responsible authorities
 
  (a) Law and regulation:   Agriculture Development Act.   
  Contracting Guaranteed Price Marketing Plan for Summer 
Season Vegetables.   
 
(b) Responsible authorities: 
The Taiwan Provincial Department of Agricu lture and Forestry, up to June 1999.   
  Council of Agriculture, from July 1999.   
 
5. Form of the subsidy/to whom and how the subsidy is provided
 
 
 (1) Eligibility conditions for farmers' orga nizations participating in the plan:   
 
a. Those with sound organization and wh ose product variety and quality meet the 
market demand;  and 
b. Those who help with the grading and packaging;  and 
c. Those who have the ability to supply more  than 50 per cent of the season's target 
supply quantity allocated to them, or whose monthly supplies met 60 per cent of the target quantity for at least three months in the preceding year.   
 
 (2) Criteria for Selection of Contract Vegetable and Guaranteed Price:    
a. Guaranteed price is determined on th e basis of 90 per cent of the weighted 
average prices of the Taipei Agricultura l Products Marketing Corporation in the 
same month of the most recent five years, but in any case would not exceed the 
guaranteed price set for the preceding year by more than two dollars.   
b. The vegetable varieties for the Plan are selected taking supply and demand into 
account.   
 
 (3) Contracted Supply Target:   
 
a. The contracted supply target is set according to demand for vegetables each 
month (June-October).   
b. Each contracting fruit and vegetabl e wholesale market would determine the 
monthly requirement of various vegetabl e varieties and quantities according to the 
target set by the Committee.   G/SCM/N/155/TPKM 
Page 10  
 
   (4) Price Difference Subsidy:   
  Each fruit and vegetable wholesale market will calculate the average price of each product 
distributed by cooperative vegetable and fruit marke ting on a weekly basis.  If the average price is 
lower than the guaranteed price set for the relevant  month, the price difference will be subsidized 
according to the formula described below, provi ded that the subsidy amount shall not exceed 
50 per cent of the guaranteed price.  Also, if the av erage price is higher than the guaranteed price, no 
subsidy will be granted.   
 
a. The price difference would be subsidized by 100 per cent and the contracted 
quantity would be eligible for such subsidy, if the actual supply quantity is 
located at between 100 per cent and 120 per cent of the contracted quantity.   
b. The price difference would be subsid ized by 100 per cent and the actual supply 
quantity would be eligible for such subsidy, if the actual supply quantity is 
located at between 80 per cent and 100 per cent of the contracted quantity.   
c. The price difference would be subsid ized by 90 per cent and the actual supply 
quantity would be eligible for such subsidy, if the actual supply quantity is 
located at between 70 per cent and 80 per cent of the contracted quantity.   
d. The price difference would be subsid ized by 80 per cent and the actual supply 
quantity would be eligible for such subsidy, if the actual supply quantity is 
located at between 60 per cent and 70 per cent of the contracted quantity.   
e. The price difference would be subsidi zed by 60 per cent and the contracted 
quantity would be eligible for such subsidy, if the actual supply quantity is 
located at between 120 per cent and 150 per cent of the contracted quantity.   
 
6. Amount of the subsidy
 
  NT$ 19.7 million and NT$ 4.3 million for 2003 and 2004 respectively.   
 
7. Duration of the subsidy and/or any other time-limits attached to it
 
 
 The subsidy is abolished in the end of 2004.   
 8. Statistical data
 
 
  Unit:  1,000 MT.   
Year Production Consumption Import Export 
2003 2591.1 2813.4 297.7 75.4 
2004 2608.7 2848.3 301.4 61.9 
 
 
F. SUPPORT FOR SUGAR  
1. Title of the subsidy programme  
 
 Support for sugar.    
2. Period covered by the notification
 
  2002/03-2004/05.    G/SCM/N/155/TPKM 
 Page 11 
 
 
  3. Policy objective and/or purpose  
  The purpose of the programme is to develop the sugar industry in cooperation with the 
farmers.   
 4. Background and responsible authorities
 
 
 (a) Law and regulation:   Regulation for the Sugarcane Planting Contract.   
 
 (b) Authorities:   The Taiwan Sugar Corporation.   
    Ministry of Economic Affairs.   
 
5. Form of the subsidy/to whom and how the subsidy is provided  
 
 (1) Guaranteed purchase:   
  The Taiwan Sugar Corporation made contract s with farmers for the purchase of sugarcane 
and sugar sharing.  The sugarcane farmers obtain 55 per cent of the sugar made from sugarcane.  If 
the domestic selling price of sugar is higher than the prepaid contract price, the sugarcane farmers are 
paid the domestic selling price.  If the domestic selling price is lower than the prepaid contract price, 
the farmers are paid the prepaid contract price.  The contract price was set after taking the domestic 
selling price and the marketing costs into account.  It has been frozen since 1990.    
 (2) Other grants:  
 
 The corporation provides grants to sugarcane fa rmers such as interest subsidy for loans for the 
purchase of inputs, insurance premium for sugar cane farms, fees for pest and disease control, 
inspection fees for sugar brix, and others.   
 
6. Amount of the subsidy
 
 
 NT$ 298.2 million, NT$ 286.3 million and NT $ 250.7 million for the fiscal years 2002/03, 
2003/04 and 2004/05 respectively.    
7. Duration of the subsidy and/or any other time-limits attached to it
 
  The duration of the subsidy is not specified.   
 
8. Statistical data
 
 
  Unit:  1,000 MT.  
Item Year Production Consumption Import Export 
2003 160.8 598.6 615.0 23.6 
2004 111.2 552.4 802.2 17.2 Raw Sugar 
2005 79.8 590.1 766.5 27.4 
 
 G. INTEREST
 SUBSIDY 
1. Title of the subsidy programme  
 
 The policy-oriented special agricultural loan.    G/SCM/N/155/TPKM 
Page 12  
 
  2. Period covered by the notification
 
  2003-2005.   
 
3. Policy objective and/or purpose
 
 
 The overall objective is to assist farmers and businesses in agricultural industries to raise the 
funds needed for them to be able to operate smoot hly.  This plan was devised to help them update 
their equipment, improve developmental skills a nd innovation, increase the added-value in their 
products, and strengthen product sales and their competitiv eness in the world.  In addition, the plan 
helped farmers who were affected by natural di sasters to rebuild their homes and their livelihoods, 
thus helping to raise their standard of living.    4. Background and responsible authorities
 
 
 (a) Law and regulation:   Agriculture Development Act.    
 (b) Authorities:   Council of agriculture.   
 5. Form of the subsidy/to whom and how the subsidy is provided
 
  Lower interest rate loans:  the loan capital was provided from credit departments of farmers' 
and fishermen's associations or The Agricultural Bank of Taiwan.  The source of finance for the 
interest subsidies is the Agri cultural Development Fund.   
 
