WORLD TRADE  
ORGANIZATION  G/SCM/N/95/TPKM 
8 February 2005 
 (05-0518) 
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 4 February 2005,  is being circulated at the request of the 
Delegation of the Separate Customs Territo ry of Taiwan, Penghu, Kinmen and Matsu. 
 
_______________ 
 
TABLE OF CONTENTS 
Page
 
I. AGRICULTURE .................................................................................................................... ..2 
A. SUPPORT FOR RICE .......................................................................................................................2  
B. SUPPORT FOR SORGHUM AND FEED CORN ...................................................................................3  
C. MEASURES FOR SWEET POTATOES , ADZUKI BEANS , MUNG BEANS , AND OTHER 
MISCELLANEOUS CROPS ..............................................................................................................4  
D. SUPPORT FOR TOBACCO LEA VES .................................................................................................6  
E. SUPPORT FOR VEGETABLES .........................................................................................................7  
F. SUPPORT FOR SUGAR ..................................................................................................................9  
II. FISHERY........................................................................................................................ .........10  
A. FISHING VESSELS BUY -BACK PROGRAMME ...............................................................................10  
B. REWARD FOR REDUCTION OF FISHERY ACTIVITIES PROGRAMME ............................................11  
C. EXTENSION OF THE RE-USE OF POND WATER IN AQUACULTURE PROGRAMME ......................12  
D. MARINE INSURANCE ON FISHING VESSELS AND FISHERMEN .....................................................14  
E. THE AQUA-CULTURAL FACILITIES LOAN PROGRAMME ...........................................................15  
III. INDUSTRY....................................................................................................................... .......16  
A. TAX CREDITS OR TAX EXEMPTIONS FOR DESIGNATED ENTERPRISES ......................................16  
1. Five-year tax exemption for the emerging , important and strategic industries................16  
2. Tax credit for investment in a disadvantaged region ..........................................................17  G/SCM/N/95/TPKM 
Page 2  
 
  B.
 LOANS .......................................................................................................................... ...........19  
LOANS FOR SMALL AND MEDIUM ENTERPRISES 19 
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...........................................................................19
 
2. Medium- and long-term loans for pro duct marketing and loans for overseas 
investment and construction projects ...................................................................................21  
LOANS FOR PRIVATE ENTERPRISES          22 
3. Loans at lower market interest rates for small and medium enterprises and 
private en terprises ............................................................................................................ ......22  
C. DUTY  AND  TAX  EXEMPTIONS  GRANTED  TO ENTERPRISES  LOCATED  
WITHIN  A DESIGNATED  ZONE...........................................................................................26  
1. Duty and tax exemptions for high-technology industries....................................................26  
2. Duty and tax exemptions for in-zone enterprises.................................................................28  
IV. RESEARCH AND DEVELOPMENT ..................................................................................30  
A. FUNDS GRANTED FOR DEVELOPMENT OF PRODUCTS OF THE TEN NEW LEADING 
INDUSTRIES ............................................................................................................................... 30 
ATTACHMENT I................................................................................................................... .............34  
ATTACHMENT II .................................................................................................................. ............44  
 
I. AGRICULTURE 
A. SUPPORT FOR RICE  
1. Title of the programme  
 
Support for rice. 
 
2. Period covered by the notification  
 
1999-2001.  
3. Policy objective and/or purpose
 
 The policy objectives are to ensure 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: 
 
Statute for Agriculture Development  Food Management Law 
(b) Responsible authorities: 
 
Council of Agriculture  G/SCM/N/95/TPKM 
 Page 3 
 
 
 5.  Form of the subsidy/to whom and how the subsidy is provided  
 There are two types of purchase - planned pur chase and supplementary purchase. The planned 
purchase is made at guaranteed prices. Guarante ed 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 at 1,920kg per hectare for 
the first crop and 1,440kg for the second crop. Supplementary purchases have been made to 
supplement shortage from the planned purchase quan tity. 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 limited to 1,200kg per hectare for the first crop and 800kg for the 
second crop.  
Planned and supplementary rice purchases are made available to the farmers who produce rice in 
paddy fields and follow the irrigational rotation sch eme 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 supplementary purchase is  permitted. Farmers are free to decide whether 
they want to sell products to the government. 
6.  Amount of the subsidy
 
 
NT$875 million, NT$1,778 million and NT$1,236 m illion for 1999, 2000 and 2001 respectively. 
 
7.  Duration of the subsidy and/or any other time-limits attached to it  
 The duration of the subsidy is not clearly specified. 
 
8. Statistical data
 
Unit:  1,000 MT. 
Item Year Production Consumption Import Export 
1999 1,558.6 1,538.6    6.1 140.6
2000 1,540.1 1,488.7    7.7 157.1Rice 
(brown) 2001 1,396.3 n.a.    7.4 197.0
 
B. SUPPORT FOR SORGHUM AND FEED CORN  
1.  Title of the programme  
 
Support for sorghum and feed corn. 
 
2.  Period covered by the notification  
 1999-2001 
 
3.  Policy objective and/or purpose
 
 
The policy objectives are to main tain sorghum and feed corn production and to facilitate 
implementation of the adjustment of paddy field utilization.   G/SCM/N/95/TPKM 
Page 4  
 
  4.  Background and responsible authorities
 
 
(a) Law: 
 
 Regulation for the Purchase and the Sale of Dryland Food Crops 
(b) Responsible authorities: 
 
 Council of Agriculture 
5.  Form of the subsidy/to whom and how the subsidy is provided  
 Purchase prices are determined by adding net profits of rice to the production costs of each. The 
purchase quantities are set at the limit of 5,000 kilogr ams per hectare for feed corn and sorghum.  The 
purchase prices have been set at NT$15 per kilogram  for feed corn and NT$14 for sorghum. When the 
actual yield per hectare is above the purchase limit, farmers may sell their products to the government 
at the import price. 
The purchases are made available to the farmers w hose 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. 
Since 1999, the purchase for sorghum has been limite d 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 only the second crop has been purchased in the western plain area since 
1999. The farmers are free to decide whether they want to sell products to the government or not. 
6. Amount of the subsidy
 
 NT$1,052 million, NT$836 million and NT$805 milli on for 1999, 2000 and 2001 respectively. 
 
