The Statute for Industrial Innovation aim at enterprises for innovative research and development, investment in smart machinery, investment in fifth-generation mobile communication systems (5G) or substantial investment, etc., and provide enterprises with tax incentives for investment deductions or tax deductions. Enterprises shall start to review what happened in 2021 whether the R&D expenses can be qualified to enjoy tax incentives for investment deductions or tax deductions.
Article 10 of the Statute for Industrial Innovation provides that the 15% or 10% of the expenditure of a for-profit businesses invested in research and development can be either deducted in the current year or deducted within the three years for Business Income Tax or and Retained Earning Tax.
R&D expenditures are expenses such as personnel salaries, equipment, raw materials, materials and samples, patent rights, special technology and copyright of the current year amortization or fee payment, professional or special database, software programs and system fees. R&D expenditures also include education and training expenses for full-time personnel who specialize in research and development to participate in research and development expertise.
The common reporting errors while claiming tax incentive include the full amount of royalties paid as income tax deduction for current year, which have not been amortized annually according to the period of use; or the government subsidy received is not declared.
The companies shall pay attention to the application deadlines and documents that should be prepared for tax incentives. Enterprises that want to apply for tax incentives in accordance with Article 10 of the Statute for Industrial Innovation can apply online. If they want to apply Article 23 of the Statute for Industrial Innovation, they may declare Article 23 of 3 Tax Incentives in the Annual Business Income Tax Return. It is sufficient to attach the relevant supporting documents of R&D expenses to the Annual Business Income Tax Return, no advance application is required.