Taiwan passes Chip Law provides a lot of tax relief to semiconductor developers

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    Taiwanese lawmakers adopted a new law that will give local companies that do business in the semiconductor industry an tax credit of 25% on their annual R&D spending. This is part of a plan to keep advanced semiconductor technologies at home and preserve the islands technology leadership.

    Image source: ChristianIS/pixabay.com.

    The local community has repeatedly said that the latest advances will remain in Taiwan, a similar opinion has been repeatedly expressed by the local TSMC and other companies in this area. The authorities have already helped local chipmakers in the past, including with the creation of a new infrastructure, now the island intends to grow its efforts to support the home semiconductor business.

    The Taiwan Ministry of Economy said in the statement that the USA, Japan and the European Union are already offering major incentives for the establishment of local production chains, so the island must maintain its key industry segments competitive.

    As a result, a lot of authorities from Washington to Seoul provide incentives for the production of chips in their territories, thus increasing their dependence on Taiwan, thus reducing the danger of potential failures in the supply of chips from there. To dispel such concerns, TSMC is building new factories in Japan and USA and is considering establishing an additional production site in Germany.

    The new rules are going to be introduced in 2023. In addition, companies engaged in the islands semiconductor business can claim an annual tax of 5% when purchasing new equipment for advanced manufacturing technologies. In other words, this is Taiwans version of the relatively recent Chip Act. However, in aggregate, the amount of benefits is more than 50% of total taxes payable annually.

    The most expensive money to buy equipment is the introduction of new products in a semiconductor shop. For example, Dutch ASML Holdings EUV machines cost roughly $200 million each.

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