7. Duration of the subsidy and/or any other time-limits attached to it
 
 
The duration of the subsidy is not clearly specified. 
8. Statistical data  
         Unit: 1,000 MT.  
Item Year Production Consumption Import Export 
1999   89.0 4,849.1 4,920.2   0.4
2000   72.7 5,057.8 4,998.6   0.5 Feed corn 
2001   59.2 5,020.2 5,240.0   0.4
1999   33.6    76.3   42.7   0.0
2000   26.5    64.5   38.1   0.0 Sorghum 
2001   21.7    58.0   36.3   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  
 
1999-2001  G/SCM/N/95/TPKM 
 Page 5 
 
 
 3. Policy objective and/or purpose  
 The policy objectives are to facilitate the implementa tion of the adjustment of paddy field utilization 
and to strengthen the farmland envi ronmental conservation plan for sustainable use of farmland as the 
structure of agricultural production undergoes adjustment.   
4. Background and responsible authorities
 
 
(a) Law: 
 
Statute for Agriculture Development 
(b) Responsible authorities: 
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 gi ven 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 (1994-96); or, 
b. Growing guaranteed price purchase crops of feed co rn, sorghum or sugarcane in the base year; or, 
c. Registering as set-aside or diversion in the “Rice Production and Ricefield Diversion Projects” in 
the base year.  
 
Diversion crops are selected taking into account supply 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. 
(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$1,232 million, NT$1,185 million and NT$1,186 m illion for 1999, 2000 and 2001 respectively. 
 
7. Duration of the subsidy and/or any other time-limits attached to it  
 The duration of the subsidy is not clearly specified. 
 
8. Trade effect
 
 
After the three stages of the rice diversion progra mme had been implemented, the acreage planted in 
rice went down from 645,855 hectares to 353,122 hectares; that is a decrease of 45.0 per cent from the year prior to the implementation of the projects,  1983, until 1999. The production of rice was also 
reduced from 2.48 million tons to 1.56 million tons, a decline of 37 per cent.  The quantity of rice 
purchased by government was down from 1.1 million tons to 0.45 million tons, a decrease of 
59 per cent. Measures for sweet potatoes, adzuki beans, mung beans and other miscellaneous crops 
have contributed to reductions in the production of rice.  G/SCM/N/95/TPKM 
Page 6  
 
  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 1997/8-1999/2000 (July 1997- June 2000). 
 
3.  Policy objective and/or purpose  
The purposes of the programme are to maintain the tobacco and wine monopoly and improve the 
quality of tobacco leaves produced.  
4. Background and responsible authorities  
(a) Law: 
 
The Provisional Statute for Monopoly of Tobacco and Wine in Taiwan Province 
 
(b) Authorities: 
 
Taiwan Tobacco and Wine Monopoly Bureau 
Ministry of Finance 
 Note
:  The Provisional Statute for Monopoly of Tobacco  and Wine in Taiwan Province was eliminated 
on 1 January 2002.  
 
5.  Form of the subsidy/to whom and how the subsidy is provided  
 (1) Guaranteed price purchase:  
The Taiwan Provincial Tobacco and Wine Monopol y Bureau (TWMB) purchases tobacco leaves from 
domestic producers at the guaranteed price which is  provisionally determined in the Committee for 
Evaluating the Tobacco Leaves Price, and then appr oved by the Provincial Finance Department. Both 
the production costs and quality of tobacco leaves are taken into account during the price 
determination process. Producers need to get permis sion from the bureau and contract with it before 
planting. Under a monopoly, the farmers are obliged  to sell all produced tobacco leaves to TWMB 
according to the Provisional Statute. Permission to  plant depends on dema nd and planting conditions. 
(2) Interest grants:  The Taiwan Provincial Tobacco and Wine Monopoly Bureau pre-pays for tobacco leaves during the 
growing season and makes a loan to tobacco farmers.   
(3) Fertilizer grants:  The Bureau also provides tobacco farmers with fer tilizer based on the needs in different areas, to 
control the quality of tobacco leaves.  G/SCM/N/95/TPKM 
 Page 7 
 
 
 6.  Amount of the subsidy  
 
NT$1,267.7 million, NT$1,220.9 million and NT$1,213 million for the fiscal years 1997/98, 1998/99 
and 1999/2000 respectively. 
 
7.  Duration of the subsidy and/or any other time-limits attached to it  
 
The duration of the subsidy is not clearly specified. 
 
8.  Statistical data  
           U n i t  : T o n  
Item Year Production 
(Crop year) Consumption Import Export 
1998 10,120 22,246 13,552 86
1999        9,685 20,029 11,421    72 Tobacco leaves 
2000       11,696 17,368 6,437    43
 
E. SUPPORT FOR VEGETABLES  
1. Title of the subsidy programme  
 Support for vegetables. 
 
2. Period covered by the notification
 
 
1999-2001 
 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: 
 
Statute for Agriculture Development 
Contracting Guaranteed Price Marketing Plan for Summer Season Vegetables 
 
(b) Responsible authority: 
 
The Taiwan Provincial Department of Agri culture 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’ or ganizations participating in the plan: 
 
a. Those with sound organization and whose products’ va riety and quality meet the market demand;  
and 
b. Who help with the grading and packaging;  and, G/SCM/N/95/TPKM 
Page 8  
 
  c. 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 the basis of 90% of the weighted average prices of Taipei 
Agricultural Products Marketing Corporation in the sa me 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 based on demand for vegetables each month (June-October). 
b. Each contracting fruit and vegetable wholesale ma rket would determine the monthly requirement 
of various vegetable varieties and quantities ac cording to the target set up by the Committee. 
 
(4) Price Difference Subsidy:  
Each fruit and vegetable wholesale market will calcula te the average price of each product distributed 
by cooperative vegetable and fruit marketing on a weekly  basis. If the average price is lower than the 
guaranteed price set up for the relevant month, the price difference will be subsidized according to the 
following formula, provided that, however, the subsidy amount shall not exceed 50 per cent of the 
guaranteed price. Also, if the average price is hi gher than the guaranteed price, no subsidy will be 
granted. 
 a. The price difference would be subsidized by 1 00 per cent and the contracted quantity would be 
eligible for such subsidy, if the actual suppl y quantity is located at between 100 per cent and 
120 per cent of the contracted quantity. 
b. The price difference would be subsidized by 10 0 per cent and the actual supply quantity would be 
eligible for such subsidy, if the actual suppl y quantity is located at between 80 per cent and 
100 per cent of the contracted quantity. 
c. The price difference would be subsidized by 90  per cent and the actual supply quantity would be 
eligible for such subsidy, if the actual suppl y quantity is located at between 70 per cent and 
80 per cent of the contracted quantity. 
d. The price difference would be subsidized by 80  per cent and the actual supply quantity would be 
eligible for such subsidy, if the actual suppl y quantity is located at between 60 per cent and 
70 per cent of the contracted quantity. 
e. The price difference would be subsidized by 60 per cent and the contracted quantity would be 
eligible for such subsidy, if the actual suppl y quantity is located at between 120 per cent and 
150 per cent of the contracted quantity. 
 
