Technical Audit Update – Key Points for the 2025 Corporate Income Tax Return and Latest Tax Incentives

I. Amendments to the Statute for Industrial Innovation: Introduction of AI and Energy-Saving / Carbon Reduction Investment Tax Credits

In response to the rapid growth of artificial intelligence (AI) applications and increasing demand for energy conservation and carbon reduction, the latest amendments to the Statute for Industrial Innovation have come into effect. Starting from fiscal year 2025, corporate investments in AI products or services, as well as energy-saving and carbon-reduction–related hardware, software, technologies, or technical services, are eligible for investment tax credits.

Key Eligibility Requirements

• Eligible entities: Companies and limited partnerships
• Investment amount: Aggregate qualifying expenditures of NTD 1 million to NTD 2 billion within the same taxable year
• Timing: Ordering and delivery completed within fiscal year 2025
• Procedures: Prior to the corporate income tax filing deadline, submission of the investment plan and supporting documentation through the Ministry of Economic Affairs’ online system

Tax Credit Options (One option only; irrevocable after election)

1. One-time credit at 5%
   • A tax credit equal to 5% of the qualifying expenditure, applied against corporate income tax payable for the year of delivery
2. Installment credit at 3% over three years
   • A tax credit equal to 3% of the qualifying expenditure, applied annually over three consecutive years starting from the first credit year

📌 Common Limitation

• The tax credit claimed in any given year may not exceed 30% of the corporate income tax payable for that year.

🔎 Practical Analysis: Should You Choose 5% or 3%?

• Scenario 1 – Stable Profitability
  Company A reports strong pre-tax profits in 2025 and expects stable earnings in subsequent years, with sufficient tax payable in the current year.
  👉 The 5% one-time credit may be preferable to accelerate tax benefits.
• Scenario 2 – Expansion Phase
  Company B is in a growth and expansion stage, with limited short-term profitability but stronger earnings expected over the next two to three years.
  👉 The 3% installment credit may better align tax benefits with future profitability.

II. Donations to the Sports Industry: Enhanced Deductibility of Up to 175%

Following amendments to the Sports Industry Development Act, corporate donations to professional or amateur sports organizations approved by the Sports Administration (or relevant authority) are entitled to increased deductibility for expense recognition purposes.

Key Rules

• General rule:
  • Donations up to NTD 10 million may qualify for an enhanced deduction.
• Enhanced deduction rate based on donation date:
  • On or before 24 July 2025: 150%
  • On or after 25 July 2025: 175%

Special Considerations

• If a related-party relationship exists between the donor and the donee, the deduction is limited to 100% of the donation amount.
• Donations made to key sports organizations or major sporting event organizers approved on a project basis are not subject to the NTD 10 million cap.

🔎 Practical Example

• Company C donates NTD 8 million to an approved professional sports team in August 2025:
  👉 Deductible expense = NTD 8 million × 175% = NTD 14 million

With growing enthusiasm fueled by the WBSC Premier12 and the World Baseball Classic, as well as the official opening of the Taipei Dome, sporting events in Taiwan are experiencing robust growth. Companies may comprehensively evaluate brand exposure and advertising benefits arising from sports events—including title sponsorships and gratuitous donations—while integrating applicable tax incentives to balance marketing effectiveness, tax efficiency, and corporate social responsibility, thereby enhancing overall investment value.

III. Cultural and Creative (and Biotech) Industry Investments: Launch of Shareholder Investment Tax Credits

The government continues to support the development of cultural and creative as well as biotechnology and pharmaceutical industries. Under the Cultural and Creative Industries Development Act and the Biotechnology and New Pharmaceutical Development Act, eligible investors may apply shareholder investment tax credits starting from fiscal year 2025.

Key Points for Cultural and Creative Industries

• Compliance with Article 27-1 of the Cultural and Creative Industries Development Act
• Investment held for at least two years
• Starting from 2026, shareholders may claim a tax credit of up to 20% of the qualifying investment amount for fiscal year 2025

The National Taxation Administration has also revised tax return forms to add a dedicated section for shareholder investment tax credits, reminding companies and investors to review eligibility requirements and prepare supporting documentation in advance.

IV. Other Key Revisions and Administrative Highlights for the 2025 Filing Year

In addition to tax incentives, the 2025 corporate income tax filing incorporates the following procedural changes:

• Removal of the CPA seal requirement on the Alternative Minimum Tax Return for Profit-Seeking Enterprises
• Addition of accumulated impairment fields for “investment property” and “mineral resources” on the balance sheet
• Expansion of eligibility for the expanded paper review mechanism, including small-scale long-term care service providers
• Filing period: 1 May to 1 June, with online filing strongly encouraged
• Deadline for submitting supporting documents:
  • 29 June (online upload), or
  • 30 June (physical submission by mail or in person)

Conclusion

The 2025 corporate income tax filing is not merely a routine compliance exercise, but also a critical opportunity for companies to reassess their investment strategies and tax planning approaches. It is recommended that enterprises align tax credit elections with operational plans, profit forecasts, and investment timelines, and that applications and documentation be completed well in advance to ensure tax incentives are both successfully claimed and effectively utilized.