6. To whom and how assistance is provided
 
 
(a) These lower interest rate loans are available to all farmers and fishermen, and are not 
limited to a specific industry or enterprise.   
 
(b) Different ceilings are set for different typ es of loan.  In addition, only a percentage of 
the total procurement amount is eligible for the loan.  The amount of loan granted is decided by the bank, based on the financial situation of the applicant.   
 
7. Amount of the subsidy
 
 
 The amount of interest subsidy was NT$ 302.3 million, NT$ 327.2 million and NT$ 650.9 million for the fiscal years 2003,  2004 and 2005 respectively.   
 8. Duration
 
 
 The duration of the subsidy is not clearly specified.   
 9. Trade effects or related statistical data
 
  (a) Trade effects:   
 
  The programme is mainly used to promot e the upgrading of the industry.  Given the 
scope and nature of the programme, it is not possible to determine what, if any, trade effects may result directly from this programme.    G/SCM/N/155/TPKM 
 Page 13 
 
 
   (b) Related statistical data:   
 
Interest subsidy for loans granted in 2003, 2004 and 2005  
   Unit:  thousand NT$ 
Name of Project 2003 2004 2005 
Loans for expanding the family farm;  to support farmers 
buying land 18,759 30,116 37,608 
Loans for farm machinery 96,870 103,202 107,018 
Loans for natural agricultural disasters 68,765 76,569 72,497 
Loans for accelerating rural construction 117,938 117,277 433,824 
 
Note :  Loans for accelerating rural construction include such items as:   
 
1. Loans in the Agricultural Food Industry to provide Guidance and Assistance to 
Management 
2. Loans in the Livestock and Poultry Indu stry for Improving Management Efficiency 
3. Loans to farmers to provide Guidance, Assistance and Management Improvement  
4. Preferential loans extended to those businesses that move into the Agricultural 
Technology Park 
5. Loans for Agriculture Production and Marketing Groups 
 
 
II. FISHERIES 
A. FISHING VESSELS BUY-BACK PROGRAMME  
1. Title of the programme  
 
 Fishing Vessels Buy-back Programme.    2. Period covered by the notification
 
 
 January, 2005 - December, 2006.   
 3. Policy objective and/or purpose
 
  Because of severe overfishing worldwide, the UN has called on nations, as a matter of 
urgency, to reduce their fishing capacities.  This  programme seeks to alleviate pressures on fishery 
resources and ensure their sustainability.    4. Background and responsible authorities
 
 
 (a) Law and regulation:   
  Regulation for the Fishing Vessels Buy-back Procedures (2005-2006).   
  (b) Authority:   Fisheries Agency, Council of Agriculture.   
 
5. Form
 
  Grant.    G/SCM/N/155/TPKM 
Page 14  
 
  6. To whom and how assistance is provided
 
  (a) Beneficiaries:      Owners of all varieties of fishing vessels with valid fishing licences, including 
recreational fishing vessels.   
  (b) Content:    
(1) The following are the buy-back amount s for fishing vessels, calculated and 
accumulated in 2005-2006:   
 
 (i) NT$ 50,000 for each gross ton for the 1
st to 5th ton;   
 (ii) NT$ 40,000 for each gross ton for the 6th to 10th ton;   
 (iii) NT$ 30,000 for each gross ton for the 11th to 20th ton;   
 (iv) NT$ 25,000 for each gross ton for the 21st to 50th ton;   
 (v) NT$ 20,000 for each gross ton for the 51st to 100th ton;   
 (vi) NT$ 18,000 for each gross ton over 100 tons; with;   
 (vii) the highest total amount for each eligible vessel being NT$ 7.9 million.   
 
(2) The following are the buy-back amounts for fishing rafts calculated in 2005-2006:   
 
 (i) NT$ 200,000 for below 6 M;    (ii) NT$ 300,000 for 6-below 10 M;   
 (iii) NT$ 450,000 for 10-below 15 M;   
 (iv) NT$ 600,000 for 15-below 20 M;    (v) NT$ 700,000 for 20 M and over.   
 
7. Amount
 
 
 Funds spent on buying back 12 fishing vessel s and 93 fishing rafts in 2005 totalled 
NT$ 54 million;  funds spent on buying back 10 fishing vessels and 259 fishing rafts in 2006 totalled 
NT$ 122 million.    
8. Duration
  
 
 The duration of the subsidy is not clearly specified.    
9. Trade effects or related statistical data
  
 
 Fishery production, consumption and trade.      Unit:  metric ton 
Classification 2003 2004 2005 2006 
Production 1,500,428 1,287,484 1,314,225 1,283,587 
Import 378,696 387,377 381,967 345,431 
Export 588,470 577,375 650,476 637,430 
Consumption 1,290,654 1,097,486 1,045,716 991,588 
  G/SCM/N/155/TPKM 
 Page 15 
 
 
  B. REWARD FOR CLOSING FISHERY SEASON  
1. Title of the programme  
  Reward for Closing Fishery Season.    
2. Period covered by the notification
 
  January, 2005 - December, 2006.    3. Policy objective and/or purpose
  
 
 Because of the global overfishing problem, the UN has called on nations to reduce their catches.  This programme seeks to alleviate pressures on fishery resources and ensure their 
sustainability.   
 
4. Background and responsible authorities
 
  (a) Law and regulation:   Regulation for the Reward for Closing Fishery Season.   
 
 (b) Authority:   Fisheries Agency, Council of Agriculture.   
 5. Form
 
  Grant.   
 
6. To whom and how assistance is provided
  
 
(a) Beneficiaries:  Any fishing vessels w ith valid fishing licences that meet the 
qualifications below (not including recreati onal fishing charter boats or boats that 
temporarily accommodate foreign fishermen in Taiwanese waters).   
 (b) Qualifications:  Fishing vessels must have been at sea for one hundred days or more 
and moored in a Taiwanese harbour for 120 days or more in the fiscal year to qualify.  For those fishing vessels whose fishing ac tivities are restricted by the government, 
they must have been at sea for one hundred days or more and moored in a Taiwanese 
harbour for 60 consecutive days or more in the fiscal year.   
 
