Taiwan Approves Tax Breaks in Fight for More Chip Investment
Taiwan expanded tax breaks for companies that invest in technology research and production in an attempt to strengthen the island's semiconductor industry and help maintain its leading position in the global chip supply chain.
Tech firms will now be able to lower their income tax bill by a quarter if their spending on research and development hits a set level, according to the amendments approved Thursday by Taiwan's cabinet. The measure also gives another 5% tax break to companies whose investment in advanced equipment reaches a set level, and is aimed at encouraging them to keep spending on production and development in Taiwan.
Over the past year many countries have ramped up support for their domestic chip industries, promising to give tens of billions of dollars in subsidies to companies which increase production in those markets and diversify away from China and Taiwan. Those promises have led to a rash of new factories being built or planned in the US, Japan and in Europe, worrying some in Taiwan that its pre-eminent position in the semiconductor industry is at risk.
As geopolitical tensions have risen between the US and China, businesses have been preparing contingency plans in case foreign companies are no longer able to operate in China or there's a military confrontation around Taiwan. The increasing global concern about the concentration of chip production on the island has prompted more firms and nations to try and move output away from Taiwan or away from local chip giant Taiwan Semiconductor Manufacturing Co.
Samsung Electronics Co. said this week that the global technology industry is in search of alternative sources for advanced semiconductors, given rising political risks. And Apple Inc.'s Chief Executive
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