6. Amount of the subsidy
 
 
NT$69.1 million, NT$40.9 million and NT$13.5 milli on for 1999, 2000 and 2001 respectively. 
 7. Duration of the subsidy and/or any other time-limits attached to it
 
 
The duration of the subsidy is not clearly specified.     G/SCM/N/95/TPKM 
 Page 9 
 
 
 8. Statistical data  
          Unit: 1,000 MT.  
Year Production Consumption Import Export 
1999 2,942.2 3,043.4 218.5 117.3
2000 2,732.3 2,849.2 222.6 105.7
2001 2,559.1 2,729.8 253.7 83.0
 
F. SUPPORT FOR SUGAR  
1. Title of the subsidy programme  
 Support for sugar. 
 
2. Period covered by the notification
 
 
1998/99-2000/01 
 
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) Laws or Regulations: 
 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 contracts 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 c ontract 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 c ontract 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 farm ers 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.  G/SCM/N/95/TPKM 
Page 10  
 
  6. Amount of the subsidy
 
 NT$352.2 million, NT$188.4 million and NT$176.4 m illion for the fiscal years 1998/99, 1999/2000 
and 2000/01 respectively. 
 7. Duration of the subsidy and/or any other time-limits attached to it
 
 
The duration of the subsidy is not clearly specified.  
 
8. Statistical data  
          Unit: 1,000 MT.  
Item Year Production Consumption Import Export 
1999 292.7 542.9 264.8 13.2
2000 275.2 624.4 528.9 15.6 Raw Sugar 
2001 200.1 567.7 365.3 12.7
 
II. FISHERY 
A. FISHING VESSELS BUY -BACK PROGRAMME  
1. Title of the programme  
 
Fishing vessels buy-back programme.  2. Period covered by the notification
 
 
January 2002 to December 2002  
3. Policy objective and /or purpose
 
 Due to the global fishery resources crisis due to over-exploitation, the UN has issued an urgent 
demand requesting States concerned to do their best to reduce fishing capacity. This subsidy 
programme is aimed at relaxing the pressure on fi shery resources for the purpose of ensuring that 
there will be a sustainable use of marine resources. 
 4. Background and responsible authorities
  
 
(a) Laws and regulations: 
 
In accordance with the bulletin entitled: “The fishing vessels buy-back procedure between 
2002 and 2004”. 
 
(b) Authorities 
 
Fisheries Agency, Council of Agriculture  
 
5. Form  
 
Grant 
  G/SCM/N/95/TPKM 
 Page 11 
 
 
 6. To whom and how assistance is provided  
 Owners of all kinds of fishing vessels with valid fi shing licences, including recreational    fishing 
vessels, other than sampans and rafts. 
 The buy-back amount is calcula ted and accumulated as follows: 
 
1. NT$70,000 for each gross ton under (including) 5 tons, and 
2. NT$60,000 for each gross ton between 6 to 10 tons, and 
3. NT$50,000 for each gross ton between 11 to 20 tons, and  
4. NT$40,000 for each gross ton between 21 to 50 tons, and 
5. NT$35,000 for each gross ton between 51 to 100 tons, and 
6. NT$18,000 for each gross ton over 100 tons. 
 7. Amount
 
 
The funds for the buy-back of 251 fishing v essels in fiscal year 2002 totalled NT$606 million. 
 
8. Duration  
 July 2000 to December 2004 
 
9. Statistical data
 
 Statistics of fishery production, consumption and trade. 
 
          Unit: metric ton 
 1999 2000 2001 
Production 1,363,867 1,356,295 1,318,740
Import 417,473 435,563 422,315
Export 418,755 489,508 523,763
Consumption 1,362,585 1,302,350 1,217,292
 
B. REWARD FOR REDUCTION OF FISHERY ACTIVITIES PROGRAMME  
1. Title of the programme  
 
Reward for reduction of fishery activities programme.  2. Period covered by the notification
 
 
January 2003 to December 2003 
 
3. Policy objective and/or purpose  
 
Due to the global fishery resources crisis due to over-exploitation, the UN has issued an urgent 
demand requesting States concerned to do their best to reduce fishing capacity. This subsidy 
programme is aimed at relaxing the pressure on fi shery resources for the purpose of ensuring that 
there will be a sustainable use of marine resources.  G/SCM/N/95/TPKM 
Page 12  
 
  4. Background and responsible authorities
 
 
(a) Laws and regulations: 
 
In accordance with the bulletin of the “reward for reduction of fishery activities programme”. 
 
(b) Authorities: 
 Fisheries Agency, Council of Agriculture 
 
5. Form
 
 
Grant 
 6. To whom and how assistance is provided
 
 
(a) All kinds of fishing vessels with valid fishi ng licences, except illegal recreational and vessels 
over 30 years old. 
 
(b) The vessels shall have: 
 
(i) 100 days of fishing activities and 120 days of suspended fishing activities in the fiscal 
year; or 
(ii) 100 days of fishing activities and a continuous period of 60 days of suspended fishing 
activities in the fiscal year. 
7. Amount  
 
The budget for this programme in 2003 totalled NT$482 million.  
8. Duration
 
 January 2003 to December 2003  
9. Statistical data
 
 Statistics of fishery production, consumption and trade.            Unit: metric ton 
 1999 2000 2001 
Production 1,363,867 1,356,295 1,318,740
Import 417,473 435,563 422,315
Export 418,755 489,508 523,763
Consumption 1,362,585 1,302,350 1,217,292
 
C. EXTENSION OF THE RE-USE OF POND WATER IN AQUACULTURE PROGRAMME  
1. Title of the programme  
 Extension of the re-use of pond water in aquaculture programme.   G/SCM/N/95/TPKM 
 Page 13 
 
 
 2. Period covered by the notification  
 Fiscal years 1996-2002 (July 1995 to June 2002)  
3. Policy objective and/or purpose
 
 To reduce the groundwater consumption in order to prevent deterioration causing land subsidence. 
 
4. Background and responsible authorities
 
 
(a) Laws and regulations: 
 
Agricultural Development Act, Article 62 
 
(b) Authorities: 
 
Fisheries Agency, Council of Agriculture  
 
5. Form  
 Grant  
6. To whom and how assistance is provided
 
 Beneficiaries:  Fishermen who raise and rear fish.  
Content:  Grants providing 40 per cent of the amount required for the cost of the water re-circulation 
equipment (e.g. mechanical filter).  7. Amount
 
 
The total amount of subsidy in fiscal years 1996, 1997, 1998, 1999, 2000, 2001 and 2002 is 
NT$153,000,000.   8. Duration
 
 
Fiscal years 1984-2004  9. Statistical data
 
 Statistics of fishery production, consumption and trade. 
 
