WORLD TRADE  
ORGANIZATION  G/SCM/N/123/TPKM 
3 August 2005 
 (05-3490) 
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, received 27 July  2 005, is being circulated at the request of the 
Delegation of the Separate Customs Territo ry of Taiwan, Penghu, Kinmen and Matsu. 
 
_______________ 
  G/SCM/N/123/TPKM 
Page 2  
 
 TABLE OF CONTENTS
 
  
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 ................................................................................................................11  
II. FISHERY........................................................................................................................ .........12  
A. FISHING VESSELS BUY-BACK PROGRAMME .............................................................................12  
B. REWARD FOR CLOSING FISHERY SEASON ................................................................................14  
C. EXTENSION OF REUSE OF POND WATER USED IN AQUACULTURE ...........................................15  
D. FISHING VESSELS MARINE INSURANCE REWARD .....................................................................16  
E. AQUA-CULTURAL FACILITIES LOAN.........................................................................................17  
F. FISH PRODUCTS MARKET STABILIZATION FUND .....................................................................18  
III. INDUSTRY....................................................................................................................... .......19  
A. TAX CREDITS OR TAX EXEMPTIONS FOR DESIGNATED ENTERPRISES ......................................19  
1. Five-year tax exemption for the emerging , important and strategic industries................19  
2. Tax credit for investment in a disadvantaged region ..........................................................21  
B. LOANS  - LOANS  FOR  SMALL  AND  MEDIUM-SIZED  ENTERPRISES  (SME S) ..............23  
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...........................................................................23  
2. Medium- and long-term loans for pro duct marketing and loans for overseas 
investment and construction projects ...................................................................................25  
LOANS  FOR  PRIVATE  ENTERPRISES .............................................................................................26  
3. Loans at lower market interest rates for small and medium-sized enterprises and 
private en terprises ............................................................................................................ ......26  
C. DUTY  AND  TAX  EXEMPTIONS  GRANTED  TO ENTERPRISES  LOCATED  
WITHIN  A DESIGNATED  ZONE...........................................................................................29  
1. Duty and tax exemptions for high-technology industries....................................................29  
2. Duty and tax exemptions for in-zone enterprises.................................................................32  
D.  SUBSIDIES FOR THE ESTABLISHMENT AND OPERATION OF PETROLEUM 
FACILITIES IN MOUNTAIN AND OFFSHORE AREAS ....................................................34  
IV. RESEARCH AND DEVELOPMENT ..................................................................................36   G/SCM/N/123/TPKM 
 Page 3 
 
 
 A. FUNDS GRANTED FOR DEVELOPMENT OF PRODUCTS OF THE NEW LEADING 
INDUSTRIES ............................................................................................................................... 36 
B. FUNDS GRANTED FOR PROMOTING DEVELOPMENT OF INDUSTRIAL 
TECHNOLOGY ..................................................................................................................... ..37 
C. FUND GRANTED FOR ENCOURAGING EXPLORATION AND 
DEVELOPMENT OF OIL AND NATURAL GAS RESERVES............................................39  
 G/SCM/N/123/TPKM 
Page 4  
 
 I. AGRICULTURE 
A. S
UPPORT FOR RICE  
1. Title of the programme  
 
 Support for rice 
 
2. Period covered by the notification  
  2001-2003 
 
3. Policy objective and/or purpose
 
 
 The policy objectives are to en sure the security of the food s upply by balancing supply and 
demand for rice, and to stabilize rice prices for 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 two types of purchase - planned purchase and supplementary purchase.  The planned purchase is made at guaranteed prices. Guaranteed prices are determined by taking into 
account production costs.  The prices have been se t 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 planned purchase qua ntity.  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. An additional purchase was made in the second crop in 2003.  The prices for this 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 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 supplem entary 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$1,236 million, NT$1,363 million and NT$1,961 million for 2001, 2002 and 2003 
respectively  G/SCM/N/123/TPKM 
 Page 5 
 
 
 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 
2001 1,396.3 1390.1    7.4 197.0
2002 1460.7 1332.3 122.6 121.9Rice 
(brown) 2003 1338.3 1329.2 173.9 69.7
 
B. SUPPORT FOR SORGHUM AND FEED CORN  
1.  Title of the programme  
 
 Support for sorghum and feed corn 
 
2.  Period covered by the notification  
  2001-2003 
 
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 kil ograms 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 deci de whether they want to sell products to the 
government or not. G/SCM/N/123/TPKM 
Page 6  
 