7. Amount
 
  The budget for the programme totalled NT$ 309 million for the 2005 to 2006 fiscal period (NT$ 139 million in 2005, NT$ 170 million in 2006).   
 
8.  Duration
 
  The duration of the subsidy is not clearly specified.   
 
9. Trade effects or related statistical data
 
  Fishery production, consumption and trade.   G/SCM/N/155/TPKM 
Page 16  
 
    Unit:  metric ton.   
Classification 2003 2004 2005 2006 
Production 1,500,428 1,287,484 1,314,225 1,283,587 
Import 378,696 387,377 381,967 345,431 
Export 588,470 577,375 650,476 637,430 
Consumption 1,290,654 1,097,486 1,045,716 991,588 
 
 
C. EXTENSION OF RE-USE OF POND WATER USED IN AQUACULTURE  
1. Title of the programme  
  Extension of Re-use of Pond Water Used in Aquaculture.   
 
2. Period covered by the notification
 
  January 2005 to December 2006.    3. Policy objective and/or purpose
 
 
 Reduce groundwater consumption in order to prevent land subsidence.    4. Background and responsible authorities
 
 
 (a) Law and regulation:   Agricultu re Development Act, Article 62.   
  (b) Authority:   Fisheries Agency, Council of Agriculture.    5. Form
 
 
 Grant.   
 6. To whom and how assistance is provided
 
  (a) Beneficiaries:  Fishermen who rear fish.   
(b) Content:  Government provides grants to offset by 35 per cent the total amount of the 
cost of water re-circulation devices (e.g. mechanical filters).   
 7. Amount
 
 
 The amount of subsidies for 2005 and 2006 totalled NT$ 7 million.   
 8. Duration
 
  Ongoing since 1984.   
 
9.  Trade effects or related statistical data
 
  Fishery Production, Consumption and Trade.    G/SCM/N/155/TPKM 
 Page 17 
 
 
    Unit:  metric ton.   
Classification 2003 2004 2005 2006 
Production 1,500,428 1,287,484 1,314,225 1,283,587 
Import 378,696 387,377 381,967 345,431 
Export 588,470 577,375 650,476 637,430 
Consumption 1,290,654 1,097,486 1,045,716 991,588 
 
 
D. FISHING VESSELS MARINE INSURANCE REWARD  
1. Title of the programme   
  Fishing Vessels Marine Insurance Reward.   
 
2. Period covered by the notification
  
  January, 2005 - December, 2006.    3. Policy objective and/or purpose
 
 
 Insure fishing vessels against marine disasters.    4. Background and responsible authorities
 
 
 (a) Law and regulation:   
  Regulation for the Insurance Reward for Owners of Fishing Vessels.   
  (b) Authority:  Fisheries Agency, Council of Agriculture.    5. Form
 
 
 Grant.    6. To whom and how assistance is provided
 
 
 (a) Beneficiaries:  Owners of fishing vessels 
 
(b) Content:  The programme provides grants to  cover part of the costs of insurance for 
fishing vessels in case of damage at sea.   
 
7. Amount  
  The budget for the programme totalled NT $ 83.4 million for 2005 and NT$ 84.1 million 
for 2006.   
 
8. Duration
 
  Ongoing since 1987.   G/SCM/N/155/TPKM 
Page 18  
 
  9. Trade effects or related statistical data
  
  Fishery production, consumption and trade.    
  Unit:  metric ton.   
Classification 2003 2004 2005 2006 
Production 1,500,428 1,287,484 1,314,225 1,283,587 
Import 378,696 387,377 381,967 345,431 
Export 588,470 577,375 650,476 637,430 
Consumption 1,290,654 1,097,486 1,045,716 991,588 
 
 
E. AQUA-CULTURAL FACILITIES LOAN   
1 Title of the programme  
  Aqua-cultural Facilities Loan.    
2.  Period covered by the notification
 
  January, 2005 - December, 2006.    3. Policy objective and/or purpose
 
 
  To assist fishermen in improving aqua-cultural facilities.   
 4. Background and responsible authorities
 
  (a) Law and regulation:   Regulation for the Aqua-cultural Facilities Loan.   
 
(b) Authority:   Fisheries Agency, Council of Agriculture.   
 
5. Form
 
  Loan.   
 
6.  To whom and how assistance is provided
 
  (a) Beneficiaries:  Fishermen who rear and raise fish.    
(b) Content:  Banks and fishermen's associations  offer low-interest loans to fishermen, 
based on the size of their farms.  The Agricultural Development Foundation 
subsidizes the gap between the guaranteed lo an rate and the commercial bank interest 
rate.   
 7. Amount
 
 
 NT$ 6 million annually.   
 8.  Duration
 
  Ongoing since 1998.    G/SCM/N/155/TPKM 
 Page 19 
 
 
  9. Trade effects or related statistical data  
  Fishery production, consumption and trade.    
  Unit:  metric ton.   
Classification 2003 2004 2005 2006 
Production 1,500,428 1,287,484 1,314,225 1,283,587 
Import 378,696 387,377 381,967 345,431 
Export 588,470 577,375 650,476 637,430 
Consumption 1,290,654 1,097,486 1,045,716 991,588 
 
 
F. FISH PRODUCTS MARKET STABILIZATION FUND 
1. Title of the programme  
  Fish Products Market Stabilization Fund.    
2. Period covered by the notification
 
  January, 2005 - December, 2006.    3. Policy objective and/or purpose
 
 
  Stabilize fish product prices and the fish products market.    
4. Background and responsible authorities
 
  (a) Law and regulation:   
  Regulation for the Incomes, Expenditures, Safe Custody, and Application of Fish 
Products Market Stabilization Fund.   
  (b) Authority:   Fisheries Agency, Council of Agriculture.    
5. Form
 
  Grant.    6.  To whom and how assistance is provided
 
 
(a) Beneficiaries:  When a particular fish  species is overproduced, the local government 
will provide incentives for fishermen's as sociations to propose a stabilization 
programme to buy the overproduced fish.   
 
(b) Content:  When the market price of a particular fish species falls below 80 per cent of 
the stabilized price for that fish for 5 c onsecutive days, fishermen's associations, in 
accordance with this programme, will be compensated for 70 per cent of the storage 
cost and all accumulated interest involve d in buying the overproduced fish.   G/SCM/N/155/TPKM 
Page 20  
 
  7. Amount
 
  NT$ 31,202 in grants for storage costs in 2005.  NT$ 848,235 in grants for storage costs in 2006.   
 