Unit: metric ton 
1999 2000 2001 
Production 1,363,867 1,356,295 1,318,740
Import 417,473 435,563 422,315
Export 418,755 489,508 523,763
Consumption 1,362,585 1,302,350 1,217,292
 G/SCM/N/95/TPKM 
Page 14  
 
  D. 
MARINE INSURANCE ON FISHING VESSELS AND FISHERMEN  
1. Title of the programme  
 Marine insurance on fishing vessels and fishermen.  
2. Period covered by the notification
 
 Fiscal years 1996-2002 (July 1995 to December 2002)  3. Policy objective and/or purpose
 
 
(a) To insure fishing vessels and fishermen against marine disasters; 
(b) To protect fishermen’s families’ livelihoods in the event of a marine disaster. 
 4. Background and responsible authorities
 
 
(a) Laws and regulations: 
  
The regulation on “marine insurance on fishing vessels and fishermen” 
 
(b) Authorities: 
 
Fisheries Agency, Council of Agriculture 
 5. Form
 
 
Grant  6. To whom and how assistance is provided
 
 Beneficiaries:  fishermen. 
  
Content:  the grants to provide for part of the co sts of insurance cover for fishermen in case of death 
or injury at sea and for owners of fishing vessels in case of damage at sea. 
 7. Amount
 
 
NT$96,778,000 (average of 1996-2002)  8. Duration
 
 Since 1987. 
  G/SCM/N/95/TPKM 
 Page 15 
 
 
 9. Statistical data  
 Statistics of fishery production, consumption and trade            Unit: metric ton 
 1999 2000 2001 
Production 1,363,867 1,356,295 1,318,740
Import 417,473 435,563 422,315
Export 418,755 489,508 523,763
Consumption 1,362,585 1,302,350 1,217,292
 
E. THE AQUA-CULTURAL FACILITIES LOAN PROGRAMME  
1. Title of the programme  
 The Aqua-cultural Facilities Loan Programme. 
 
2. Period covered by the notification:
 
 January 2002 to December 2002 
 
3. Policy objective and/or purpose
 
 To assist fishermen in improving their aqua-cultural facilities (fish farming).  
4. Background and responsible authorities
 
 
(a) Laws and regulations: 
 
The regulation on “the aqua-cultural facilities loan program” 
 
(b) Responsible authorities: 
 
Fisheries Agency, Council of Agriculture  
 
5. Form  
 Loan  6. To whom and how assistance is provided
 
 
(1) Beneficiaries:  Fishermen who raise and rear fish.  (2)  Content:  Banks and fishermen’s associations offer low-interest loans to fishermen based on 
the size of their farms. The Agricultural De velopment Foundation subsidizes the gap between 
the guaranteed loan rate and th e commercial bank interest rate. 
 7. Amount
 
 NT$ 6,485,193 for 2002  G/SCM/N/95/TPKM 
Page 16  
 
  8. Duration
 
 Since 1993.  9. Statistical data
 
 
Statistics of fishery production consumption and trade.            Unit:  metric ton 
 1999 2000 2001 
Production 1,363,867 1,356,295 1,318,740
Import 417,473 435,563 422,315
Export 418,755 489,508 523,763
Consumption 1,362,585 1,302,350 1,217,292
 
III. INDUSTRY 
A. TAX 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 2000-2001 
 3. Policy objective and/or purpose
 
 The primary goal of the tax incentives is to promot e the development of hi-tech and high value-added 
industries. 
 
4. Background and responsible authority
 
 
(a) Laws: 
 
 1999 amendment to the Statute for Upgrading Industries (the SUI), Article 9 on five-year tax 
exemption. 
 
(b) Authorities: 
 
 The Industrial Development Bureau, the Minist ry of Economic Affairs and the Ministry of 
Finance. 
 Note
: The SUI was promulgated on 29 December 1990,  amended on 10 January  1995 and re-amended 
on 31 December 1999. 
 
5. Form  
 Tax exemption.  G/SCM/N/95/TPKM 
 Page 17 
 
 
 6. To whom and how assistance is provided  
 An emerging, important and strategic industry may apply within two years from the beginning date 
for payment of the capital contributions by its share holders and with the appr oval of its shareholders 
meeting, to be exempted from corporate income tax.  
 
To qualify as an “emerging, important and strategi c industry”, the following three criteria should be 
met: (1) products to be produced under the investme nt 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 incorporated enterprise, th e tax exemption is for a period of five consecutive 
years from the date on which it begins to ma rket its products or to render services. 
 In the case of the expansion of an existing enterp rise, the exemption applies to the corporate income 
tax levied on the increased income derived 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 exemption applies only to an expansion in the form of the 
establishment of additional independent productio n or service units, or for increase in major 
production or service equipment.  
An eligible enterprise applying the tax exemption may, within two years from the date on which it 
starts to market its products or to render services, defer, at its own discretion, the commencement date 
of the tax exemption period.  The maximum period of such deferment is four years.  Furthermore, the 
commencement date of such deferre d tax exemption period should be the beginning date of a fiscal 
year. 
 
7. Amount
 
          Unit: thousand NT$ 
Fiscal Year 2000 Fiscal Year 2001 
3,971,301 10,797,422
 
8. Duration  
 The programme was initiated in 2000. Chapter 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 programme, it  is not 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.  G/SCM/N/95/TPKM 
Page 18  
 
  2. Period covered by the notification
 
 The fiscal year 2000-2001.  3. Policy objective and/or purpose
 
 
With the overall objective of achieving balanced economic growth within the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu, the aim of the tax credit programme is to encourage 
investment in disadvantaged geographic regions.  
4. Background and responsible authorities
 
 
(a) Law: 
 
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, amended on 10 January 1995 and re-amended 
on 31 December 1999. 
 5. Form
 
  Tax credit against corporate income tax. 
 
