Loading…
Loading…
Article 10-1 sits inside Taiwan's master industrial-policy instrument, the Statute for Industrial Innovation (產業創新條例), as the general-industry counterpart to Article 10-2 ("Taiwan Chips Act" — semiconductor-specific R&D + advanced-equipment ITC for top-tier silicon firms). Where Article 10-2 is gated by NT$6bn R&D spend, 6% R&D intensity, 15% effective tax rate, and NT$10bn equipment spend (i.e., a TSMC-/MediaTek-/ASE-class instrument), Article 10-1 is the broader-eligibility mechanism applicable to the general industrial base.
Pre-amendment, Article 10-1 covered investments in hardware, software, technology or technical services related to:
1. Smart machinery 2. 5G network deployment 3. Cybersecurity
with a maximum eligible expenditure of NT$1bn per company per taxable year. The credit was set to expire at the end of 2024.
The 18 April 2025 amendment (third reading, Legislative Yuan) restructures Article 10-1 along three axes:
1. Scope expansion — two new eligible categories: - AI products or services — first dedicated AI investment tax credit in Taiwan's general-industrial framework. Captures AI hardware (server/GPU/accelerator deployment), AI software (model training, inference platforms, AI-application stacks), and AI technical services (AI-systems integration, MLOps). - Energy-conservation and carbon-reduction initiatives — aligns Taiwan's general-industrial ITC with global net-zero industrial-policy instruments (US IRA §45X / §48 ITC, EU Net Zero Industry Act, Korea K-Chips Act 2025 amendments). Captures investments in energy-efficient equipment, carbon- capture/avoidance hardware, and process-decarbonisation technology services.
2. Cap increase — NT$1bn → NT$2bn maximum eligible expenditure per company per taxable year. The cap doubling reflects the substantially higher capex levels associated with AI-server / GPU / data-centre-class deployments relative to the original smart-machinery/5G/cybersecurity instruments.
3. Sunset extension — through 31 December 2029, matching the Article 10-2 sunset and giving Taiwanese industry a five-year planning horizon for AI- and green-tech capex decisions.
The MOEA and MOF jointly released the secondary legislation operationalising the new categories on 27 November 2025, formally titled "Regulations Governing Tax Credits Claimed for Investments in Smart Machinery, 5G Networks, Cybersecurity, Artificial Intelligence (AI) Products or Services, and Energy Conservation and Carbon Reduction." This sets the qualification thresholds, documentation requirements, and application procedures for the new AI and green-tech categories.
company per year is large enough to be material for mid-cap industrial AI deployers (e.g., Foxconn AI-server build-out, Quanta and Wistron AI-platform manufacturing, Asustek Cloud AI-services, contract data-centre operators), though small relative to the Article 10-2 ceiling for top-tier silicon firms.
policy framework was indirect (via Article 10-2 chip-side credits or sector-specific MOEA grants). Article 10-1 closes the gap by giving the general industrial base — i.e., the AI-server supply chain that runs through Taiwan — a dedicated tax instrument.
aligns Taiwan's general-industrial ITC with US IRA, EU NZIA, and Korea K-Chips Act 2025 incentives, removing a competitive gap in Taiwan's industrial-policy toolkit.
multi-tens-of-billions-NTD relief for top-tier silicon firms, Article 10-1's per-firm cap (NT$2bn) is bounded; the broader eligibility increases reach but each firm's ITC benefit is capped at a fraction of Article 10-2's effective per-firm benefit.
The responds_to edges to the US CHIPS Act, US IRA, K-Chips Act, and EU Net Zero Industry Act reflect the explicit competitive- policy framing embedded in the December 2024 Executive Yuan press release (which presents the amendment as Taiwan's response to "AI advancements and global net-zero emissions trends"):
§45X advanced-manufacturing PTC; §48 clean-energy ITC).
passes — the chip-specific response.
scope; US IRA implementation accelerates with §45X PTC payments.
amendment to Legislative Yuan, citing AI and net-zero as the policy gaps remaining in Taiwan's general-industrial framework.
(Article 10-1 + Article 22 + new Article 67-3) on third reading.
with operational eligibility thresholds for AI and green-tech categories.
Article 10-2. The amendment widens the set of beneficiary Taiwanese firms beyond the top-tier silicon names — AI-server ODMs (Foxconn, Quanta, Wistron, Inventec), motherboard / chassis manufacturers, networking and data-centre kit suppliers, and the green-tech industrial base (e.g., energy- efficient industrial equipment manufacturers).
material to mid-tier AI-platform deployers and ODMs that invest in their own AI-server / inference / MLOps stacks to support manufacturing, design, and service operations.
instruments are mutually exclusive on the same expenditure — top-tier silicon firms will continue to claim under Article 10-2 (higher % credit on R&D + equipment), while the broader general-industrial base will claim under Article 10-1 (lower-threshold, broader-eligibility ITC).
reduction category creates a tax-side pull for industrial decarbonisation capex parallel to Taiwan's emerging carbon- pricing architecture. Industries with high process-emissions (steel, petrochem, cement) gain a credit-side incentive to retrofit.
pairs with the existing trilateral chip-equipment perimeter (US-Japan-Netherlands) and Taiwan's outbound-investment screening regime (Article 22 / 67-3, filed separately) — joint effect: AI-compute capex is incentivised onshore while outbound chip/AI investment to designated countries is screened.
services" — limited to AI-specific hardware/software, or extended to AI-adjacent IT modernisation? The 27 November 2025 secondary legislation sets the precedent.
parallel Article 22 + Article 67-3 outbound-investment screening (filed separately)? Outbound AI/chip-related capex to designated countries is screened, while onshore AI capex is credited — the joint effect is a strong onshoring pull.
or treated as the natural review point for the AI-and- green-tech ITC architecture as Taiwan's net-zero pathway matures?
(which embeds a 15% effective-tax-rate floor for eligibility), Article 10-1 does not include an explicit Pillar Two-aligned threshold — the GloBE classification of the credit (qualifying refundable vs non-refundable) is the open question for multinational claimants.