Statute for Industrial Innovation
1.Amendment to Statute for Industrial Innovation
On 7 May 2025, the president of R.O.C. announced the amendment to “Statute for Industrial Innovation”. We summarize below:
(1) Extend the applicable period of tax incentives for companies or limited partnerships investing in brand-new smart machines, introduction of 5th-generation mobile networks, or cybersecurity products or services. Artificial intelligence and energy-saving and carbon-reduction related products or services are added where investment credits are applicable and the maximum amount of applicable investment expenditures for investment credits is raised to NT$2 billion.
(2) Specify that companies or limited partnerships investing in designated countries or regions, specific industries or technologies, or reaching a certain investment amount shall apply for prior approval from the competent authority before implementing the investment. The competent authority may grant full, partial, or conditional approval as appropriate.
(3) Adjust the capital contribution threshold, investment ratio, and amount required to be invested in innovative startups if venture capital enterprise in the form of limited partnerships would like to apply tax incentives.
(4) Amend the conditions for individuals investing in high-risk innovative startups in cash to apply individual income tax deductions.
(5) Stipulate that if a company or limited partnership fails to apply for prior approval as required before the investment, or fails to perform relevant conditions, the competent authority may order rectification within a specified period or revocation of the investment, or impose a fine.
(6) Specify that entities already enjoying tax incentives under other laws shall not apply for the tax benefits under this Statute for the same matter.
Reported by: Stacy Lo / Ron Tsai
M&A
2.Draft Amendment to Articles 44-2 and 52-1 of Business Mergers and Acquisitions Act
On 1 May 2025, the Ministry of Economic Affairs announced the draft amendment to Articles 44-2 and 52-1 of the “Business Mergers and Acquisitions Act” (Act) for public consultation (pending approval by the Executive Yuan and the Legislative Yuan). We summarize below:
(1) To encourage enterprises to form industrial holding companies and to prevent reducing shareholders’ willingness due to immediate taxation, in the case of the acquisition under Article 29 of this Act, if the acquiring company, the acquired company, and its shareholders meet certain requirements, and the acquiring company is recognized as an industrial holding company by the National Development Council, capital gains derived by shareholders from share exchange between the acquired company and the industrial holding company may be excluded from the basic taxable income amount for the year in which the share exchange occurs, at the shareholder’s election.. Such income does not need to be declared until actual transfer or when the shares are entered in a designated securities custodial account.
(2) For the declaration date, the industrial holding company shall report the details of the transferred or booked shares to the competent tax authority by January 31 of the year following the transfer or book-entry. The competent tax authority may order to make a supplementary report within a specified period and impose a fine from NT$50,000 to NT$1,000,000 as appropriate for anyone failing to do.
Reported by: Mike Lu / Angela Lin
Investment
3.Amendment to Direction for Counseling and Governing the Private Equity Funds to Promote Investment in Industry
On 9 May 2025, the National Development Council announced the amendment to the “Direction for Counseling and Governing the Private Equity Funds to Promote Investment in Industry”. We summarize below:
(1) To be in line with the government’s “National Project of Hope” policy, the semiconductor, artificial intelligence, military, security and surveillance and next generation communications are added to the scope of important strategic industries; and
(2) Public investment projects planned in accordance with other laws and regulations or determined to be in line with policy directions by the competent authority are added to the scope of important strategic industries.
Reported by: Stacy Lo / Zoe Chen
Securities
4.Draft Amendments to Securities Firms related Regulations
On 8 May 2025, the Financial Supervisory Commission announced a ruling to allow securities dealers to engage in proprietary trading of designated foreign bonds (Business) along with amendments to Article 3 and Article 11 of the Standards Governing the Establishment of Securities Firms, Article 45-1 of the Regulations Governing Securities Firms, and Article 11-1 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms, thereby enabling investors to participate in high-denomination bond investments. We summarize below:
(1) The Business shall refer to securities dealers to purchase and sell foreign bonds issued by nationals or foreigners outside Taiwan, and the purchase and sale of such bonds is conducted in amounts less than the minimum transaction amount prescribed by the bond issuer’s issuance regulations. To engage the Business, it is required to apply to establish or restructure a securities firm, or apply to add business types or items in accordance with the Standards Governing the Establishment of Securities Firms (FSC ruling dated 8 May 2025 (Ref No. 11403817044);
(2) In light of the fact that a securities dealers conducting the Business only is different in nature from general securities dealers business, the minimum capital requirement is set at NT$100 million. Additionally, the internal control systems must comply with the regulations stipulated by the Taipei Exchange (TPEx). (Article 3 and Article 11 of the Standards Governing the Establishment of Securities Firms); and
(3) Considering the distinct nature of the Business compared to that of general securities dealers business, the TPEx is authorized to establish operational management guidelines, as well as personnel management regulations for such activities. (Article 45-1 of the Regulations Governing Securities Firms and Article 21-1 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms)
Reported by: Jeffrey Liu / Winnie Su
SITE/SICE
5. Amendment to Article 3 of the Taiwan Stock Exchange Corporation Directions for the Recognition of the Qualifications of Issuers of Exchange-Traded Funds and Underlying Indexes
On 12 May 2025, the Taiwan Stock Exchange (TWSE) announced amendments to Article 3 of the “Taiwan Stock Exchange Corporation Directions for the Recognition of the Qualifications of Issuers of Exchange-Traded Funds and Underlying Indexes.” The amendments introduce an exception to the provision that the component accounting for the highest share of market capitalization of the index may not exceed 30 percent of the total market capitalization of the index. Specifically, for indices composed solely of domestic TWSE- and TPEx-listed stocks, the capitalization for any single constituent may be increased from 30% to its weighting in the Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX). However, the cumulative weighting of the top five constituents shall still not exceed 65% of the index’s market capitalization.
Reported by: Jeffrey Liu / Jason Su
| Editors: Mike Lu (Partner) Stacy Lo (Partner) Jeffrey Liu (Partner) Kang-Shen Liu (Partner) David Tsai (Partner) Angela Lin (Partner) Paul Hsu (Partner) Alex Li (Partner) | Counselors: Echo Yeh Sue Su Jolene Wang (Lexcel Partners IP Firm) |