 6. Amount of the subsidy
 
  NT$805 million, NT$640 million and NT$520 millio n for 2001, 2002 and 2003 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 
2001   59.2 5,020.2 5,240.0   0.4
2002 60.2 4936.7 5105.8 1.4 Feed corn 
2003 53.1 4846.7 5106.5 1.3
2001   21.7    58.0   36.3   0.0
2002 17.9 45.5 63.4 0.0 Sorghum 
2003 17.5 87.1 69.5 0.0
 
 C. M
EASURES 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  
  2001-2003 
 
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  G/SCM/N/123/TPKM 
 Page 7 
 
 
 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 (1994-96); 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 Ricefield 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. 
 (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$1,186 million, NT$1,224 million and NT$1,082 million for 2001, 2002 and 2003 
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 programme had been implemented, the acreage 
planted in rice went down from 645,855 hectares to 272,128 hectares; that is a decrease of 
57.9 per cent between 1983, the year prior to the implementation of the projects, and 2003.  The production of rice was also down from 2.48 million tons to  1.34 million tons, a decline of 46 per cent.  
The quantity of rice purchased by the government w as reduced from 1.1 million tons to 0.46 million 
tons, a decrease of 58 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 2000/01-2002/2003 (July 2000- June 2003)  G/SCM/N/123/TPKM 
Page 8  
 
 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 and regulation: 
 
  The Provisional Statute for Monopoly of Tobacco and Wine in Taiwan Province 
 
(b) Authorities: 
 
  The Taiwan Tobacco and Wine Monopoly Bureau 
  Ministry of Finance 
  Note
:  The Provisional Statute for Monopoly of Tobacco and Wine in Taiwan Province was 
abolished on 1 January 2002. The Taiwan Tob acco and Wine Monopoly Bureau was replaced 
by the  Taiwan Tobacco & Liquor Corporation from 1 July 2002. 
 
5.  Form of the subsidy/to whom and how the subsidy is provided  
  (1) Guaranteed purchase price:  
  The Taiwan Provincial Tobacco and Wi ne 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 pr oduction costs and the quality of the tobacco 
leaves were taken into account during the pri ce determination process. Producers needed to 
get permission from the bureau and contract with it before planting. Under a monopoly, the 
farmers were obliged to sell all the tobacco leaves produced to the TWMB according to the 
Provisional Statute. Permission to plant depe nded on the level of demand and planting 
conditions. Since the Provisional Statute for Monopoly of Tobacco and Wine in Taiwan 
Province was abolished on 1 January 2002, the permission granted to farmers to plant has 
been cancelled. Instead of a guaranteed price pur chase 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  Monopoly 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 farmer s 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 Mono poly Bureau was replaced by the Taiwan 
Tobacco & Liquor Corporation.  G/SCM/N/123/TPKM 
 Page 9 
 
 
 6.  Amount of the subsidy  
 
 NT$1,203.2 million, NT$938.22 million and NT$480.19 million for the fiscal years 2000/01, 
2001/02 and 2002/2003 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 
2001 9,215 16,057 6,842 0.76
2002 7,578 16,039 8,461 0 Tobacco leaves 
2003 5,243 11,489 9,467 3,221
 
 
E. SUPPORT FOR VEGETABLES  
1. Title of the subsidy programme  
 
 Support for vegetables. 
 2. Period covered by the notification
 
 
 2001-2003  
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 Ag riculture 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 who se products’ variety and quality meet 
the market demand; and G/SCM/N/123/TPKM 
Page 10  
 
 b. Who help with the grading and packaging; and 
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 the Taipei Agricultural Produc ts 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 ac cording to demand for vegetables each 
month (June-October). 
b. Each contracting fruit and vegetable wholesale market would determine the 
monthly requirement of various vegetable varieties and quantities according 
to the target set by the Committee. 
  (4) Price Difference Subsidy: 
 
   Each fruit and vegetable wholesale mark et will calculate the average price of 
each product distributed by cooperative ve getable and fruit marketing 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, provided that the subsidy amount shall not exceed 50 per cent of the 
guaranteed price. Also, if the average pri ce 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 subsidized  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 pe r 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 supply quantity is 
located at between 60 per cent and 70 pe r 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 supply quantity is located at between 120 per cent and 150 per cent of the contracted quantity. 
  
6. Amount of the subsidy
 
 
 NT$13.5 million, NT$25.0 million and NT$19.7m illion for 2001, 2002 and 2003 respectively 
  G/SCM/N/123/TPKM 
 Page 11 
 
 
 7. Duration of the subsidy and/or any other time-limits attached to it  
  The time limit of the subsidy is the end of 2004.  
 
