TAIPEI: Taiwan-based subsidiaries of mainland enterprises in high-tech fields will be eligible to take advantage of tax incentives offered to high-tech businesses, a "Ministry of Economic Affairs" (MOEA) official said yesterday.

C. Y. Ling, director-general of the MOEA's Department of Investment Services, said in Taichung at a seminar on mainland investment in Taiwan on the last day of cross-Straits talks that the enterprises can apply for the tax breaks offered under the Statute for Upgrading Industries and the Statute for Innovating Industries.

Woody T. J. Duh, director general of the MOEA's Industrial Development Bureau, explained that any overseas-invested or mainland-invested enterprise is considered a legal entity in Taiwan and therefore eligible for the tax breaks as long as they have been established in compliance with Taiwan's Corporation Law.

"They must be subsidiaries, however. Branches and representative offices are not eligible," Duh said.

That's because the finances of subsidiaries, unlike branches, are independent of the finances of their parent companies, Duh explained, citing the example of US-based insurer AIG and its Taiwanese subsidiary Nan Shan Life Insurance.

Because their finances were separate, AIG's sale of Nan Shan Life is being reviewed independently from AIG.

Among the overseas investors that now enjoy tax incentives under the statutes are IBM and Philips Electronics, he added.

The Statute for Upgrading Industries will expire at the end of this year and will be replaced by the Statute for Innovating Industries starting next year.

Under the new program, the MOEA will offer incentives for investments in R&D and talent cultivation, but will not give companies five-year corporate income tax holidays as had been the case previously.

Wang Jing, chairwoman of Fujian Newland Group, the first mainland enterprise to invest in Taiwan, expressed the hope on the same occasion that Taiwan will give greater access, such as landing permits, to company employees traveling between the two sides and provide tax incentives for high-tech industries.

China Daily/CNA

(HK Edition 12/24/2009 page2)