8. Duration
 
  Ongoing since 1995.   
 
9. Trade effects or related statistical data
 
  Fishery production, consumption and trade.      Unit:  metric ton.   
Classification 2003 2004 2005 2006 
Production 1,500,428 1,287,484 1,314,225 1,283,587 
Import 378,696 387,377 381,967 345,431 
Export 588,470 577,375 650,476 637,430 
Consumption 1,290,654 1,097,486 1,045,716 991,588 
 
 G. F
ISHING VESSELS REDUCTION PROGRAMME  
1. Title of the programme  
  Government compensation for fishing vessels reduction plan.   
 
2. Period covered by the notification
 
 
 January, 2005 - December, 2006.   
 3. Policy objective and/or purpose
 
 
 Because of severe overfishing worldwide, the UN has called on nations, as a matter of 
urgency, to reduce their fishing capacities.  This  programme seeks to alleviate pressures on fishery 
resources and ensure their sustainability.   
 4. Background and responsible authorities
 
 
 (a) Law and regulation:   Articles 37, 38 and 44 of the Fisheries Act.   
 
 (b) Authority:   Fisheries Agency, Council of Agriculture.    
5. Form
 
  Grant.   
 
6. To whom and how assistance is provided
 
 
 (a) Beneficiaries:  Owners of big-eye tuna long-line fishing vessels with valid fishing 
licences and freezing equipment of ultra-low temperature.   
  G/SCM/N/155/TPKM 
 Page 21 
 
 
   (b) Content:   
    NT$ 30,000 for each gross ton.   
 
7. Amount
 
  Funds spent on reducing by 59 fishing vessel s in 2005 totalled NT$ 781.44 million, and funds 
spent on reducing by 101 fishing vessels in  2006 totalled NT$ 1,822.65 million.   
 8. Duration
 
  The duration of the subsidy is not specified.    
9. Trade effects or related statistical data
 
 
 Fishery production, consumption and trade.   
  Unit:  metric ton.   
Classification 2003 2004 2005 2006 
Production 1,500,428 1,287,484 1,314,225 1,283,587 
Import 378,696 387,377 381,967 345,431 
Export 588,470 577,375 650,476 637,430 
Consumption 1,290,654 1,097,486 1,045,716 991,588 
 
 III. INDUSTRY 
A. T
AX CREDITS OR TAX EXEMPTIONS FOR DESIGNATED ENTERPRISES  
1. Five-year tax exemption for the emergi ng, important and strategic industries 
1. Title of the programme  
 
 Five-year tax exemption for the emerging,  important and strategic industries.   
 2. Period covered by the notification
 
  Fiscal years 2004-2005.   
 
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) Law and regulation:     1999 amendment to the Statute for Upgradi ng Industries (the SUI), Article 9 on five-
year tax exemption.   G/SCM/N/155/TPKM 
Page 22  
 
   (b) Authorities:   
  The Industrial Development Bureau, the Ministry of Economic Affairs and the 
Ministry of Finance.   
 Note
:  The SUI was promulgated on 29 Decemb er 1990, and amended on 10 January 1995, 
31 December 1999, and 6 February 2003.   
 5. Form
 
  Tax exemption.   
 
6. To whom and how assistance is provided
 
  An emerging, important and strategic industry w ithin two years of its start-up date, may apply 
for payment of the capital contributions by its sharehol ders and, with the approval of its shareholders 
meeting, to be exempted from corporate income tax.   
  To qualify as an "emerging, important and st rategic industry", the following three criteria 
should be met:  (1) products to be produced under th e investment plan should belong to the emerging, 
important and strategic industry;  (2) the paid-in or  increased paid-in capital for the investment plan 
should be more than NT$ 200 million;  and, (3) the funds available for the purchase of brand-new 
machinery/equipment in the investment plan should be in excess of NT$ 100 million.   
 
 In the case of a newly incorpor ated 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 en terprise, the exemption applies to the corporate 
income tax levied on the increased income derive d as a result of such expansion for a period of 
five consecutive years from the date the newly-added equipment starts to operate or the rendition of 
services begins;  provided, however, that the exempti on applies only to an expansion in the form of 
the establishment of additional independent producti on or service units, or to an increase in major 
production or service equipment.    
 An eligible enterprise applying the tax exempti on may, within two years of the date on which 
it starts to market its products or to render service s, defer, at its own discretion, the commencement 
date of the tax exemption period.  The maximu m period for such deferment is four years.  
Furthermore, the commencement date of such deferre d tax exemption period should be the beginning 
date of a fiscal year.   
 
7. Amount
 
   Unit:  thousand NT$ 
Fiscal Year 2004 Fiscal Year 2005 
100,202 491,083 
 8. Duration
 
  The programme was initiated in the year 2000. Chapter 2 of the SUI concerning tax benefits 
will expire in 2009.    G/SCM/N/155/TPKM 
 Page 23 
 
 
  9. Trade effects or related statistical data  
  In light of the scope and nature of the progra mme, it is not yet possible to determine what, if 
any, trade effects may result from this programme.    2. Tax credit for investment in a disadvantaged region 
1. Title of the programme
 
  Tax credit for investment in a disadvantaged region.    
2. Period covered by the notification
 
  The fiscal year 2004-2005.    3. Policy objective and/or purpose
 
 
 With the overall objective of achieving bala nced economic growth within the Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Ma tsu, the aim of the tax credit programme is to 
encourage investment in disadvantaged geographic regions.    4. Background and responsible authorities
 
 
 (a) Law and regulation:   Statute for Upgrading Industries (the SUI), Article 7.     (b) Responsible authority:   
The Industrial Development Bureau, Ministry of Economic Affairs 
 
Note
:  The SUI was promulgated on 29 December 1990, and amended on 10 January 1995, 
31 December 1999, and 6 February 2003.   
 5. Form
 
 
 Tax credit against corporate income tax.   
 6. To whom and how assistance is provided
 
  Any company incorporated under the Company La w, which makes an investment in a region 
with scant natural resources or with slow developm ent, may gain credits of up to 20 per cent of the 
total amount of its investment against the corporat e 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 credit may be 
applied against the corporate income tax levied in the ensuing four years.   
 