8. Statistical data
 
          Unit: 1,000 MT.  
Year Production Consumption Import Export 
2001 2566.3 2737.0 253.7 83.0
2002 2844.2 3040.7 271.5 75.0
2003 2591.1 2813.4 297.7 75.4
 
 
F. SUPPORT FOR SUGAR  
1. Title of the subsidy programme  
 
 Support for sugar 
 
2. Period covered by the notification  
 
 2000/01-2002/03 
 3. Policy objective and/or purpose
 
 
 The purpose of the programme is to devel op 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 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 suga r 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 farm ers 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. 
 G/SCM/N/123/TPKM 
Page 12  
 
  (2) Other grants: 
   The corporation provides grants to suga rcane farmers such as interest subsidy for 
loans for the purchase of inputs, insurance prem ium for sugarcane farms, fees for pest and 
disease control, inspection fees for sugar brix, and others. 
 
6. Amount of the subsidy
 
 
 NT$176.4 million, NT$340.2 million and NT$37 3.5 million for the fiscal years 2000/01, 
2001/02 and 2002/03 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 
2001 200.1 567.7 596.8 28.9
2002 183.0 517.5 612.4 16.8 Raw Sugar 
2003 160.8 518.8 615.0 23.6
 
 
II. FISHERY 
A. FISHING VESSELS BUY-BACK PROGRAMME  
1. Title of the programme   
  Fishing Vessels Buy-back Program  2. Period covered by the notification
 
 
 January, 2003 - December, 2004  3. Policy objective and/or purpose
  
 
 Due to severe overfishing worldwide, the UN is  urgently calling on nations to reduce their 
fishing capacities. This programme seeks to alle viate pressures on the fishery resources and ensure 
their sustainability.   4. Background and responsible authorities
 
 
(a) Law and regulation:  
   Regulation for the Fishing Vessels Buy-back Procedures (2002-2004)  
(b) Authority:  
 
  Fisheries Agency, Council of Agriculture  G/SCM/N/123/TPKM 
 Page 13 
 
 
  
5. Form   
  Grant  
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 (rafts are not included in this programme). 
 
(b) Content: the following is the buy-back amount, calculated and accumulated in 2003: 
 
 (a) NT $60,000 for each gross ton for the 1st to 5th ton; 
   (b) NT $50,000 for each gross ton for the 6th to 10th ton; 
   (c) NT $40,000 for each gross ton for the 11th to 20th ton; 
   (d) NT $30,000 for each gross ton for the 21st to 50th ton; 
   (e) NT $25,000 for each gross ton for the 51st to 100th ton; 
 (f) NT $18,000 for each gross ton over 100 tons; with   (g) the highest total amount for each eligible vessel being NT $8.5 million. 
 
The buy-back amount, calculated and accumulated in 2004 is as follows: 
 
  (a) NT $50,000 for each gross ton for the 1
st to 5th  ton; 
  (b) NT $40,000 for each gross ton for the 6th to 10th ton; 
 (c) NT $30,000 for each gross ton for the 11th to 20th ton; 
  (d) NT $25,000 for each gross ton for the 21st to 50th ton; 
  (e) NT $20,000 for each gross ton for the 51st to 100th ton; 
 (f) NT $18,000 for each gross ton over 100 tons; with  (g) the highest total amount for each eligible vessel being NT $7.9 million. 
 
7. Amount
 
 
  Funds spent to buy back 131 fishing vessel s in 2003 totalled NT $1.7 hundred million; funds 
spent to buy back 18 fishing vessels in 2004 totalled NT $0.2 hundred 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 2001 2002 2003 
Production 1,318,740 1,406,741 1,500,428
Import 422,315 389,794 378,696
Export 523,763 595,724 588,470
Consumption 1,217,292 1,200,811 1,290,654
 G/SCM/N/123/TPKM 
Page 14  
 
  
B. R
EWARD FOR CLOSING FISHERY SEASON       
1. Title of the programme   
 
 Reward for Closing Fishery Season 
 2. Period covered by the notification
 
   January, 2003 - December, 2004 
 
3. Policy objective and/or purpose
  
  Due to the global overfishing problem, the UN is  calling on nations to reduce their catches. 
This programme seeks to alleviate pressures on fi shery 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 with  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 b een at sea for a 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 fi shing activities are restricted by the government, they 
must have been at sea for a 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$748 mi llion for the 2003 to 2004 fiscal period 
(NT$482 million for 2003, NT$266 million in 2004).  8.  Duration
  
 
 The duration of the subsidy is not clearly specified.   G/SCM/N/123/TPKM 
 Page 15 
 
 
 9. Trade effects or related statistical data   
  Fishery production, consumption and trade  
Unit: metric ton 
Classification 2001 2002 2003 
Production 1,318,740 1,406,741 1,500,428
Import 422,315 389,794 378,696
Export 523,763 595,724 588,470
Consumption 1,217,292 1,200,811 1,290,654
 
