Taiwan’s Legislative Yuan has passed amendments to the Statute for Industrial Innovation.

The changes double the annual tax credit limit from NT$1 billion (US$30.66 million) to NT$2 billion (US$61.32 million) for investments in AI, carbon emissions reduction technologies, and innovative startups.

These incentives will be in place until December 31, 2029.

The law also raises the maximum income tax deduction for individuals investing in key industries from NT$3 million (US$91,973) to NT$5 million (US$153,289) .

To safeguard key technologies, companies must obtain prior government approval before investing in certain overseas countries like Iraq and Iran.

Approval is also required for investment in sensitive industries such as military-use carbon fiber, satellite and semiconductor technologies, and post-quantum technology.

🔗 Source: Focus Taiwan

🧠 Food for thought

1️⃣ Taiwan accelerates AI incentives amid intensifying global competition

Taiwan’s new tax credit ceiling of NT$2 billion (US$30.67 million) comes as global AI investments are projected to reach $200 billion by 2025, showing the country’s determination to compete in the AI race 1.

The timing is strategic as the United States leads global AI investment with $328.5 billion from 2019-2023, while China follows with $132.7 billion, creating pressure for Taiwan to enhance its competitive position 1.

This amendment builds upon Taiwan’s existing incentive structure, which includes R&D subsidies covering up to 50% of project costs and low-interest loans of up to NT$65 million for innovation projects 2.

Taiwan’s approach aligns with global trends, where countries like France offer substantial R&D tax credits through programs like Crédit d’Impôt Recherche, though France faces challenges with GPU expenses not qualifying for these incentives 3.

By expanding tax benefits to individual investors with up to NT$5 million in deductions (increased from NT$3 million), Taiwan is employing a multi-level approach to stimulate both corporate and personal investment in AI technology.

2️⃣ Strategic protection of semiconductor dominance drives policy design

The amendment’s restrictions on overseas investments reflect Taiwan’s determination to protect its semiconductor leadership, where it produces over 90% of advanced chips essential for AI development worldwide 4.