6. To whom and how assistance is provided
 
 Any company incorporated under the Company Law,  which makes an investment in designated 
industries in a region with scanty natural resources or  with slow development, may gain credits of up 
to 20 per cent of the total amount of its investment against the corporate income tax levied in the then 
current year, provided it meets the threshold of capital or the threshold number of employees.  If the 
amount of corporate income tax levied in that year is less than the tax credit, the balance of the tax 
credit may be applied against the corporate inco me tax levied in the ensuing four years. 
 The "county or township areas with  scanty natural 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 satis fy either of the following requirements: 
 
(a) A village in the first eight (8) counties as ar ranged in sequence based on the aggregate amount 
of 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 rate, proportion of the secondary and tertiary workers to total employment 
population, tax revenue, average regular income of each household, proportion of urban 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 consolidated income file d in the last three year s fell within the lower 
half of all the average national consolidated in comes filed by all villages island-wide in the 
same period.  G/SCM/N/95/TPKM 
 Page 19 
 
 
 The designated industries referred to above include  all manufacturing industries and several service 
industries.  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 newly employed employees in a full year, amounting to fifty (50) 
persons or more.  The criteria used by the Separate Customs Territo ry 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 indicators prescrib ed by the SCM Agreement is that these criteria 
reflect the real condition of scanty resources a nd the slow economic development in the areas 
concerned. If the SCM index were applied, more re gional zones would be eligible for tax credits. 
 7. Amount
 
 
(a) For the fiscal year 2001:  NT$ 1,703,890,000  (b) Statistical data available for the two most recent years: 
 
          Unit:  thousand NT$ 
FY 2000 FY 2001 
1,695,320 1,703,890
 
8. Duration  
 The programme was initiated in 1990 and Chapter 2 of  the SUI concerning tax benefits will expire in 
2009.  B. LOANS 
LOANS FOR SMALL AND MEDIUM ENTERPRISES 
 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 plan s from damage caused by major natural disasters. 
 2. Period covered by the notification
 
 
Fiscal year 2002   3. Policy objective and or/purpose
 
 
Qualified SMEs in circumstances meeting the following conditions are entitled to apply for the 
financing and loans:  G/SCM/N/95/TPKM 
Page 20  
 
  (a) Urgent financing is provided for the provision 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 and purchasing new automated equipment.   
 
4. Background and responsible authorities
 
 
(a) Laws: 
 
Statute for Development of Small and Medium  Enterprises (Articles 9, 15, 17 and 18). 
Procedure for Income-Expenditure Safeguardi ng 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 Enterprises. 
 
(b) Authority: 
  The Ministry of Economic Affairs.    Note:
 While the SME Development Fund was planne d to be NT$12 billion, the cumulative amount 
reached by the end of fiscal year 2002 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  Enterprise” are 
eligible to apply.  
According to the “Standards for Identifying a Small and Medium Ente rprise” published by the 
Ministry of Economic Affairs, an SME is a co mpany or commercial enterprise registered in 
accordance with the law with capital or opera ting revenue below the following thresholds: 
 
(a) For enterprises engaged in manufacturing, constr uction, mining or excavating, paid-in capital 
of less than NT$80 million. 
 
(b) For enterprises engaged in agriculture, logging , fishing, the raising of livestock, utilities, 
commerce, transport, warehousing, communica tions, 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 pa rticipating banks on a 
25/75 per cent basis.  The ceiling interest rate is 2.5 per cent plus a flat rate of the 2-year postal fixed 
saving rate.   G/SCM/N/95/TPKM 
 Page 21 
 
 
 7. Amount  
 Statistics for Specific Programmes:  
Loaned by the SME Development Fund 
          Unit: million NT$ 
Title of Programme 2000-2002 
Urgent financing for the provision of working capital during periods of 
significant financial crisis, recession 0
Urgent financing for major natural disasters 50
 
8. Duration  
 
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 Te rritory of Taiwan, Penghu, Kinmen and Matsu, 
98 per cent of enterprises can meet the criteria and 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 marke ting and loans for overseas investment and 
construction projects.  2. Period covered by the notification
 
 
Fiscal year 2002  3. Policy objective and or/purpose
 
 Those programmes are implemented with the purpose of providing SMEs with financial assistance in 
exploring new markets for their machinery and equi pment, in investing and establishing plants in 
foreign countries, and in undertaking over seas contracts for construction projects. 
 4. Background and responsible authorities
 
 
(a) Laws: 
  Statute for Development of Small and Medium Enterprises (Articles 9, 15, and 16) 
Procedure for Income-Expenditure, Safeguardi ng and Utilization of the SME Development 
Fund 
 
(b) Authority: 
  The Ministry of Economic Affairs.  5. Form
 
 Loan G/SCM/N/95/TPKM 
Page 22  
 
  6. To whom and how assistance is provided
 
 
(a) All enterprises which meet the “Standards fo r Identifying a Small and Medium Enterprise” 
are eligible for application.   
 
(b) The approval of loan applicati ons is implemented by commercia l banks.  However, the capital 
needed is provided entirely by the SME Development Fund. 
 7. Amount
 
 
Loaned by the SME Development Fund 
 FY 2000-2002 NT$2.232 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 Te rritory of Taiwan, Penghu, Kinmen and Matsu, 
98 per cent of enterprises can meet the criteria and be termed SMEs, it is difficult to estimate the trade 
effects of these programmes.  
LOANS FOR PRIVATE ENTERPRISES 
 
3. Loans at lower market interest rates for small and medium enterprises and private 
enterprises 
1. Title of the programme
 
 Loans at lower market interest rates for sma ll and medium enterprises and private enterprises. 
 
2. Period covered by the notification
 
 The year 2000.  3. Policy objective and/or purpose
 
 
The programmes are implemented with the purpo se of improving production technology and product 
quality, promoting industrial upgrading and achieving environment protection through lower interest 
rate loans for the procurement of automation e quipment, pollution control facilities, energy-saving 
facilities and to assist in the upgrading of small and medium enterprises.  
4. Background and responsible authorities
 
 
(a) Laws and regulations: 
 
The Statute for Upgrading Industries (the SUI), sub-paragraphs (2) and (3), paragraph 1 of 
Article 21. 
  G/SCM/N/95/TPKM 
 Page 23 
 
 
 (b) Authorities: 
  The principle of the loan is made by the Development Fund  The loan is granted by public/private banks  
5. Form
 
 Lower interest rate loans: the financial sources of  the loans are the Development Fund (25 per cent) 
and the bank (75 per cent) for each loan.  
6. To whom and how assistance is provided
 
 
(a) These lower interest rate loans are available to  all enterprises and are not limited to a specific 
industry or enterprise. 
 
(b) Different ceilings are set for different types of lo an. In addition, only a percentage of the total 
procurement amount is eligible for the loan. Th e amount of loan granted is decided by the 
bank, based on the financial situation of the applicant. 
 7. Amount
 
 
There are no official statistics with respect to the programme. 
 8. Duration
 
 The projects will be implemented until the expiration of the SUI. 
 
9. Trade effects or related statistical data
 
 
(a) Trade effects: 
 
The programme is mainly used in promoting industry upgrading. In light of the scope and 
nature of the programme, it is not possible to determine what, if any, trade effects which may 
result from this programme. 
 
