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Royalties paid in 2011 and thereafter for foreign patents and computer programs may be exempt from Taiwan income tax
Royalties paid in 2011 and thereafter for foreign patents and computer programs may be exempt from Taiwan income tax
The Ministry of Finance (MOF) and the Ministry of Economic Affairs (MOEA) jointly issued a directive on 29 January 2014 stating the amendments to the Rules Governing the Applications for Exemption from Income Tax on Royalties and Technical Service Fees Collected by Foreign Profit-Seeking Enterprises from the Manufacturing Industry, Technical Services Industry and Power-Generating Industry ("Rules"). These amendments took effect retroactively on 1 January 2011.
Under the amended Rules, royalties paid for foreign patents and computer programs are exempt from income tax provided that the criteria prescribed under the Rules are met. With respect to technical service fees for technical know-how, they are no longer exempt from income tax under the amended Rules.
According to the Income Tax Act, the royalties and technical service fees received by a foreign entity for providing its patents, trademarks and technical know-how to a Taiwan entity are, in general, subject to 20% income tax which the Taiwan entity should withhold upon making the payment, unless tax exemption approval is obtained pursuant to the Rules.
Before the Rules were amended, the royalties paid for patents that were eligible for tax exemption were limited to those for patent rights approved by the Taiwan Intellectual Property Office. As a result, foreign entities may include their income tax cost in the royalties for their foreign patents, which meant an increase in cost to Taiwan entities.
Under the amended Rules, if the patent rights licensed are within their valid period and are licensed to a Taiwan entity (in any of the 20 industries listed below) for its use by way of technical cooperation, tax exemption could be granted. However, the amended Rules prescribe additional criteria for tax exemption, i.e., a patent is subject to the MOEA's special approval and confirmation that the underlying technology is indeed critical to the Taiwan entity but unavailable in Taiwan, or the technology available in Taiwan is not compatible with the Taiwan entity's product specifications. With such additional criteria, the actual economic benefit of the amendments remains to be seen.
1. Precision machineries and intellectual automation industry
2. Motor vehicles industry
3. High-value metal materials industry
4. Wind-power generating industry
5. Solar-energy industry
6. New generation telecommunications and smart handheld gadgets industry
7. Smart electronics and parts industry
8. Displayer industry
9. LED lighting industry
10. Smart living industry
11. Cloud computing industry
12. High-value petrochemical industry
13. High-value textile industry
14. Photoelectric chemical materials industry
15. Health-care food industry
16. High technology industry
17. Resource recycling industry
18. Water-recycling and utilization industry
19. Information services industry
20. Design industry
In addition, the royalties paid to a foreign entity by a Taiwan entity in the manufacturing or technical service industry for the latter's use of the former's computer programs by way of technical cooperation are exempt from income tax, provided that the jurisdiction where the foreign entity is incorporated affords copyright protection to the works of Taiwan individuals and entities, the copyright of the computer program is within the valid period, and the MOEA's confirmation has been obtained.
With the cancelation of the tax exemption on technical service fees, such fees are subject to 20% income tax rate. Hence it is worth considering applying for the tax authorities' approval to impose tax at a lower rate (3%) so as to reduce tax cost.
If you have any questions or require any further information, please feel free to contact us.
符合條件之外國專利及電腦程式授權金可免稅，
且追溯自100年1月1日起生效
財政部與經濟部於103年1月29日會銜發布函令，修正「外國營利事業收取製造業技術服務業與發電業之權利金及技術服務報酬免稅案件審查原則」(以下簡稱「審查原則」)，並追溯自100年1月1日後簽約授權案件均可適用。
依修正後審查原則，支付予符合條件之外國專利及電腦程式授權金可申請免納所得稅，至於原審查原則第七點，外國營利事業提供專門技術予中華民國營利事業所收取技術服務報酬之免稅優惠則予以取消。
按現行所得稅法規定，外國營利事業提供其專利、商標及專門技術予中華民國營利事業所取得之權利金收入及技術服務報酬，除非經核准免納所得稅，原則上應由中華民國營利事業於給付時就源扣繳20%所得稅款。
修正前審查原則第五點，對於專利權權利金免稅之範圍，僅限於在中華民國智慧財產局核准有案之專利權，至於未經核准之外國專利，則無免稅優惠之適用。由於實務上，外國營利事業會將此稅款成本反映在權利金價額上，造成中華民國營利事業實際負擔之成本增加，經財政部與經濟部兩部會多次協商，終於達成共識，修正此點。
依據修正後審查原則，外國營利事業以其所有之專利權在專利權有效期間內，以技術合作方式授權中華民國下列特定產業使用，均可申請免納所得稅：
(一) 精密機械及智慧型自動化產業。
(二) 車輛產業。
(三) 高值化金屬材料產業。
(四) 風力發電產業。
(五) 太陽能產業。
(六) 新世代通訊及智慧手持裝置產業。
(七) 智慧電子及零組件產業。
(八) 顯示器產業。
(九) LED照明產業。
(十) 智慧生活產業。
(十一) 雲端運算產業。
(十二) 高值化石化產業。
(十三) 高值化紡織產業。
(十四) 光電電子用化學材料產業。
(十五) 保健食品產業。
(十六) 生技產業。
(十七) 資源再生產業。
(十八) 水再生利用產業。
(十九) 資訊服務產業。
(二十) 設計產業。
然而值得注意的是，修正後審查原則增加了申請免稅之條件，即該專利必須經經濟部工業局專案核准確認屬關鍵技術而國內無法提供，或國內可提供，惟其效能無法滿足營利事業產品規格要求。因此，修正後審查原則之實質效益，仍待觀察。
此外，修正後審查原則對於外國營利事業所擁有之電腦程式著作，於著作權存續期間內以技術合作方式授權中華民國製造業及其相關技術服務業使用所收取之權利金，於取得經濟部工業局專案核准者，其因而取得之權利金，亦得申請免納所得稅。
惟修正後審查原則已就原審查原則第七點中外國營利事業提供專門技術之免納所得稅優惠予以取消。因此今後就取得技術服務報酬，企業應考慮向稅捐稽徵機關申請核准適用較低的所得稅率(3%)，以減少其稅捐成本。
若您對上述法令修正或適用有任何疑問，請隨時與本所聯繫。