 C. E
XTENSION OF REUSE OF POND WATER USED IN AQUACULTURE  
1. Title of the programme   
 
 Extension of Reuse of Pond Water Used in Aquaculture    2. Period covered by the notification
 
  January 2002 to December 2004 
 
3. Policy objective and/or purpose
  
  Reduce groundwater consumption in order to prevent land subsidence.  
4. Background and responsible authorities
 
 
(a) Law and regulation:  
  
  Agriculture 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% the total amount of the cost of 
water re-circulation devices (e.g., mechanical filters). 
 7.  Amount
 
 
 The amount of subsidies for 2002, 2003, and 2004 totaled NT$11 million. 
 G/SCM/N/123/TPKM 
Page 16  
 
 8. Duration
  
  Ongoing since 1984  9.  Trade effects or related statistical data
 
 
 Fishery Production, Consumption and Trade          
Unit: metric ton 
Classification 2001 2002 2003 
Production 1,318,740 1,406,741 1,500,428
Import 422,315 389,794 378,696
Export 523,763 595,724 588,470
Consumption 1,217,292 1,200,811 1,290,654
 
D. FISHING VESSELS MARINE INSURANCE REWARD  
1. Title of the programme   
  Fishing Vessels Marine Insurance Reward  
2. Period covered by the notification
  
  January, 2003 - December, 2004  3. Policy objective and/or purpose
 
 
 Insure fishing vessels agai nst 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.  
  G/SCM/N/123/TPKM 
 Page 17 
 
 
 7.  Amount   
   The annual budget for this programme is NT $92 million (average for the years 2003 to 2004). 
 8. Duration
 
 
 Ongoing since 1987  9. Trade effects or related statistical data
   
  
 Fishery production, consumption and trade      
Unit: metric ton 
Classification 2001 2002 2003 
Production 1,318,740 1,406,741 1,500,428
Import 422,315 389,794 378,696
Export 523,763 595,724 588,470
Consumption 1,217,292 1,200,811 1,290,654
 
E. AQUA-CULTURAL FACILITIES LOAN   
1 Title of the programme  
  Aqua-cultural Facilities Loan    2.  Period covered by the notification
 
 
 January, 2003 - December, 2004  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. 
 G/SCM/N/123/TPKM 
Page 18  
 
 (b) Content: Banks and fishermen's’ associations offer low-interest loans to fishermen, 
based on the size of their farms. Th e Agricultural Development Foundation 
subsidizes the gap between the guaranteed lo an rate and the commercial bank interest 
rate. 
 
7. Amount
  
  NT $4 million annually   8.  Duration
 
 
 Ongoing since 1998  9.  Trade effects or related statistical data
 
    
 Fishery production, consumption and trade  
                                                                                                       Unit: metric ton 
Classification 2001 2002 2003 
Production 1,318,740 1,406,741 1,500,428
Import 422,315 389,794 378,696
Export 523,763 595,724 588,470
Consumption 1,217,292 1,200,811 1,290,654
 
 
F. FISH PRODUCTS MARKET STABILIZATION FUND 
1. Title of the programme  
  Fish Products Market Stabilization Fund  
2. Period covered by the notification
   
  January, 2003 - December, 2004  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 
  G/SCM/N/123/TPKM 
 Page 19 
 
 
 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 a ssociations to propose a stabilization 
programme to buy the overproduced fish. 
 
(b) Content: When the market price of a partic ular fish species falls below 80% of the 
stabilized price for that fish for 5 con secutive days, fishermen's associations, in 
accordance with this programme, will be co mpensated for 70% of the storage cost 
and all accumulated interest involved in buying the overproduced fish. 
 
7.  Amount   
 
 NT $9,109,806 in grants for storage costs in 2003  NT $12,410,252 in grants for storage costs in 2004  8.  Duration
:  
 
 Ongoing since 1995  9. Trade effects or related statistical data
 
  
 Fishery production, consumption and trade  
                                                                          Unit: metric ton 
Classification 2001 2002 2003 
Production 1,318,740 1,406,741 1,500,428
Import 422,315 389,794 378,696
Export 523,763 595,724 588,470
Consumption 1,217,292 1,200,811 1,290,654
  
 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 2002-2003 
 G/SCM/N/123/TPKM 
Page 20  
 
 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 Upgrad ing Industries (the SUI), Article 9 on five-
year tax exemption 
 
(b) Authorities: 
 
  The Industrial Development Bureau, th e Ministry of Economic Affairs and the 
Ministry of Finance 
  Note
: The SUI was promulgated on 29 Decemb er 1990, amended on 10 January 1995 and 
re-amended on 31 December 1999. 
 5. Form
 
