The National Taxation Bureau of Taipei, Ministry of Finance states that, in accordance with Paragraph 1, Article 7 of the Act for the Development of Biotech and Pharmaceutical Industry, to encourage the establishment or expansion of biotech and pharmaceutical companies, a profit-seeking enterprise that (i) originally subscribes for or underwrites shares issued by a biotech and pharmaceutical company; and (ii) has been a registered shareholder of the biotech and pharmaceutical company for a period of three (3) years or more, may, for a period of five (5) years from the first year it incurs profit-seeking enterprise income tax liability, enjoy a reduction in its profit-seeking enterprise income tax payable by up to twenty percent (20%) of the total amount of price paid for the subscription of the shares in such biotech and pharmaceutical company; provided that such biotech and pharmaceutical company has not applied for exemption from profit-seeking enterprise income tax or shareholder investment credit based on the subscription price under any other laws. The total amount creditable in each year shall not exceed fifty percent (50%) of the profit-seeking enterprise income tax payable in the then-current year.
The Bureau further explains that, for a biotech and pharmaceutical company to apply for the aforementioned profit-seeking enterprise shareholder investment credit, it shall, in accordance with Paragraph 1, Article 5 of the Regulations Governing Application of Tax Credit to Profit-seeking Enterprise Shareholder of Biotech and Pharmaceutical Companies, submit the application no later than January 31 of the year following the date on which the profit-seeking enterprise shareholder has completed the three-year holding period from the date, when the share price was actually paid. The biotech and pharmaceutical company shall submit the required documents to the local tax collection authority to apply for approval to issue the “Certificate of Investment Tax Credit for Profit-seeking Enterprise Shareholders.” Applications submitted after this deadline will not be accepted.
The Bureau provides the following example: Company A, a biotech and pharmaceutical company, issued registered shares to raise capital for research and development. Its profit-seeking enterprise shareholder paid for the capital increase on September 1, 2022. The three-year holding period for this capital increase ends on August 31, 2025. In accordance with the above-mentioned regulations, Company A shall apply to the local tax collection authority for a “Certificate of Investment Tax Credit for Profit-seeking Enterprise Shareholders” before the end of January 2026. Since January 31, 2026, falls on a Saturday, the deadline is extended to February 2, 2026. If Company A submits the application on or after February 3, 2026, the application will be deemed late and will not be accepted.
The Bureau urges all biotech and pharmaceutical companies to be mindful of the relevant requirements and deadlines when applying for shareholder investment tax credits on behalf of their profit-seeking enterprise shareholders, so as not to jeopardize shareholders’ entitlement to tax incentives.
The Bureau further explains that, for a biotech and pharmaceutical company to apply for the aforementioned profit-seeking enterprise shareholder investment credit, it shall, in accordance with Paragraph 1, Article 5 of the Regulations Governing Application of Tax Credit to Profit-seeking Enterprise Shareholder of Biotech and Pharmaceutical Companies, submit the application no later than January 31 of the year following the date on which the profit-seeking enterprise shareholder has completed the three-year holding period from the date, when the share price was actually paid. The biotech and pharmaceutical company shall submit the required documents to the local tax collection authority to apply for approval to issue the “Certificate of Investment Tax Credit for Profit-seeking Enterprise Shareholders.” Applications submitted after this deadline will not be accepted.
The Bureau provides the following example: Company A, a biotech and pharmaceutical company, issued registered shares to raise capital for research and development. Its profit-seeking enterprise shareholder paid for the capital increase on September 1, 2022. The three-year holding period for this capital increase ends on August 31, 2025. In accordance with the above-mentioned regulations, Company A shall apply to the local tax collection authority for a “Certificate of Investment Tax Credit for Profit-seeking Enterprise Shareholders” before the end of January 2026. Since January 31, 2026, falls on a Saturday, the deadline is extended to February 2, 2026. If Company A submits the application on or after February 3, 2026, the application will be deemed late and will not be accepted.
The Bureau urges all biotech and pharmaceutical companies to be mindful of the relevant requirements and deadlines when applying for shareholder investment tax credits on behalf of their profit-seeking enterprise shareholders, so as not to jeopardize shareholders’ entitlement to tax incentives.
Article cited from: The National Taxation Bureau of Taipei, Ministry of Finance