(b) Related statistical data: 
 
Total amount of loans granted in 2002  
          Unit:  hundred million NT$ 
Name of Project Number of granted 
cases Total amount of granted 
loans 
Loans for the procurement of automation equipment 113 99.90
Loans to assist in the upgrading of small and medium enterprises 3,179 14,878
Loans to private enterprises for the procurement of pollution control facilities 8 2.95
Loans for the procurement of energy-saving facilities 2 0.31
 G/SCM/N/95/TPKM 
Page 24  
 
  Loans Provided for the Procurement of Automation Equipment
 
           Unit:  thousand NT$ 
Total 
Industry 
Cases Amount 
Machinery 8 47,537
Electronics Information 59 8,173,668
Precision Machinery 6 89,570
Transport Parts 4 201,190
Metal 16 441,720
Chemicals & their Processed Products 3 85,000
Petrochemical 0 0
Textiles & Processing 4 218,510
Paper & Paper Products 2 43,460
Utility (includes water, electricity and gas) 0 0
Wood & Bamboo Products & Furniture 0 0
Foods 1 60,000Manufacturing 
Other Manufacturing 7 137,500
Sub Total 110 9,498,155
Transport, Warehousing and Communications 1 65,000
Mining 1 37,000
Construction 0 0
Commerce 0 0
Industry & Business, Social and Individual Services 1 390,000
Other Industries 0 0
Total 113 9,990,155
 
Note 1:   The granted loan is provided by the De velopment Fund (25 per cent) and the bank 
(75 per cent) for each loan.  
Note 2
: The numbers provided above clearly indicate that funding is granted to all types of industry 
and is not limited to a particular type of industry. 
 
Loans Provided to Private Enterprises for th e Procurement of Pollution Control Facilities  
           Unit:  thousand NT$ 
Total 
Industry 
Cases Amount 
Machinery 0 0
Electronics Information 2 73,826
Precision Machinery 0 0
Transport Parts 0 0
Metal 1 98,435
Chemicals and their Processed Products 1 20,507
Petrochemical 1 41,015
Textiles and Processing 3 61,522
Paper & Paper Products 0 0
Utility (includes water, electricity and gas) 0 0
Wood & Bamboo Products & Furniture 0 0
Foods 0 0Manufacturing 
Other Manufacturing 0 0 G/SCM/N/95/TPKM 
 Page 25 
 
 
 Total Industry 
Cases Amount 
Sub Total  0
Transport, Warehousing and Communications  0
Mining 0 0
Construction 0 0
Commerce 0 0
Industry & Business, Social and Individual Services 0 0
Other Industries 0 0
Total 8 295,305
 
Note:   The granted loan is provided by the Development Fund (25 per cent) and the bank (75 per cent)   
for each loan. 
 
Loans for the Procurement of Energy-Saving Facilities  
           Unit:  thousand NT$ 
Total 
Industry 
Cases Amount 
Machinery 1 1,600
Electronics Information 0 0
Precision Machinery 0 0
Transport Parts 0 0
Metal 0 0
Chemicals and its Processed Products 0 0
Petrochemical 0 0
Textiles and Processing 0 0
Paper & Paper Products 0 0
Utility (includes water, electricity and gas) 0 0
Wood & Bamboo Products & Furniture 0 0
Foods 0 0Manufacturing 
Other Manufacturing 0 0
Sub Total 1 1,600
Transport, Warehousing and Communications 1 30,000
Mining 0 0
Construction 0 0
Commerce 0 0
Industry & Business, Social and Individual Services 0 0
Other Industries 0 0
Total 2 31,600
 
Note:   The granted loan is provided by the De velopment Fund (25 per cent) and the bank 
(75 per cent) for each loan. 
    G/SCM/N/95/TPKM 
Page 26  
 
  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 2001-2002 
 
3. Policy objective and/or purpose
 
 This programme is implemented with a view to stimulate the research and innovation of industrial 
technology and to promote the development of a dvanced technology industries in the Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Matsu. 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) Laws and regulations: 
 
Statute for the Establishment and Administ ration of a Science-Based Industrial Park 
(Articles 20 and 21); Implementing Regulation of Statute for the Es tablishment and Administration of a Science-
Based Industrial Park. 
 
(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 accordance with domestic 
Company Law or surviving or new Park en tities 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 fo r succeeding to the exemption of profit-seeking 
income tax as investment incentives from the dissolving Park entities, the surviving Park 
entities in the scope of science-based industri es under the merger/consolidation projects shall 
continue to produce products or to provide servi ces identical to those produced or provided by 
the dissolving Park entities and such tax benef its shall apply only to the portion of income 
derived from products or services independent ly produced or provided by the original 
dissolving Park entities.  If the tax benefits are provided in the manner of investment offset or 
deduction, such tax benefits shall apply only to  the payable tax portion of the surviving or 
new Park entities after mergers of the disso lving science-based industries. (Article 18 ）  G/SCM/N/95/TPKM 
 Page 27 
 
 
 (b) All Park enterprises are entitled to the following exemptions: 
 
(i) Customs duties, commodity tax, and business tax on imported machinery and 
equipment, raw materials, commodities, fuel, and semi-finished products, and 
(ii) Commodity tax and business tax on exported goods or labour services. 
 
Note 1:   Park enterprise refers to the science-base d industry and to the enterprise approved and 
established in the Park able to provide services in  respect of operation, management or technical 
support to science-based industries.    
A research and development instituti on or a venture capital investme nt incubatory centre may also 
apply for establishment and operation in the Park.   The venture capital investment incubatory centre elig ible for establishment in the Park shall be limited 
to one that engages in research and developmen t activities, does not engage in mass production and 
has been approved by the Park Administration. It will stay in the Park for a period of not more than 
three years.   Note 2:
  According to Section 2, para graph 1, Article 3 of the Commodity Tax Statute and Article 7 of 
the Value-added and Non Value-added Law, exports  can be exempted 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 available for exported goods, regardless of whether or not the 
manufacturers are located in the Park.  7. Amount
 
 
2001-2002 Tax Exemption  
           Unit: US$ 1 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 
2001 3,079 92 154 802
2002 2,650 80 132 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. 
 
2001-2002 Business Tax Exemption for all Imports  
 
          Unit: US$ 1 million 
Year Total Import Value Total Amount of Business 
Tax Exemption 
2001 6,758 338
2002 7,211 360
 Note:
  Exchange rate in 2001:  USD1.00=NT$33.87;  2002: USD1.00=NT$34.59. 
  G/SCM/N/95/TPKM 
Page 28  
 
  8. Duration
 
 There is no time limit attached to the programme.  9. Trade effects or related statistical data
 
          Unit: US$ 1 million 
 2001 2002 
Number of approved park enterprises 
(accumulated numbers ） 312 334
Total import value 6,758 7,211
Total export value 8,491 8,071
 
In light of the scope and nature of the programmes granted, it is not  possible to determine what, if 
any, are the trade effects which ma y result 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.  2. Period covered by the notification
 
 
Calendar year 2000-2002.  3. Policy objective and/or purpose
 
 
Export Processing Zones have been established fo r the purpose of promoting investment and 
international trade.  4. Background and responsible authorities
 
 
(a) Laws: 
 
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 Permissible 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 of reviewing the eligibility of enterprises established in Export Processing. 
 