 
 Tax exemption  6. To whom and how assistance is provided
 
 
 An emerging, important and strategic i ndustry may apply within two years from the 
beginning date for payment of the capital contributions by its shareholders and with the approval of its 
shareholders meeting, to be exempted from corporate income tax.    To qualify as an “emerging, important and stra tegic 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) th e 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,  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 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 exem ption may, within two years from the date on 
which it starts to market its products or to re nder services, defer, at its own discretion, the 
commencement date of the tax exemption period.  The maximum period of such deferment is four 
years.  Furthermore, the commencement date of such deferred tax exemp tion period should be the 
beginning date of a fiscal year.   G/SCM/N/123/TPKM 
 Page 21 
 
 
 7. Amount  
          Unit: thousand NT$ 
Fiscal Year 2002 Fiscal Year 2003 
2,206,566 98,873 
 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 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 2002-2003  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 Decemb er 1990, amended on 10 January 1995 and 
31 December 1999. 
 
5. Form  
  Tax credit against corporate income tax  G/SCM/N/123/TPKM 
Page 22  
 
 6. To whom and how assistance is provided
 
  Any company incorporated under the Compan y Law, which makes an investment in 
designated industries in a region with scant 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 levi ed 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 satis fy either of the following requirements: 
 
(a) A village in the first eight (8) counties as arranged 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 popula tion to total population, availability of 
tap water supply, availability of telephone to every one hundred households in the 
city, highway density, and number of educati onal facilities of college level or higher.   
 
(b) A village whose average conso lidated 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 designated industries referred to above in clude 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 mil lion. 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 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 i ndicators 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 2003:    NT$ 3,003,643,000 
 
   G/SCM/N/123/TPKM 
 Page 23 
 
 
  (b) Statistical data available for the two most recent years: 
           Unit:  thousand NT$ 
FY 2002 FY 2003 
1,451,930 3,003,643 
 
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. LOANS
 - LOANS  FOR  SMALL  AND  MEDIUM-SIZED  ENTERPRISES  (SME S) 
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 2002-2004 
 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 provi sion 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.   
 G/SCM/N/123/TPKM 
Page 24  
 
 4. Background and responsible authorities
 
 
(a) Law and regulation: 
 
  Statute for Development of Small and Me dium-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 2004 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 opera ting revenue below the following thresholds: 
 
(a) For enterprises engaged in manufacturing, c onstruction, mining or excavating, paid-in 
capital of less than NT$80 million. 
 
(b) For enterprises engaged in agriculture, logg ing, fishing, the raising of livestock, 
utilities, commerce, transport, warehousing, co mmunications, 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 Development Fund and other participating banks on a 
50/50 basis.  The ceiling interest rate is 2.5 per cent plus a flat rate of the 2-year postal fixed savings 
rate.  
7. Amount
 
  Statistics for Specific Programmes:  
Loaned by the SME Development Fund 
          Unit: million NT$ 
Title of Programme 2002-2004 
Urgent financing for the provision of  working capital during periods of 
significant financial crisis, recession 0
Urgent financing for major natural disasters 50 G/SCM/N/123/TPKM 
 Page 25 
 
 
  
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 mark eting and loans for overseas investment and 
construction projects.  
2. Period covered by the notification
 
  Fiscal year 2002-2004  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 mach inery and equipment, in investing and establishing 
plants in foreign countries, and in undertak ing 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  6. To whom and how assistance is provided
 
 
(a) All enterprises which meet the “Standards for Identifying a Small and Medium-Sized 
Enterprise” are eligible for application.   
 
(b) The approval of loan applications is im plemented by commercial banks.  However, 
the capital needed is provided entirely by the SME Development Fund. G/SCM/N/123/TPKM 
Page 26  
 
  
7. Amount
 
  Loaned by the SME Development Fund  
 FY 2002-2004 NT$2.954 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 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-sized enterprises and 
private enterprises 
1. Title of the programme  
 
 Loans at lower market interest rates for sm all and medium-sized enterprises and private 
enterprises  2. Period covered by the notification
 
 
 The fiscal year 2003  3. Policy objective and/or purpose
 
  The programmes are implemented with the purpose of improving production technology and 
product quality, promoting industrial upgrading a nd achieving environment protection through lower 
interest rate loans for the procurement of automa tion equipment, pollution control facilities, energy-
saving facilities and to assist in the upgrading of small and medium-sized enterprises.  4. Background and responsible authorities
 
 
(a) Law and regulation: 
 
 The Statute for Upgrading Industries (t he SUI), sub-paragr aphs (2) and (3), 
paragraph 1 of Article 21 
 
(b) Authorities: 
 
 The guidelines for the loan programme are 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.  G/SCM/N/123/TPKM 
 Page 27 
 
 
  
6. To whom and how assistance is provided  
 
(a) These lower interest rate loans are availabl e to all enterprises and are not limited to a 
specific industry or enterprise. 
 
