Tax incentives to promote capital investments that enhances productivity

1. Overview

It is said that the growth of capital investment in the past years has been slowed down. As a matter of fact, such slowed down capital investment accounts for the degradation over time or obsolescence in the facilities and equipment which affects the company’s productivity significantly. To address the problem, tax incentives have been created to help companies who invest in certain cutting edge technology facitilites, production line or operation improvement equipment specified by the laws.

2. Content

The tax incentives are summarized in the table below:

2013※

2014

2015

2016

Special depreciation

Machinery etc

Depreciation 100%

Depreciation 100%

Depreciation 100%

Depreciation 50%

Buildings etc

Depreciation 100%

Depreciation 100%

Depreciation 100%

Depreciation 25%

Tax deduction

Machinery etc

5%

5%

5%

4%

Buildings etc

3%

3%

3%

2%

※Applicable after the effective date of industry competition enhancement laws (20 January 2014).

A company who qualifies can choose either special depreciation or tax deduction whichever is in favor of a larger tax advantage.

3. Who can apply

The tax incentives are available for a blue-return filing companies regardless of its size and industry. However, only small-to-medium sized enterprises can apply for the deduction of inhabitant tax and enterprise tax.