Zones shall be undertaken by the Export Pro cessing Zone Administration together with the 
other government agencies involved.  G/SCM/N/95/TPKM 
 Page 29 
 
 
 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, packing, repairs and other related businesses approved by the Ministry of 
Economic Affairs in Export Processing Zones.   
5. Form
 
 Duty and tax exemptions.  6. To whom and how assistance is provided
 
 
All in-zone enterprise industries are entitled to the following exemptions: 
 
(a) Import duty, commodity tax and business ta x on imported machinery and equipment. 
(b) Import duty, commodity tax, and business tax on imported raw and consumption materials, 
fuels, semi-finished products, sa mples, and finished products fo r 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 after im port, all machinery and e quipment is not entitled to 
duty and tax exemptions when shipped to levi able areas from Export Processing Zones. Moreover, 
products manufactured by in-zone enterprises shall be  subject to customs duties, commodity taxes and 
business taxes when they are shipped to leviable ar eas. While customs duties would be applied on the 
basis of ex-factory prices minus value-added r esulting from manufacturing or processing activities in 
the EPZs, other taxes would be based on the ex-factory price. 
 
7. Amount
 
 
Percentage of EPZ Payable Tax to Export Value  
          Unit: US$ thousand 
Year→ 
Item↓ 2000 2001 2002 
Imported Machinery 
Equipment 1,427,425 464,565 454,187
Custom Duty On 
Imported Machinery Equipment  35,686 11,614 2,271
Export Value Total 8,704,822 6,586,668 6,149,583
Percentage 0.41% 0.18% 0.04%
Average Percentage   0.21% 
Export and Import Value 
Total 15,548,021 10,755,116 9,976,702
Percentage 0.23% 0.11% 0.02%
Average Percentage 0.12% 
 G/SCM/N/95/TPKM 
Page 30  
 
   
Year→ 
Item↓ 2000 2001 2002 
Raw materials, semi-finished 
products and finished products for transshipment 5,415,774 3,703,883 3,346,772
Custom Duty on raw materials, 
semi-finished products and 
finished products for 
transshipment 67,156 45,928 8,367
Export Value Total 8,704,822 6,586,668 6,149,583
Percentage 0.77% 0.70% 0.14%
Average Percentage 0.54% 
Export and Import Value Total 15,548,021 10,755,116 9,976,702
Percentage 0.43% 0.43% 0.08%
Average Percentage 0.31% 
 
8. Duration  
 There is no time limit attached to the programme.  9. Trade effects or related statistical data
 
 
Year→ 
Item↓ 2000 2001 2002 
Number of approved in-
zone enterprises 260 274 305
Total import value 
(million US dollar) 6,843 4,168 3,827
Total export value 
(million US dollar) 8,705 6,587 6,150
 
In light of the scope and nature of the programmes granted, it is not  possible to determine what, if 
any, trade effects may result from this subsidy programme.  
IV. RESEARCH AND DEVELOPMENT 
A. F
UNDS GRANTED FOR DEVELOPMENT OF PRODUC TS OF THE TEN NEW LEADING INDUSTRIES  
1. Title of the programme  
 Funds granted for development of products of the ten new leading industries.  2. Period covered by the notification
 
 
The fiscal year 2002 (Jan 2002 to Dec 2002).  3. Policy objective and/or purpose
 
 In order to encourage research and development on new leading products and upgrade the technical 
capability of the leading newly-emerging industri es, the programme grants funds for private 
enterprises.  G/SCM/N/95/TPKM 
 Page 31 
 
 
 4. Background and responsible authorities  
 
(a) Laws and regulations: 
 
Measures for Assistance in the Developmen t of New Leading Products, promulgated 
26 April 1991 and amended 30 June 1995. 
 
(b) Authority: 
  The Industrial Development Bureau , Ministry of Economic Affairs 
 
5. Form
 
 Grant and interest-free loan.  
6. To whom and how assistance is provided
 
 
(a) Any company incorporated under the Compa ny Law with sound financial standing, 
possessing a research and development department with sufficient R&D specialists in the Separate Customs Territory of Taiwan, Penghu,  Kinmen and Matsu, which have actually 
made R&D achievements, may apply for the assi stance fund relating to the development of a 
product within the scope of one of the ten new leading industries, i.e. communications, 
information, consumer electronics, aerospace, medical and health-care, pollution control, 
advanced materials, semi-conductors, specialty  chemicals and pharmaceuticals, and precision 
machinery and automation (See Attachment II).   
 
The ten new leading industries were selected on the basis of six criteria: 
  1. Great market potential  2. High linkage with other industries  3. High added value  4. Advanced technical capability 
 5. Low pollution 
 6. Low dependence on energy supply  
(b) In light of the broad nature of the industries,  it is not possible to list the specific products 
covered by the ten new leading industries. Howe ver, the general scope of each industry is 
provided in Attachment I. 
 
(c) The assistance funds granted a total of no more than fifty percent (50 per cent) of the amount 
of the following expenses incurred exclusively fo r the development of new leading products: 
  1. Costs incurred for full-time a nd/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.  
(d) In 1995, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu amended the 
“Measures for Assistance in the Development of New Leading Products”. The amended Article 10 provides that: “the total amount of assistance and matching funds to be allocated to 
a leading product development plan shall be limite d to no more than 50 per cent of the total 
amount of the budgeted development costs.”  Wh ile the assistance fund may be defined as a G/SCM/N/95/TPKM 
Page 32  
 
  grant, the matching fund is an interest-fee loan, whose repayment must be started upon the 
first anniversary of the completion of R&D. In addition to the repayment term (two to five 
years) for the matching fund, a private enterprise receiving the matching fund must, starting from the sale of the funded product, pay a quart erly feed-back fee, in amounts ranging from 1 
per cent to 4 per cent of the sales amount of such product. The total amount of the budgeted 
development costs should be expended exclusively on the following items: 
 
1. Personnel costs for research personnel, technical personnel and other assistants 
employed exclusively for performing research work; 
2. Costs of instruments, equipment, land  and buildings exclusively and permanently 
used for research activities except t hose used on a commercial basis; 
 3. Costs of consultation solely for the purpose of research activities and the same 
services, including expenditures for purch ase of research results, technical know-
how, patents, etc.; 
 4. Indirect costs arising directly from research activities; and 
 5. Running expenses for materials, suppli es and similar expenditures arising directly 
from research activities. 
 7. Amount
 
 
(a) Since the programme's inception, the accumulated grant is NT$8,870,124,560 as at the end of 
fiscal year 2002 (fiscal years 1992-2002) and the accumulated interest-free loan is 
NT$ 9,429,716,090. 
 
