Taiwan's 'Chip Act' Tax Breaks Enter 3rd Year; 5 Companies Apply

(Central News Agency reporter Zeng Yunting, Taipei, 8th) The tax incentives under Article 10-2 of the Statute for Industrial Innovation, known as Taiwan's 'Chip Act,' have entered their third year of acceptance, with the application process closing at the end of May. The Industrial Development Bureau of the Ministry of Economic Affairs stated that five companies submitted applications this year, but the list of applicants will not be disclosed due to corporate confidentiality.

To strengthen Taiwan's international competitiveness in semiconductors and solidify its core position in the global supply chain, the Ministry of Economic Affairs added Article 10-2 to the Statute for Industrial Innovation in 2023, commonly referred to as the 'Taiwan Chip Act.' According to the regulations, companies can deduct 25% of their expenditures on key technology R&D from their annual corporate income tax, and 5% of expenditures on new machinery or equipment for advanced manufacturing processes. This is considered one of the largest industrial tax incentive measures in Taiwan's history.

The Industrial Development Bureau stated today that five companies applied this year, but due to corporate confidentiality, the names of the companies cannot be disclosed. The number of applicants this year is the same as last year (five) and higher than the four companies that applied in the first year.

According to Article 10-2 of the Statute, companies must simultaneously meet the following criteria to qualify for the tax benefits: annual R&D expenditures of at least NT$6 billion, an R&D intensity of at least 6%, and an effective tax rate of at least 15%. Furthermore, to qualify for the advanced equipment investment credit, companies must also meet an equipment expenditure threshold of NT$10 billion in addition to the three conditions above.

According to data from the Market Observation Post System, TSMC's R&D expenses for 2025 were NT$246.4 billion, with an R&D intensity of approximately 6.47%, meeting the R&D expenditure and R&D intensity thresholds. Given TSMC's long-term investment in advanced process R&D, expansion, and equipment procurement, it is widely expected that TSMC is highly likely to apply.

According to regulations, companies can only choose to apply under either Article 10-2 or Article 10 of the Statute for their R&D investments. To encourage companies to increase investment, those that fail the qualification review for Article 10-2 can switch to applying for the R&D investment credit under Article 10 or the smart machinery investment credit under Article 10-1. (Editor: Pan Yijing) 1150608