 The "county or township areas with scanty natu ral resources or slow development" referred to 
in Article 7 of the SUI, with the exception of the villages in Kinmen County, Lien-chiang County, 
Penghu County, and the Lanyu Village  and the Green Island Village of Taitung County, as well as 
Ryukyu Village of Pingtung County, must satisfy  either of the following requirements:   
 
(a) A village in the first eight (8) counties as arranged in sequence based on the aggregate 
score of each of the 16 counties, from the lowest to the highest, as calculated on the 
basis of the following ten index items available in the preceding two years:  population growth rate, society increase ra te, proportion of secondary and tertiary 
workers to total employed population, ta x revenue, average regular income of each G/SCM/N/155/TPKM 
Page 24  
 
  household, proportion of urba n population to total population, availability of tap 
water supply, availability of telephone to every one hundred households in the city, 
highway density, and number of educational facilities of college level or higher.   
 
(b) A village whose average cons olidated income filed in the last three years fell within 
the lower half of all the average national consolidated incomes filed by all villages 
island-wide in the same period.   
  The threshold capital means the total amount used in procuring brand-new machinery, 
equipment and building aggregates up to NT$ 25 million.  The term minimum number of employees 
means the monthly average of the number of newl y employed employees in a full year, amounting to 
fifty (50) persons or more.     The criteria used by the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu 
are more stringent than those under Article 8 of  the SCM Agreement.  The main reason for the 
adoption of factors other than the two economic indi cators prescribed by the SCM Agreement is that 
these criteria reflect the real condition of scant r esources and the slow economic development in the 
areas concerned.  If the SCM index were applied,  more regional zones would be eligible for tax 
credits.    7. Amount
 
 
 (a) For the fiscal year 2005:      NT$ 10,239,049.    
 (b) Statistical data available for the two most recent years:   
   Unit:  thousand NT$.   
FY 2004 FY 2005 
4,968,448 10,239,049 
 
8. Duration  
  The programme was initiated in 1990 and Chapte r 2 of the SUI concerning tax benefits will 
expire in 2009.    
9. Trade effects or related statistical data
 
  In light of the scope and nature of the progra mme, it is not yet possible to determine what, if 
any, trade effects may result from this programme.     
B. L
OANS - LOANS FOR SMALL AND MEDIUM -SIZED ENTERPRISES (SMES) 
1. Specific and urgent financing and loans intended for working capital needed during 
periods of economic crisis and recession, and for recovery plans from damage caused by 
major natural disasters 
1. Title of the programme  
 
 Specific and urgent financing and loans intende d for working capital needed during periods of 
economic crisis and recession, and for recovery plans from damage caused by major natural disasters.   
  G/SCM/N/155/TPKM 
 Page 25 
 
 
  2. Period covered by the notification  
  Fiscal year 2005-2006.    3. Policy objective and or/purpose
 
 
 Qualified SMEs in circumstances meeting th e following conditions are entitled to apply for 
the financing and loans:    
(a) Urgent financing is provided for the pr ovision of working capital during periods of 
significant financial crisis, recession and major natural disasters.   
 
(b) The loans are provided for helping enterprises restructure during periods of economic 
crisis and recession, replacing machinery a nd purchasing new automated equipment.   
 
4. Background and responsible authorities
 
  (a) Law and regulation:   
Statute for Development of Small and Medium-Sized Enterprises (Articles 9, 15, 17 and 18).   
  Procedure for Income-Expenditure Safeguarding and Utilization of the SME 
Development Fund.   
  The SME Development Fund was established based on Article 9 of the Statute for 
Development of Small and Medium-Sized Enterprises.   
  (b) Authority:   The Ministry of Economic Affairs.   
 
Note:
  The cumulative amount reached by the end of  fiscal year 2006 for the SME Development Fund 
was NT$ 9.2 billion.    5. Form
 
 
 Financing and loan.   
 6. To whom and how assistance is provided
 
  All enterprises which meet the "Standards for Identifying a Small and Medium-Sized 
Enterprise" are eligible to apply.   
  According to the "Standards for Identifying a Small and Medium-Sized Enterprise" published 
by the Ministry of Economic Affairs, an SME is a company or commercial enterprise registered in 
accordance with the law with capital or operati ng revenue below the following thresholds:   
 
(a) For enterprises engaged in manufacturing, construction, mining or  excavating, paid-in 
capital of less than NT$ 80 million.   
 
(b) For enterprises engaged in other economic  activities such as agriculture, logging, 
fishing, the raising of livestock, utiliti es, commerce, transport, warehousing, 
communications, finance, insurance, real estate, commercial, social or individual 
services, an annual operating revenue of less than NT$ 100 million.   
  The loan granted is shared by the SME Deve lopment Fund and other participating banks on a 
50/50 basis.  The ceiling interest rate is 1.5 per cent plus a flat rate of the 2-year postal fixed savings 
rate.   G/SCM/N/155/TPKM 
Page 26  
 
  7. Amount
 
  Statistics for Specific Programmes:     Loaned by the SME Development Fund.   
  Unit:  million NT$.   
Title of Programme 2005-2006 
Urgent financing for the provision of working capital during periods 
of significant financial crisis, or recession 0 
Urgent financing for major natural disasters 0 
 
8. Duration  
 
 The above-mentioned two programmes loaned by the SME Development Fund ceased to apply after 2005.    9. Trade effects or related statistical data
 
 
 Given the fact that in the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, 
98 per cent of enterprises can meet the criteria and t hus be termed SMEs, it is difficult to estimate the 
trade effects of these programmes.    
2. Medium- and long-term loans for product ma rketing and loans for overseas investment 
and construction projects 
1. Title of the programme
 
  Medium- and long-term loans for product mark eting, and loans for overseas investment and 
construction projects.   
 
2. Period covered by the notification
 
  Fiscal year 2005-2006.    
3. Policy objective and or/purpose
 
  Those programmes are implemented with th e purpose of providing SMEs with financial 
assistance in exploring new markets for their machin ery and equipment, in investing and establishing 
plants in foreign countries, and in undertaki ng overseas contracts for construction projects.   
 
4. Background and responsible authorities
 
  (a) Law and regulation:     Statute for Development of Small and Medium-Sized Enterprises (Articles 9, 15, 
and 16).   
 Procedure for Income-Expenditure, Sa feguarding and Utilization of the SME 
Development Fund.   
  (b) Authority:   The Ministry of Economic Affairs.    5.  Form
 
 
 Loan.    G/SCM/N/155/TPKM 
 Page 27 
 
 
  6. To whom and how assistance is provided  
 
(a) All enterprises which meet the "Standard s for Identifying a Small and Medium-Sized 
Enterprise" are eligible for application.   
 
