TAIPEI (Taiwan News) — Taiwan’s Legislature on Saturday (Jan. 7) passed the third reading of a tax incentive bill mainly intended to boost research and development (R&D) expenditure.

Chipmakers and other high-tech manufacturers, including Taiwan Semiconductor Manufacturing Co. (TSMC), are believed to be the main beneficiaries, when the world's largest contract chip maker's previous round of tax breaks is going to expire in 2023, a finance official told CommonWealth Magazine.

The approved bill will expand tax deductions for investments from 2023 to 2029. The tax breaks for R&D investment could reach up to 25%, and a 5% credit for capital investment for advanced equipment. The maximum combined tax deduction is capped at 50% of the firm’s total income tax.

Companies whose effective tax rates (ETRs) exceed 12% in 2023 and 15% after 2024 would be entitled to the incentives. However, a grace period is considered for businesses whose ETRs are between 12% and 15% in 2024.

Details for implementation of the nation's biggest R&D tax break will be announced by the Ministry of Economic Affairs (MOEA) mid-year.