Linking You to a World of PROFIT in Asia

Taiwan Business Alliance

I. Taiwan’s Foreign Trade and Economy

II. Taiwan’s Global Competitiveness

III. Investment Incentives

IV. What TAITRA can do for you

Topics

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I. Taiwan’s Foreign Trade

and Economy

6

Taiwan Economic Facts

GDP US$ 589.4 Billion

2018

Economic Growth Rate

2.6 %

2018

GDP per capita (PPP)

* 19th in the world

US$ 52,960 (*IMF)

2018

Foreign Trade

*18th in the world

US$ 335.9 Billion (Export)

2018

US$ 286.3 Billion (Import)

2018

Foreign Exchange

Reserves

*5th in the world

US$ 467.23 Billion

2018

Source: Department of Statistics, MOEA 2017, Central Bank of ROC(Taiwan)

Source: Department of Statistics, MOEA 2019, ROC(Taiwan) ,IMF 4

Taiwan Economic Facts

Taiwan exports to Germany in 2018:

USD 7.06 Billion *4th in Asia

Taiwan imports from Germany in 2018:

USD 9.96 Billion *6th in Asia

Germany is Taiwan’s 1st trading

partner in the EU

II. Taiwan’s Global Competitiveness

3

Taiwan’s Global Competitiveness

World Economic Forum (WEF)

Global Competitiveness Report 2018

13th in Overall Ranking (among 140 countries ); 4th in Asia

•1st in “Macroeconomic stability”

•4th in “Innovation capability”

•7th in “Financial system”

Business Environment Risk Intelligence (BERI)

Investment Environment Risk Assessment Report 2018

• 4th in Profit Opportunity Recommendation (among 50 countries); 2nd in Asia

International Institute for Management (IMD)

The World Competitiveness Scoreboard 2019

• 16th in Overall Ranking (among 63 countries ) ); 4th in Asia

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Taiwan’s Global Competitiveness

World’s Leading Provider of ICT Products

#2

#1

#1

#1 #1

#1 #1

#1 Source: ITIS 2017

LCD Monitor

Market Share: 25.6%

DSL CPE

Market Share: 65.4%

Desktop computer

Market Share: 27.8%

IC Foundry

Market Share: 73.1%

Notebook

Market Share: 81.5% Cable CPE

Market Share: 77.1%

#1

Motherboard

Market Share: 89.1%

WLAN

Market Share: 67.1%

PND

Market Share: 57.8% 8

Overseas Production Included

Why choose Taiwan?

Strong Industry Clusters

R&D and Innovation, Science Parks

and Software Parks

High quality Human Resource

Efficient Logistics, Distribution Center & Free Trade Ports

Taiwan’s Global Competitiveness

9

Why Choose Taiwan

Strong Industry

Clusters

R&D and

Innovation,

Science Parks, &

Software Parks

High Quality Human

Resources

Efficient Logistics

Distribution Centers, &

Free Trade Ports

10

Yunlin

Petrochemicals,Optoelectronics

Taipei

ICT, Electronics, Software

Taoyuan

CDs, PCBs, Automobiles Hsinchu

Electronics, IC, Optoelectronics, Biotech Miaoli

Optoelectronics, Automobiles Taichung

Hand Tools,Traditional Hardware, Bicycles,

Machinery, Musical Instruments, Autotronics

Tainan

Optoelectronics, Yachts, Textile & Clothing,

Autoparts, Photovoltaics

Kaohsiung

Yachts, Shipbuilding & Steel,Nuts &Screws

Pingtung

Biotechnology, Autoparts

Yilan

Photovoltaics, Optoelectronics

Hualien

Stone Crafts

Taitung

Deep Ocean Water,Tourism

Source: Taiwan Advantage, TAITRA

Source: USPTO 2017

(1) Patents Issued by the United States to Residents of Foreign Countries

R&D and

Innovation,

Science Parks, &

Software Parks

High Quality Human

Resources

Efficient Logistics

Distribution Centers, &

Free Trade Ports

Strong Industry

Clusters

Why Choose Taiwan

7491 7781 7851

9636 9907

11624 12168 12271 12317

[值] 12540

0

2000

4000

6000

8000

10000

12000

14000

2007 2008 2008 2010 2011 2012 2013 2014 2015 2016 2017

20

Source: Kempler 2018

R&D and

Innovation,

Science Parks, &

Software Parks

High Quality Human

Resources

Efficient Logistics

Distribution Centers, &

Free Trade Ports

Strong Industry

Clusters

Why Choose Taiwan

20

MOEA launched the “Multinational Innovative R&D Centers in Taiwan” Program to encourage foreign enterprises to set up R&D centers in Taiwan.