(b) The approval of loan applications is pe rformed by commercial banks.  However, the 
capital needed is provided entirely by the SME Development Fund.   
 7. Amount
 
 
 Loaned by the SME Development Fund.   
  FY 2005-2006:  NT$ 1.27  billion.   
 8. Duration of subsidy
 
 
 The programmes are not subject to any fixed completion date.    9. Trade effects or related statistical data
 
  Given the fact that in the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, 
98 per cent of enterprises can meet the criteria and t hus be termed SMEs, it is difficult to estimate the 
trade effects of these programmes.    L
OANS FOR PRIVATE ENTERPRISES  
3. Loans for small and medium-sized enterprises and private enterprises 
1. Title of the programme  
  Loans for small and medium-sized en terprises and private enterprises.   
 2. Period covered by the notification
 
 
 The fiscal year 2006.    3. Policy objective and/or purpose
 
 
 The programme is implemented with the purpose of improving production technology and 
product quality, promoting industria l upgrading and to assist in the upgrading of small and medium-
sized enterprises and private enterprises.    4. Background and responsible authorities
 
 
 (a) Law and regulation:   
  The Statute for Upgrading Industries (the SUI), sub-paragraphs (2) and (3), 
paragraph 1 of Article 21.   
  (b) Authorities:   
 The guidelines for the loan programme are produced by the Development Fund.   G/SCM/N/155/TPKM 
Page 28  
 
  5. Form
 
  Loans:  each loan is provided by the Development Fund (25 per cent) and the bank 
(75 per cent).  
6. To whom and how assistance is provided
 
 
The loans are available to all enterprises a nd are not limited to a specific industry or 
enterprise.    
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.    9. Trade effects or related statistical data
 
 
(a) Trade effects: 
 
 The programme is mainly used to promote industry upgrading.  In light of the scope 
and nature of the programme, it is not possible to determine what, if any, trade effects may result.   
 
(b) Related statistical data:   
 
Total amount of loans granted in 2006
 
 
Name of Project Number of granted 
cases Total amount of granted 
loans   
(hundred million NT$) 
Loans to assist in the upgrading of small 
and medium-sized enterprises 903 77.61 
 
 
C. DUTY AND TAX EXEMPTIONS GRANTED TO ENTERPRISES LOCATED WITHIN A DESIGNATED 
ZONE 
1. Duty and tax exemptions for high-technology industries 
1. Title of the programme  
 
 Duty and tax exemptions for high-technology industries.   
 2. Period covered by the notification
 
  Fiscal year 2005-2006.    
3. Policy objective and/or purpose
 
  This programme is implemented with a view  to stimulating the research and innovation of 
industrial technology and to promote the developm ent of advanced technology in the Separate  G/SCM/N/155/TPKM 
 Page 29 
 
 
  Customs Territory of Taiwan, Penghu, Kinmen and Ma tsu.  The "Science-Based Industrial Park"("the 
Park") has been established by introducing sophi sticated industries and personnel with advanced 
technological backgrounds into a designated zone.    4. Background and responsible authorities
 
 
 (a) Law and regulation:   
 Statute for the Establishment and Administ ration of a Science-Based Industrial Park 
(Article 20);   
 Implementing Regulation of Statute for th e Establishment and Administration of a 
Science-Based Industrial Park (Article 17).   
  (b) Authorities:   The Park is managed by the Science Park Administration;       The policy-making body is the National Science Council.    
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) Effective from 1 January 2000, the merged  Park entities in acco rdance with domestic 
Company Law, or surviving or new Park entities after mergers, shall succeed to the 
tax benefits, which are not yet terminated nor fully offset, originally enjoyed by the dissolving science-based industry before mergers.  As for succeeding to the 
exemption of profit-seeking income tax as investment incentives from the dissolving 
Park entities, the surviving Park entities with in the scope of science-based industries 
under the merger/consolidation projects sha ll continue to produce products or to 
provide services identical to those produced or provided by the dissolving Park entities and such tax benefits shall apply onl y to the portion of income derived from 
products or services independently produced or provided by the original dissolving 
Park entities.  If the tax benefits are provide d in the manner of investment offset or 
deduction, such tax benefits shall appl y only to the payable tax portion of the 
surviving or new Park entities after merger s of the dissolving science-based industries 
(Article 18).   
  (b) All Park enterprises are entitle d 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 enterprise refers to the science-bas ed industry and to an enterprise approved and 
established in the Park able to provide services in respect of operational, management or technical 
support to science-based industries.     A research and development institution or a ve nture capital investment incubatory centre may 
also apply for establishment and operation in the Park.   
 
 The venture capital investment incubatory centr e eligible for establishm ent in the Park shall 
be limited to one that engages in research and development activities, does not engage in mass 
production and has been approved by the Park Administra tion.  It will stay in the Park for a period of 
not more than three years.   
 G/SCM/N/155/TPKM 
Page 30  
 
  Note 2
:  According to Section 2, paragraph 1, Article 3 of the Commodity Tax Statute and Article 7 of 
the Value-added and Non Value-a dded Law, exports can be exempt ed from commodity tax and the 
business tax rate on exported goods is zero.  These tax treatments are not specific to enterprises 
located in the Park, as they are generally availabl e for exported goods, regardless of whether or not 
the manufacturers are located in the Park.   
 
7. Amount  
 
2005-2006 Tax Exemption  
 
          Unit:  NT$ million 
Year Import Value 
for Machinery and 
Equipment Amount of Import
Duty Exemption 
for 
M & E Amount of 
Business Tax 
Exemption for 
M & E Amount of 
Corporate Income 
Tax Exemption 
2005 53,104 1,593 2,655 N/A 
2006 62,932 1,887 3,146 N/A 
 Note:
  The amount of the import duty exemption for various tariff lines other than machinery and 
equipment is not available because of the lack of st atistics for imports into the Park by tariff line.  
Since the duty rate applied against each tariff line differs, we can not calculate the exempted duty 
amount for all the imports into the Park unless we have the import statistics of the Park by tariff line.   
 
2005-2006 Business Tax Exemption for all Imports  
   Unit:  NT$ million 
Year Total Import Value Total Amount of Business 
Tax Exemption 
2005 331,117 16,555 
2006 389,363 19,468 
 8. Duration
 
  There is no time limit attached to the programme.    
9. Trade effects or related statistical data
 
   Unit:  NT$ million 
Year 2005 2006 
Number of approved park enterprises
(accumulated numbers) 382 392 
Total import value 331,117 389,363 
Total export value 484,249 592,916 
 
 In light of the scope and nature of the progra mmes granted, it is not yet possible to determine 
what, if any, trade effects may resu lt from this subsidy programme.   
 
