Can Buying Machines Reduce Your Taxes? Smart Machinery and Energy-Saving Investment Tax Credits Under Article 10-1 of the Statute for Industrial Innovation

Can Buying Machines Reduce Your Taxes?

Yes, with conditions. Article 10-1 of the Statute for Industrial Innovation (產業創新條例) provides that companies or limited partnerships investing in "brand-new, for their own use" smart machinery, 5G systems, cybersecurity products or services, artificial intelligence products or services, or energy-saving and carbon-reduction hardware, software, technology, or technical services may, when conditions are met, credit the investment against their profit-seeking enterprise income tax. This is a statutory provision currently in force (the current text of Article 10-1 was amended and promulgated in May 2025), and there's no need to wait for an annual announcement.

Conditions and Credit Methods

Under the current text of Article 10-1:

• Period: January 1, 2025 to December 31, 2029 (ROC years 114 to 118)
• Eligibility: No serious violations of environmental protection, labor, or food safety and sanitation laws within the past 3 years
• Threshold: Total spending in the same tax year of NT$1 million or more and NT$2 billion or less
• Credit method (choose one; it can't be changed once chosen):
  • Up to 5% of the spending, credited against that year's corporate income tax payable; or
  • Up to 3% of the spending, credited against corporate income tax payable in each of the 3 years starting from that year
• Cap: The annual credit may not exceed 30% of that year's corporate income tax payable; combined with other investment credits, the total may not exceed 50%
• Procedure: An investment plan with defined benefits must be submitted and specifically approved by the central competent authority, with only one application allowed per tax year

For example, if a company buys NT$2 million of qualifying equipment in a year and chooses to credit it that year, it can credit up to NT$100,000 of corporate income tax, but no more than 30% of that year's tax payable. Note that this is a "credit against tax payable": the company must have corporate income tax payable that year for there to be anything to credit against.

What Counts as Smart Machinery

The provision and Article 2 of its implementing regulations (the Regulations Governing Tax Credits for Investment by Companies or Limited Partnerships in Smart Machinery, 5G Systems, Cybersecurity, AI Products or Services, and Energy Saving and Carbon Reduction, 公司或有限合夥事業投資智慧機械與第五代行動通訊系統與資通安全人工智慧產品或服務及節能減碳抵減辦法) require smart machinery to meet both of the following conditions:

1. Use at least one smart technology element:

• Robotics
• Digital management
• Cyber-physical integration
• Additive manufacturing

2. Have at least one smart function:

• Production information visualization
• Fault prediction
• Precision compensation
• Automatic parameter setting
• Automatic control
• Automatic scheduling
• Application service software
• Flexible production
• Mixed-line production

Whether an ordinary food forming machine qualifies depends on the functions it actually has. For example, a machine that can digitize output and operating status and integrate them into a management system may correspond to "digital management" and "production information visualization"; a machine with purely mechanical motion and no digital management functions is unlikely to qualify. Whether an encrusting machine or divider counts as smart machinery must be determined case by case based on actual specifications, subject to the competent authority's review. For equipment data exchange capabilities, you can also refer to the Food Machinery Industry Standard.

Energy-Saving and Carbon-Reduction Equipment

Energy saving and carbon reduction in the provision means using low-carbon technology elements for utility energy saving or process improvement to raise energy efficiency and reduce energy or resource consumption. The implementing regulations list categories of utility energy-saving equipment including high-efficiency motors, air compressors, air conditioning, and boilers. Food plants replacing refrigeration, air compression, or boiler equipment with high-efficiency models can evaluate these at the same time.

Timing and Application Procedure

Under the credit regulations:

• Order date: Must be between January 1, 2025 and December 31, 2029 (Article 8)
• Delivery: Delivered or completed within 2 years from the day after the order date; in special circumstances, a one-time extension may be requested before the deadline (Article 8)
• Application period: From 4 months before the start of the corporate income tax filing period for the year of delivery until the end of the filing period, register on the online system set up by the Ministry of Economic Affairs and upload the investment plan and proof of spending (Article 14)
• Supporting documents: For domestic purchases, copies of the sales contract or purchase order, uniform invoices and proof of payment, proof of delivery, and so on (Article 15)
• Approval: The competent authority completes its approval within 7 months after the filing deadline, and the tax authority then determines the credit amount

Applications won't be accepted after the period closes, so in the year you buy the equipment, organize the contract, invoice, payment, and delivery documents, and confirm the timeline with your accountant.

Advice for Businesses Buying Machines

1. Before ordering, confirm whether the equipment specifications correspond to smart technology elements and smart functions; if needed, ask the supplier for a description of functions
2. Qualifying spending in the same year must total NT$1 million
3. Keep the dates on purchase orders, invoices, payments, and delivery documents clear
4. You can apply from 4 months before the filing period of the delivery year, so put it on your calendar
5. Confirm the company's tax payable for the year and other credits with your accountant, and evaluate whether to choose 5% or 3% over 3 years

If you need equipment specifications for an evaluation, please call Dong-Yih Machinery at 06-257-4644 or reach us through our contact information page. For other subsidy channels, see the current status of government subsidies.

FAQ

Q: Can buying machines reduce our taxes?
A: Under Article 10-1 of the Statute for Industrial Innovation, investments between 2025 and 2029 in brand-new smart machinery or energy-saving and carbon-reduction equipment for your own use, with spending of NT$1 million or more in the same year, can be credited against corporate income tax with specific approval.

Q: How much can be credited?
A: Choose one: 5% of spending credited against that year's corporate income tax, or 3% of spending credited over 3 years; the annual credit may not exceed 30% of that year's corporate income tax payable, or 50% combined with other credits.

Q: What counts as smart machinery?
A: It must use at least one technology element among robotics, digital management, cyber-physical integration, or additive manufacturing, and have at least one smart function such as production information visualization, fault prediction, automatic control, or automatic scheduling.

Q: Does an encrusting machine count as smart machinery?
A: It must be determined case by case based on the machine's actual functions. Only models with functions such as digital management and production information visualization may qualify, subject to final review by the competent authority.

Q: When do we apply?
A: From 4 months before the start of the corporate income tax filing period for the year of delivery until the filing deadline, through the Ministry of Economic Affairs' online system.