By Jan. 2018, there were 140 incubation centers in Taiwan and the incubation policy has successfully incubated over 8,216 enterprises which helped the registration of 4,387 patents, the transfer of over 2,057 technologies, and the listing of 116 companies.

More than 43 International companies have set up 51 R&D/Innovation Centers in Taiwan.

Source: Invest taiwan, 2018

R&D and

Innovation,

Science Parks, &

Software Parks

High Quality Human

Resources

Efficient Logistics

Distribution Centers, &

Free Trade Ports

Strong Industry

Clusters & Export

Processing Zones

Why Choose Taiwan

13

R&D Personnel

Source: OECD, 2018

R&D and

Innovation,

Science Parks, &

Software Parks

High Quality Human

Resources

Efficient Logistics

Distribution Centers, &

Free Trade Ports

Strong Industry

Clusters

Why Choose Taiwan

0

2

4

6

8

10

12

14

16 14.2 14.9 13.6 13.713.1

11.5

9.9 11.5

10.3

12.8

9.1 9.1 8.2

14

Researcher per 1,000 Employment in 2016

Source: IHME, 2018

R&D and

Innovation,

Science Parks, &

Software Parks

High Quality Human

Resources

Efficient Logistics

Distribution Centers, &

Free Trade Ports

Strong Industry

Clusters

Why Choose Taiwan

15

Global Human Capital Ranking:

Taiwan 1st in Asia

5th in the World, next to Finland、

Iceland、Denmark、The Netherlands

Among 195 countries and territories

Why Choose Taiwan

R&D and

Innovation,

Science Parks, &

Software Parks

High Quality Human

Resources

Efficient Logistics

Distribution Centers, &

Free Trade Ports

Strong Industry

Clusters & Export

Processing Zones

Taiwan as an Ideal air/sea transit hub

Beijing

Seoul Tokyo

Hong Kong

3:30

1:40

3:00

2:20

1:40

Shanghai

Taiwan offers the shortest

average flying time to major

Western Pacific cities:

2 hours and 42 minutes

Direct air and sea links with China:

■ Direct flying destinations: 54

■ Direct flights: 670/week

■ Cargo charter flights: 68/week

■ Sea transport:

13 harbors in Taiwan,

72 harbors in China

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Why Choose Taiwan

15 multinational companies set up

global distribution centers in Taiwan

Source: MOEA 2016

R&D and

Innovation,

Science Parks, &

Software Parks

High Quality Human

Resources

Efficient Logistics

Distribution Centers, &

Free Trade Ports

Strong Industry

Clusters & Export

Processing Zones

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III. Investment Incentives

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5+2 Innovative Industries

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Items Subsidies

R&D Tax Deduction

(1) 15% of expenses applied to the current year

(2) 10% of expenses applied for three years;

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Central Government Incentives

Biotechnology and

New

Pharmaceutical

Industries

(1). 35% of R&D and employee training expenditures

may be claimed as a deductible

(2). 20% of the amount invested may be claimed as a

deductible expense against their payable business

income tax.

Items Subsidies

Private Participation

in Major

Infrastructure Projects

a five-year business income tax exemption, investment

tax credits, and exemption of tariffs on imported

construction machinery as well as deductions on the

house tax, land value tax, and deed tax.

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Central Government Incentives

Tourism Industry 10% - 20% of international tourism promotion

expenditures as a deduction against payable business

income tax for the current year.

Film Production

a maximum of 20 percent of the amount paid for the

share acquisitions against the amount of the profit-

seeking-enterprise income tax payable each year

within a period of five years from the then-current year.

Items Subsidies

Hiring Additional

Employees

(1). Hiring additional full-time employees and raise their

overall salary expenses can recognize additional tax

deductible salary expenses up to 130% of the salaries

paid to Taiwanese employees newly hired in the current

year.

(2). For additional domestic hires who are 24 years old

or younger, SMEs can deduct up to 150% of the annual

gross salary payments to these young domestic hires

from their then current year profit-seeking enterprise

income.

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Central Government Incentives

Items Subsidies

Land Incentives for Industrial Parks

(1). The program provides rent-free leasing for the first

two years for land in industrial parks being developed

under the jurisdiction of the MOEA;

(2). A lessee who completes utilization in accordance

with the approved plan within two years will enjoy

free land rental for the first two years, and may apply

for the interest-free return of the two-year rental fee

that was prepaid in cash or use it to offset future

rental fees.

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Source:

https://investtaiwan.nat.gov.tw/showPage?lang=eng&search=reward

Central Government Incentives

Items Subsidies

Land and

Management Fee

Incentives for Export

Processing Zones

Rental Incentives:

When there is an approved demolition and rebuilding

of an old factory, rental incentives are offered starting

from the commencement date listed on the building

permit. No land rent is charged in the first two years, a

40% discount is offered in the third and fourth years, and

a 20% discount is offered in the fifth and sixth years.