(b) Different ceilings are set for different types of  loan. In addition, only a percentage of 
the total procurement amount is eligible for the loan. The amount of loan granted is decided by the bank, based on the fina ncial 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 possibl e to determine what, if any, trade effects 
may result from this programme. 
 
(b) Related statistical data: 
 
Total amount of loans granted in 2003  
          Unit:  hundred million NT$ 
Name of Project Number of granted 
cases Total amount of granted 
loans 
Loans for the procurement of automation equipment 60 17.01
Loans to assist in the upgrading of small and 
medium enterprises 1,191 9.03
Loans to private enterprises for the procurement of pollution control facilities 9 2
Loans for the procurement of energy-saving facilities 
94 0.1
 
Loans Provided for the Procurement of Automation Equipment  
           Unit:  thousand NT$ 
Total 
Industry 
Cases Amount 
Machinery 6 41,126
Electronics Information 28 1,176,252
Precision Machinery 2 5,296
Transport Parts 1 4,800Manufacturing 
Metal 5 82,094G/SCM/N/123/TPKM 
Page 28  
 
 Total 
Industry 
Cases Amount 
Chemicals & their Processed Products 6 115,860
Petrochemical 0 0
Textiles & Processing 2 73,900
Paper & Paper Products 0 0
Utility (includes water, electricity and gas) 0 0
Wood & Bamboo Products & Furniture 0 0
Foods 1 2,360 
Other Manufacturing 7 172,825
Sub Total 58 1,674,513
Transport, Warehousing and Communications 0 0
Mining 0 0
Construction 0 0
Commerce 1 20,000
Industry & Business, Social and Individual Services 1 7,420
Other Industries 0 0
Total 60 1,701,933
 
 Note:  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 12,410
Precision Machinery 0 0
Transport Parts 0 0
Metal 1 3,900
Chemicals and their Processed Products 3 83,439
Petrochemical 0 0
Textiles and Processing 0 0
Paper & Paper Products 1 25,600
Utility (includes water, electricity and gas) 0 0
Wood & Bamboo Products & Furniture 0 0
Foods 0 0Manufacturing 
Other Manufacturing 0 0
Sub Total 7 125,349
Transport, Warehousing and Communications 0 0
Mining 0 0
Construction 0 0
Commerce 0 0
Industry & Business, Social and Individual Services 2 81,500
Other Industries 0 0
Total 9 206,849
 
 Note 1:  The granted loan is provided by the Deve lopment Fund (25 per cent) and the bank (75 
per cent) for each loan.  G/SCM/N/123/TPKM 
 Page 29 
 
 
  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 for the Procurement of Energy-Saving Facilities  
 
          Unit:  thousand NT$ 
Total Industry 
Cases Amount 
Machinery 0  0 
Electronics Information 7  558,154 
Precision Machinery 0  0 
Transport Parts 0  0 
Metal 2  1,360 
Chemicals and its Processed Products 5  1,603,494 
Petrochemical 5  295,800 
Textiles and Processing 6  1,501,362 
Paper & Paper Products 2  566,591 
Utility (includes water, electricity and gas) 7  1,532,900 
Wood & Bamboo Products & Furniture 0  0 
Foods 1  175,000 Manufacturing 
Other Manufacturing 0  0 
Sub Total 35  6,234,661 
Transport, Warehousing and Communications 57  3,954,093 
Mining 0  0 
Construction 0  0 
Commerce 0  0 
Industry & Business, Social and Individual Services 1  950 
Other Industries 1  400,000 
Total 94  10,589,704 
 
 Note : 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.  
  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 2002-2004  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 development of advanced technology industries in the Separate Customs Territory of Taiwan, Penghu, Ki nmen and Matsu. The “Science-Based Industrial G/SCM/N/123/TPKM 
Page 30  
 
 Park”(“the Park”) has been established by intr oducing sophisticated industries and personnel with 
advanced technological backgr ounds 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 accordance with domestic 
Company Law or surviving or new Park en tities after mergers sha ll 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 only 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 provided 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 me rgers of the disso lving science-based 
industries. (Article 18 ） 
 
(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-based  industry and to the enterprise approved and 
established in the Park able to provide ser vices 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.    G/SCM/N/123/TPKM 
 Page 31 
 
 
  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 Administ ration. It will stay in the Park for a period of 
not more than three years. 
  