2. Duty and tax exemptions for in-zone enterprises 
1. Title of the programme  
 
 Duty and tax exemptions for in-zone enterprises.   
  G/SCM/N/155/TPKM 
 Page 31 
 
 
  2. Period covered by the notification  
  Calendar years 2004-2006.    3. Policy objective and/or purpose
 
 
 Export Processing Zones have been established for the purpose of promoting investment and international trade.    4. Background and responsible authorities
 
 
 (a) Law and regulation:   
 Statute for Establishment and Administration of Export Processing Zones (the 
EPZ Law), (Articles 1, 5 and 13).   
 Measures for the Screening of Application for Establishment of Enterprises in Export 
Processing Zones.   
  Categories of Industry eligible to be  established in Export Processing Zones.   
  (b) Authorities:     Export Processing Zones are managed by the Export Processing Zone Administration.     The policy-making body is the Ministry of Economic Affairs.   
  The task for reviewing the eligibility of enterprises established in Export Processing 
Zones shall be undertaken by the Export Processing Zone Administration together 
with the other government agencies involved.   
 Note:
  In-zone enterprises include industries authori zed to be engaged in manufacturing, processing, 
assembly, research and development, trade, c onsulting, technical services, warehousing, 
transportation, stevedoring, packi ng, repairs and other related busin esses approved by the Ministry of 
Economic Affairs for Export Processing Zones.    5. Form
 
 
 Duty and tax exemptions 
 6. To whom and how assistance is provided
 
  All in-zone enterprise industries are en titled to the following exemptions:   
 
 (a) Import duty, commodity tax and business tax on imported machiner y and equipment.   
(b) Import duty, commodity tax, and bus iness 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 Processing Zone 
or acquiring a building from the Export Processing Zone Administration.   
  It should be noted that, within five years of import, all machinery and equipment is not 
entitled to duty and tax exemptions when shipped to leviable areas from Export Processing Zones. 
Moreover, products manufactured by in-zone ente rprises shall be subject to customs duties, 
commodity taxes and business taxes when they are sh ipped to leviable areas.  While customs duties 
would be applied on the basis of ex-factory pri ces minus value-added resulting from manufacturing or 
processing activities in the EPZs, other taxes w ould be based on the ex-factory price.   G/SCM/N/155/TPKM 
Page 32  
 
  7. Amount
 
 
Percentage of EPZ Payable Tax to Export Value  
   Unit:  US$ thousand 
Year→ 
Item↓ 2004 2005 2006 
Imported Machinery 
Equipment 903,733 439,349 455,750 
Custom Duty On Imported 
Machinery Equipment  5,269 4,508 2,771 
Export Value Total 7,456,551 7,842,733 8,208,496 
Percentage 0.071% 0.057% 0.034% 
Average Percentage 0.054% 
Export and Import Value Total 13,543,362 14,264,439 15,440,364 
Percentage 0.039% 0.032% 0.018% 
Average Percentage 0.030% 
 
8. Duration  
  There is no time limit attached to the programme.    
9. Trade effects or related statistical data
 
 
3. In light of the scope and nature of the programmes granted, it is not yet possible to 
determine what, if any, trade effects may result from this subsidy programme 
D. SUBSIDIES FOR THE ESTABLISHMENT AND OPERATION OF PETROLEUM FACILITIES IN 
MOUNTAIN AND OFFSHORE AREAS  
1. Title of the programme  
 
 Subsidies for the Establishment and Opera tion of Petroleum Facilities in Mountain and 
Offshore Island Areas.   
 
2. Period covered by notification   
  The years 2004-2006.    3. Policy objective
 
 
 The policy objective of the programme is to maintain oil supplies from reserves located in 
mountain and offshore island areas.    4. Background and responsible authorities
 
 
 (a) Law and regulation:  Petroleum Administration Law.     (b) Responsible authority:   Bureau of Energy, Ministry of Economic Affairs.   
 5. Form
  
 
 Grant.    G/SCM/N/155/TPKM 
 Page 33 
 
 
  6. How assistance is provided and to whom  
  Building contractors and/or operators of pe troleum facilities in mountain and offshore island 
areas are entitled to apply for the following subsidies:   
 
 (1) Subsidy for the establishment of petrol eum facilities in mountain and offshore island 
areas.   
 (2) Subsidy for maintenance cost of petrol eum facilities in mountain and offshore island 
areas.   
 (3) Subsidy to offset the cost of shipping petroleum or Liquefied Petroleum Gas to 
mountain and offshore island areas.   
 (4) Subsidy for extra personnel costs in th e operation of petroleum facilities in mountain 
or offshore island areas.   
 
7. Amount for the past three years
 
  Statistics for specific subsidies:   
Unit:  thousand NT$ 
                                       Year
Title of Subsidy 2004 2005 2006 
Subsidy for the establishment of petroleum 
facilities in mountain and offshore island areas 2,411 8,801 22,954
Subsidy for maintenance cost of petroleum 
facilities in mountain and offshore island areas 1,168 17,866 12,662
Subsidy to offset the cost of shipping petroleum 
or Liquefied Petroleum Gas to mountain and offshore island areas 154,783 175,933 171,933
Subsidy for extra personnel costs in the 
operation of petroleum facilities in mountain or 
offshore island areas 26,864 26,048 26,091
Total 185,226 228,648 233,640
 
8. Duration  
 
 The program was initiated in 2002.  It is not subject to any fixed completion date.   
 9 Trade effects or related statistical data
 
  In light of the scope and nature of the activ ities that may be financially supported by these 
subsidies, it is not yet possible to determine what, if  any, trade effects may ev entually result from this 
programme.   
  