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Source:

https://investtaiwan.nat.gov.tw/showPage?lang=eng&search=reward

Central Government Incentives

Value-Added

Business (VAT) Tax Deduction

Foreign enterprises, institutions, organizations, or

associations that do not have a fixed place of business

in Taiwan and that purchase goods or services for

exhibitions or temporary business activities within a

period of one year and on which the VAT is more than

NTD 5,000 may qualify for a VAT refund on the goods or

services.

Items Subsidies

Interest Payments Subsidized 2.5% interest rate, Longest for 2 years

Up to 50 million

City-owned Real

Estate Subsidy

Free rental for construction period

Subsidized 50% rental for 2 to 5 years after getting

licence

Job Training Subsidized 50% of training cost

New Hired

Employees' Payroll Taipei City Citizen only, 10k per person for 12 months

Up to 5 million

Annual Housing &

Land-value Tax

Subsidized 100% for first 2 years, 50% for the following 3

years

Up to 50 million

Rental subsidy Subsidized 50% of monthly rental, Longest for 5 years

Up to 5 million

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Taipei City Government Incentives

Source:

https://www.industry-incentive.taipei/page_result_en.aspx#downloadblock1

Items Subsidies

Tax Incentives

(1). No import duty, commodity tax nor business tax will

be imposed on machineries, instruments, raw materials,

fuel, materials and semi-finished products imported by a

Park enterprise for its own use. The enterprise is also

excused from the off-duty, warrant, filing, or tax-

mortgage process.

(2). All products or labor outputs exported by Park

enterprises are exempted from business taxation.

Incentives for

Research and

Development

R&D expenses can be deducted from corporate

income tax up to 15% but the total deducted expenses

can not exceed 30% of the total corporate income tax.

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Hsinchu Science Park Incentives

Source:

https://www.industry-incentive.taipei/page_result_en.aspx#downloadblock1

Items Subsidies

Incentives Regarding

the Act Governing

Biotech and New

Medicine Industry

Development

(1). Listed shareholders investing in biotech or new

medicine corporations more than three years can be

exempted from corporate income tax within a period of

five years up to a total of 20% of the price of stock

shares gained. For entities of venture capitalists,

corporate income tax can be exempted from the

fourth year of stock shares gained, with the same period

of five years.

(2). 35% of R&D expenditure can be deducted from

corporate income tax within a period of five years since

a real corporate profit gain.

(3). Amount of R&D expenditure exceeding the

averaged amount of former two years, the exceeded

portion of R&D expenditure enjoys a deduction rate of

50% from corporate income tax.

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Hsinchu Science Park Incentives

Source:

https://www.industry-incentive.taipei/page_result_en.aspx#downloadblock1

Items Subsidies

Developers

Incentive 50% discount on land rental during construction. Limit of

three years.

Enterprises in the

Park The plan offers a 40% land rental discount during years 1

and 2 and a 20% discount during years 3 and 4.

Enterprises in the

Park

(Lease to Build)

The plan offers free land rental during years 1 and 2, a

40% discount during years 3 and 4, and a 20% discount

during years 5 and 6.

Park Management

Fee Years 1 and 2: 40% discount on the management fee

Years 3 and 4: 20% discount on the management fee 28

Taichung Software Park Incentives

Items Subsidies

Enterprises in the

Park The plan offers a 40% land rental discount during years 1

and 2 and a 20% discount during years 3 and 4.

Enterprises in the

Park (Lease to Build)

The plan offers free land rental during years 1 and 2, a

40% discount during years 3 and 4, and a 20% discount

during years 5 and 6.

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Kaohsiung Software Park Incentives

IV. What TAITRA can do for you

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About TAITRA

• Non-profit making trade

promotion organization

• Numerous inbound/

outbound trade promotion

activities

• International exhibitions

and conventions organizer

• 63 overseas

offices worldwide

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TAITRA’s Customized Services

Tailor-made one-on-one meetings with

potential Taiwan suppliers

Efficient and effective vendor or supplier

selection process & matchmaking

Facilitate start-ups through IBC

Participation in Taipei International Trade

Shows

Online Sourcing Hub: www.taiwantrade.com

Investment Consultancy + Office space

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TAITRA’s major activities

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40+ Taiwan Trade Fairs

10+ Germany Trade Fairs

10+ Sourcing Taiwan Event

Benefits from using TAITRA’s services

Save your time

Free & Customized

services worldwide

Sound advice

What TAITRA Can Do For You

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Feel Free to contact us@ Taiwan Trade Center, Düsseldorf TEL: 0211 78180 EMAIL: dsdf@taitra.org.tw

Thank you!