 Note 2:
 According to Section 2, paragraph 1, Article 3 of the Commodity Tax Statute and 
Article 7 of the Value-added and Non Valu e-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 lo cated 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
 
 
2002-2004 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 
2002 2,650 80 132 334
2003 1,622 48 81 489
2004 3,523 105 176 N/A
  Note:
 The amount of the import duty exemption for various tariff lines other than 
machinery and equipment is not available b ecause of the lack of statistics for imports 
into the Park by tariff line.  Since the dut y 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. 
 
2002-2004 Business Tax Exemption for all Imports  
 
          Unit: US$ 1 million 
Year Total Import Value Total Amount of Business 
Tax Exemption 
2002 7,211 360
2003 6,433 321
2004 11,741 587
Note:   Exchange rate in  2002: USD1.00=NT$34.59; 
2003: USD1.00=NT$34.48; 2004: USD1.00=NT$33.45 
 
8. Duration
 
  There is no time limit attached to the programme.  G/SCM/N/123/TPKM 
Page 32  
 
 9. Trade effects or related statistical data
 
         Unit: US$ 1 million 
Year 2002 2003 2004 
Number of approved park enterprises
(accumulated numbers) 334 370 384
Total import value 7,211 6,433 11,741
Total export value 8,071 11,334 14,821
 
In light of the scope and nature of the programmes gr anted, it is not yet possible to determine what, if 
any, trade effects may 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 2002-2004  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 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 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 authorized to be engaged in manufacturing, 
processing, assembly, research and developmen t, trade, consulting, technical services, 
warehousing, transportation, stevedoring,  packing, repairs and other related  G/SCM/N/123/TPKM 
 Page 33 
 
 
 businesses 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 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 busin ess 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 pl ant building in the Export Processing Zone 
or acquiring a building from the Export Processing Zone Administration. 
  It should be noted that, within five years af ter import, all machinery and equipment is not 
entitled to duty and tax exemptions when shippe d 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 shipped to leviable areas. While customs duties 
would be applied on the basis of ex-factory pri ces minus value-added resu lting 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↓ 2002 2003 2004 
Imported Machinery 
Equipment 454,187 593,570 855,250 
Custom Duty On Imported 
Machinery Equipment  2,271 2,968 3,592 
Export Value Total 6,149,583 6,017,565 7,456,520 
Percentage 0.037% 0.049% 0.048 
Average Percentage   0.045% 
Export and Import Value Total 9,976,702 10,750,087 13,543,301 
Percentage 0.023% 0.028% 0.027% 
Average Percentage 0.026% 
 
 G/SCM/N/123/TPKM 
Page 34  
 
 Year→ 
Item↓ 2002 2003 2004 
Imported Raw materials, semi-finished products 
and finished products for transshipment 3,346,772 4,119,692 5,201,297
Custom Duty on raw materials, semi-finished 
products and finished products for transshipment 8,367 3,296 15,604
Export Value Total 6,149,583 6,017,565 7,456,520
Percentage 0.136% 0.055% 0.209%
Average Percentage 0.133% 
Export and Import Value Total 9,976,702 10,750,087 13,543,301
Percentage 0.084% 0.031% 0.115%
Average Percentage 0.077% 
 
8. Duration  
  There is no time limit attached to the programme.  
9. Trade effects or related statistical data
 
 
Year→ 
Item↓ 2002 2003 2004 
Number of approved in-
zone enterprises 305 352 340
Total import value 
(million US dollar) 3,827 4,733 6,087
Total export value 
(million US dollar) 6,150 6,018 7,457
 
 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 r esult 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 Areas  
 
2.  Period covered by notification   
  The year 2004  
3.  Policy objective
 
  The policy objective of the programme is to maintain oil supplies from reserves located in 
mountain and offshore areas.   G/SCM/N/123/TPKM 
 Page 35 
 
 
 4.   Background and r esponsible authorities  
 
(a) Law and regulation:  
 
  Petroleum Administration Law 
 
(b) Responsible authority:  
 
  Bureau of Energy, Ministry of Economic Affairs 
 
5. Form   
  Grant  6. How assistance is provided and to whom
 
 
 Building contractors and/or operators of pe troleum facilities in mountain and offshore areas 
are entitled to apply for the following subsidies:  
(1)  Subsidy for the establishment of petroleum facilities in mountain and offshore areas.  
(2)  Subsidy for maintenance cost of petroleu m facilities in mountain and offshore areas.   
(3)  Subsidy to offset the cost of shipping  petroleum or Liquefied Petroleum Gas to  
mountain and offshore areas.  
(4)  Subsidy for extra personnel costs in the operation of petroleum facilities in mountain 
or offshore areas.     
 7. Amount for the year 2004
 