IV. RESEARCH AND DEVELOPMENT 
A. F
UNDS GRANTED FOR DEVELOPMENT OF PRODUCTS OF THE NEW LEADING INDUSTRIES  
1. Title of the programme  
  Grants for development of products of the new leading industries.   
 G/SCM/N/155/TPKM 
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  2. Period covered by the notification
 
  The fiscal year 2006.    3. Policy objective and/or purpose
 
 
 In order to encourage research and devel opment on new leading products and upgrade the 
technical capability of the leading newly-emerging industries, the programme grants funds for private enterprises.    
4. Background and responsible authorities
 
  (a) Law and regulation:   
 Measures for Assistance in the Development of New Leading Products was 
promulgated on 26 April 1991 and amended on 30 June 1995, 27 November 2002, 
23 July 2003, and 20 October 2005.   
  (b) Authority:   
  The Industrial Development Bureau, Ministry of Economic Affairs.   
 5. Form
 
 
 Grant.    6. To whom and how assistance is provided
 
 
(a) Any company incorporated under the Co mpany Law with sound financial standing, 
whose book value is over 50 per cent of the cap ital, never having record of refusal or 
bounced cheque of the bank and possessing a research and development department with sufficient R&D specialists in the Sepa rate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu, may apply for the assist ance fund relating to the development of 
a product within the scope of the "emerg ing, important and strategic industry".
1  The 
product should possess great market potential and its core technology should surpass 
the current level of domestic industrial t echnology.  Besides, products within the 
scope of the "Digital Content Industry", and whose innovative content reaches the 
level of international-class products, are also  eligible for the use of the measures.   
 
(b) The assistance funds granted are a total of no more than forty percent (40 per cent) of 
the amount of the following expenses incurred exclusively for the development of new leading products:   
 
 1. 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.   
 7. Amount
 
 
(a) Since the programme's inception, the cumulative amount of grant stands at NT$ 
11,020,281,360 at the end of fiscal  year 2006 (fiscal years 1992-2006). 
 
                                                      
1 See page 23 for the definitions of the "emerging, important and strategic industry".    G/SCM/N/155/TPKM 
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  (b) For the fiscal year 2006:  the amount of  grant was NT$ 929,750,000.  A breakdown 
of the products involved is shown below:   
   Unit:  thousand NT$ 
Name of Project (or Sector) Grant 
Precision machinery and automation 269,350 
Communication 150,690 
Information 250,360 
Consumer electronics 57,690 
Medical and health care 72,730 
Advanced materials 61,580 
Semi-conductors 13,500 
Specialty chemicals and pharmaceuticals 37,530 
Aerospace 16,320 
Total 929,750 
 
8. Duration  
  There is no time-limit attached to the programme.    9. Trade effects or related statistical data
 
 
 It is not yet possible to determine what, if any, trade effects may result from this subsidy 
programme.     
B. F
UNDS GRANTED FOR PROMOTING DEVELOPMENT OF INDUSTRIAL TECHNOLOGY  
1. Title of the programme  
  Technology Development Programme for Enterprise.    
2. Period covered by the notification
 
  Fiscal year 2005 - 2006 (Jan 2005 to Dec 2006).    3. Policy objective and/or purpose 
 
 
 The programme's objective is to encourage businesses to engage in the development of 
technological innovations and applications for th e purpose of reinforcing domestic enterprises' 
capabilities, especially in the field of research and development.    4. Background and responsible authorities
 
 
 (a) Law and regulation:   
Regulations of Subsidization for En couraging Enterprise R & D Activities, 
promulgated 27 November 2002, amended 13 July 2006.   
  (b) Authority:   
Department of Industrial Technology, Ministry of Economic Affairs.   G/SCM/N/155/TPKM 
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  5. Form
 
  Fund assistance for advanced research and development.    6. How assistance is provided and to whom
 
 
 (a) Any company established according to Company Law with sound financial standing  
and a Research and Development Department that has made significant achievements 
in the past, and which is currently staffed by competent specialists, in the Separate 
Customs Territory of Taiwan, Penghu, Kinmen  and Matsu, may apply for this fund to 
offset the costs of the following activities:   
  1. The planning or development of i ndustrial technologies that may be aptly 
characterized as vital, innovative or integrative.   
 2. Development of innovative or integrat ive manufacturing technology by small and 
medium-sized businesses.   
 3. Development of innovative IT application systems.    4. Development of innovative business models  by strategic services-oriented research.   
 5. Cooperate with major national technology -related policies and cr eate an environment 
conducive to the development of technolog y and industry within civilian business 
enterprises.   
 
 (b) The assistance funds to be granted shall not exceed 50 per cent of the total amount of 
the following expenses: 
  1. 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.  7. Amount
 
 
 The total amount of grant in the fiscal year 2005-2006 was NT$ 4,405,672,201.  8. Duration
 
 
 There is no time-limit attached to the programme.   
 9. Trade effects or related statistical data
 
  It is not yet possible to determine what, if any, trade effects may result from this subsidy 
programme.   
 
 C. F
UND GRANTED FOR ENCOURAGING EXPLORATION AND DEVELOPMENT OF OIL AND 
NATURAL GAS RESERVES  
1.  Title of the programme  
 
 Fund Granted for Encouraging Exploration and Development of Oil and Natural Gas 
Reserves.    G/SCM/N/155/TPKM 
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  2. Period covered by notification   
   2003-2006.    3. Policy objective and/or purpose
 
 
 The policy objectives of the pr ogramme are to secure oil suppl y and stabilize the domestic oil 
market.   
 4.  Background and responsible authorities
 
 
 (a) Law and regulation:  Petroleum Administration Law.    (b) Responsible authority:  Bureau of En ergy, Ministry of Economic Affairs.   
 
5. Form
 
  Grant.    6. How assistance is provided and to whom
 
 
 Companies limited by shares incorporated under the Company Law that engage in the 
exploration and development of oil and natural gas reserves are eligible for the grant.   
 
 The grant is used only in support of the following activities: 
 
(1) The implementation of geological, geophysical, and/or geochemistry surveys and 
research necessary for the exploration of oil and natural gas.   
(2) Drilling for the exploration and/or developm ent of oil and/or natural gas reserves.   
(3) Any other necessary pertinent activities that have been reviewed and approved by the 
authorities.   
  The total subsidy allocated for an applicant's exploration proposal is not to exceed 50 per cent 
of the budget in the applicant's proposal.  The tota l subsidy allocated for an applicant's development 
proposal is not to exceed 12 per cent of the budget in the applicant's proposal.   
 7. Amount
 
   Unit:  thousand NT$ 
Year 2003 2004 2005 2006 
Total 129,374 233,950 192,380 194,380 
 
8. Duration  
  The programme was initiated in 2002.  It is not subject to any fixed completion date.   
 
9 Trade effects or related statistical data
 
 
 In light of the scope and nature of the activ ities that may be financially supported by the 
subsidy, it is not yet possible to determine what, if  any, trade effects may eventually result from this 
programme.    
 
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