(b) For the fiscal year 2002 : the amount of grant and interest free loan respectively was 
NT$ 685,270,000**.  A breakdown of the products involved is shown below: 
 
          Unit: thousand NT$ 
Name of Project (or Sector) Grant  Interest-free loan 
Precision machinery and automation 108,840  108,840
Communication 105,810    105,810
Information    65,000      65,000
Consumer electronics   184,550    184,550
Aerospace     0       0
Medical and health care       20,260        20,260
Pollution control         10,000             10,000
Advanced materials       69,550        69,550
Semi-conductors        19,710        19,710
Specialty chemicals and pharmaceuticals    101,550    101,550
Total    685,270    685,270
 
Notes:  * In addition to the repayment of the interest-fre e loan, a manufacturer who receives assistance from 
the programme is also required to pay a feedback contribution in an amount equal to 1 per cent to 
4 per cent of its sales derived from the sa le of the newly developed products. 
  ** The average exchange rate for the year 2002 is USD1 = NT$34.59.   G/SCM/N/95/TPKM 
 Page 33 
 
 
 8. Duration  
 There is no time-limit attached to the programme.  9. Trade effects or related statistical data
 
 
It is not possible to determine what, if any, tr ade effects may result from this subsidy programme. 
   
 G/SCM/N/95/TPKM 
Page 34 
ATTACHMENT I 
SCOPE OF THE TEN NEW LEADING INDUSTRIES  
 
1. Communications Industry  
 
General Scope: 
 Wired CPE 
Customer Premises Equipment (CPE) 
Wireless CPE 
Products 
Switching Equipment 
Network Equipment 
Transmission Equipment 
Precision parts and components Communications 
Industry  
  G/SCM/N/95/TPKM
 Page 352. Information Industry  
 
 General Scope: 
Information software manufacturers 
Software Packages 
Professional services 
Network services 
Transmission systems 
System integration Three dimensional virtual simulation equipment 
(3D/VR) Computer system manufacturing 
Peripheral equipment manufacturing 
Important precision parts & components manufacturing 
Information hardware manufacturers 
Information software manufacturers 
Software Packages 
Professional services 
Network services 
Transmission systems 
System integration Terminal equipment 
Input devices 
Storage devices 
Output devices 
Three dimensional virtual simulation equipment (3D/VR) Information Industry  
 G/SCM/N/95/TPKM 
Page 36 
3. Consumer Electronics Industry  
 
 General Scope: 
 
 
Consumer Electronic Industry 
Audio products 
Video products 
Other consumer products 
Important Precision Parts & Components  
  G/SCM/N/95/TPKM
 Page 374.  Semiconductors Industry  
 
 General Scope: 
 
  
 Semiconductors Industry 
Semiconductor manufacturing industry 
Wafer 
Integrated circuit 
Transistor 
Diode 
Important precision parts and components 
Semiconductor material industry 
Semiconductor service industry Si Silicon GaP gallium phosphide GaN gallium nitride 
GaAs gallium arsenide GaSb gallium stibnide ZnS zinc sulfide 
InP indium phosphide InAs Indium arsenide AIGalnP Aluminum gallium indiu m
phophide  
 G/SCM/N/95/TPKM 
Page 38 
5.  Precision Machinery and Automation Industry  
 
 General Scope: 
 
     
 
    
 
  Flexible manufacturing cell (FMC), flexible manufacturing system (FMS), computer integrated manufacturing system (CIM) 
Automatic industrial machinery 
Automation parts 
Industrial controller 
Precision inspection 
Automatic engineering service 
Precision power 
Co-generation equipment 
Electrical power equipment manufacturing and system design  
  G/SCM/N/95/TPKM
 Page 396. Aerospace Industry  
 
 General Scope: 
 
  
Aviation 
Aerospace Industry 
Space Complete aircraft products 
(civil aircraft, military aircraft) 
Engine and parts components 
Maintenance and ground support equipment 
Flight control and airport information systems 
Training 
Launch systems 
Satellites (communication, meteorology, remote sensing) 
Ground receiving systems (radio signal, TV receiving equipment) 
Systems equipment (communication, control, power systems) 
Experimental equipment (weightless condition, crystal growth)  
 G/SCM/N/95/TPKM 
Page 40 
7.  Advanced Materials Industry  
 
 General Scope: 
 
Advanced 
materials industry 
High performance composite materials 
Special alloy steels 
Precision ceramics 
Engineering plastics 
High-grade fibre materials  
  G/SCM/N/95/TPKM
 Page 418. Specialty Chemicals and Pharmaceuticals Industry  
 
 General Scope: 
 
  
Specialty Chemicals Industry 
Specialty Chemicals and 
Pharmaceuticals Industry  
Pharmaceuticals Industry Liquid dyes 
Polymeric surfactants 
Bio-tech products 
Catalysts 
Silicon Compounds 
Performance chemicals 
High-value added key intermediates 
Agricultural pesticides 
Controlled-release medicines 
Scientific Chinese herbal medicines 
Novel/New drugs 
Bulk pharmaceuticals  
 G/SCM/N/95/TPKM 
Page 42 
9.  Medical and Health Care Industry  
 
 General Scope: 
 
 Medical and Health Care Industry  
Diagnostic equipment 
Clinical test agent 
Biomedical material and element automatic clinical analyzers  
biomedical testing reagents  
hard tissues, soft tissues, liquid tissues, 
artificial organs, blood contact tubes, band 
elements.  
  G/SCM/N/95/TPKM
 Page 4310.  Pollution Control and Treatment Industry  
 
 General Scope: 
 
 
Pollution control equipment  
Pollution Control and Treatment 
Industry 
Environmental technical & engineering services 
Waste Treatment Detection 
Waste reduction 
Treatment agents 
Environmental engineering  evaluation  
Engineerin g techni ques 
Engineering Planning and design 
Construction, installation and test running 
Engineering administration and supervision 
Waste recovery plant G/SCM/N/95/TPKM 
Page 44  
 
 ATTACHMENT II 
THE TEN NEW LEADING INDUSTRIES 
 
1 Communications industry 
2 Information industry 
3 Consumer electronics industry 
4 Semiconductors industry 
5 Precision machinery and automation industry 
6 Aerospace industry 
7 Advanced materials industry 
8 Specialty chemicals and pharmaceuticals industry 
9 Medical and health care industry 
10 Pollution control and treatment industry 
 
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