 
 Statistics for specific subsidies:  
Unit: thousand NT$ 
Title of Subsidy Number of granted 
cases Total amount  
Subsidy for the establishment of petroleum 
facilities in mountain and offshore areas 4 2,411
Subsidy for maintenance cost of petroleum facilities in mountain and offshore areas 4 1,168
Subsidy to offset the cost of shipping petroleum or Liquefied Petroleum Gas to mountain and 
offshore areas 98 154,783
Subsidy for extra personnel costs in the 
operation of petroleum facilities in mountain or 
offshore areas    34 26,864
Total 140 185,226
 
8. Duration   
 
 The program was initiated in 2002. It is not subject to any fixed completion date. 
 G/SCM/N/123/TPKM 
Page 36  
 
 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 PR ODUCTS OF THE NEW LEADING INDUSTRIES  
1. Title of the programme  
 
 Grants for development of products of the new leading industries  2. Period covered by the notification
 
 
 The fiscal year 2004 (Jan 2004 to Dec 2004) 
 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 i ndustries, 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, 
and 23 July 2003. 
 
(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 Comp any Law with sound financial standing, 
whose book value is over 50% of the capital, never having the record of refusal or 
bounced cheque of the bank and possessing a research and development department 
with sufficient R&D specialists  in the Separate 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 “emerging, important and strategic industry”1. The 
product should possess great market potential and its core technology should surpass 
the current level of domestic industrial technology. Besides, products within the 
                                                      
1 See page 18 for the definitions of the “emerging, important and strategic industry.”  G/SCM/N/123/TPKM 
 Page 37 
 
 
 scope of the “Digital Content Industry”, and whose innovative content reaches the 
level of international-class products, are al so eligible for the use of the measures. 
  
(b) The assistance funds granted a total of no mo re 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 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. 
 7. Amount
 
 
(a) Since the programme's inception, the cu mulative amount of grant stands at 
NT$9,727,679,560 at the end of fiscal year 2004 (fiscal years 1992-2004). 
 
(b) For the fiscal year 2004: the amount of grant was NT$ 671,480,000.  A breakdown of 
the products involved is shown below: 
 
          Unit: thousand NT$ 
Name of Project (or Sector) Grant 
Precision machinery and automation 101,050
Communication 91,920
Information 132,060
Consumer electronics 114,570
Medical and health care 20,800
Advanced materials 41,450
Semi-conductors 74,490
Specialty chemicals and pharmaceuticals 95,140
Total 671,480
 
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. FUNDS GRANTED FOR PROMOTING DEVELOPMENT OF INDUSTRIAL 
TECHNOLOGY  
1. Title of the programme 
 
 Technology Development Programme for Enterprise 
 G/SCM/N/123/TPKM 
Page 38  
 
 2. Period covered by the notification 
 
 Fiscal year 2003 - 2004 (Jan 2003 to Dec 2004) 
 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 the purpose of reinforcing domestic enterprises’ 
capabilities, especially in the field of research and development.   4. Background and responsible authorities
 
 
(a) Law and regulation:  
  Implementation Regulations for Promoting Development of Industrial Technology in 
the Business Sectors, promulgated on  27 November, 2002, amended on 1 August 
2003. 
 
(b) Authority:  
 
 Department of Industrial Technolog y, Ministry of Economic Affairs 
 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 Depa rtment that has made significant 
achievements in the past, and which is cu rrently 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 integrative manufacturing technology by small 
and medium-sized businesses. 
3. Development of innovative IT application systems. 
4.  Development of innovative business m odels by strategic services-oriented 
research.       
5.  Cooperate with major national t echnology-related policies and create an 
environment conducive to the developmen t of technology and industry within 
civilian business enterprises.  
 
(b) The assistance funds to be granted shall not exceed 50% 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.  G/SCM/N/123/TPKM 
 Page 39 
 
 
  
7. Amount   
  The total grant amount in 2003-2004 fiscal year was NT $6,144,464,000.  
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. FUND 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  
 
2.  Period covered by notification
  
   2003-2004  
3.  Policy objective and/or purpose
 
 
 The policy objectives of the programme are to secure more oil and stabilize the domestic oil 
market.  
 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 
 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. G/SCM/N/123/TPKM 
Page 40  
 
  The grant is to be used only in  support of the following activities: 
 
(1) The implementation of geological, geophysi cal, 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 ha ve been reviewed and approved by the 
authorities.   
 
 The total of the subsidy allocated for an app licant’s exploration proposal is not to exceed 50% 
of the budget in the applicant’s proposal.    The total of the subsidy allo cated for an applicant’s 
development proposal is not to exceed 12% of  the budget in the applicant’s proposal. 
 7. Amount
 
 
 (a) For the year 2004: NT$233,950,000   (b) Statistical data available for the past two years:                          Unit:  thousand NT$ 
2003 2004 
129,374 233,950 
 
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.   
 
__________