Act for the Development of Biotech and Pharmaceutical Industry Article 7

To encourage the establishment or expansion of Biotech and Pharmaceutical Companies, a profit-seeking enterprise that (i) originally subscribes for or underwrites shares issued by a Biotech and Pharmaceutical Company; and (ii) has been a registered shareholder of the Biotech and Pharmaceutical Company for a period of three (3) years or more, may, for a period of five (5) years from the first year it incurs profit-seeking enterprise income tax liability, enjoy a reduction in its profit-seeking enterprise income tax payable by up to twenty percent (20%) of the total amount of price paid for the subscription of the shares in such Biotech and Pharmaceutical Company; provided that such Biotech and Pharmaceutical Company has not applied for exemption from profit-seeking enterprise income tax or shareholder investment credit based on the subscription price under any other laws. The total amount creditable in each year shall not exceed fifty percent (50%) of the profit-seeking enterprise income tax payable in the then-current year.Where the Biotech and Pharmaceutical Company described in the preceding paragraph engages in the business activities described in Item (ii), Subparagraph 2, Paragraph 1, Article 4 hereof, it is eligible for the tax credit hereunder only if it is not listed on the Taiwan Stock Exchange and the Taipei Exchange, or is a company listed on the Taiwan Stock Exchange or the Taipei Exchange but was incorporated and registered less than ten (10) years ago.If the profit-seeking enterprise described in Paragraph 1 is a venture capital company (“VC”), its corporate shareholders may, for a period of five years from the fourth anniversary of the date on which the VC becomes a registered shareholder of the subject Biotech and Pharmaceutical Company, enjoy a reduction in their profit-seeking enterprise income tax payable based on the total deductible amount enjoyed by the VC under Paragraph 1 hereof and the shareholders' respective shareholdings in the VC. The total amount creditable in each year shall not exceed fifty percent (50%) of the profit-seeking enterprise income tax payable in the then-current year.With respect to the investment tax credit applicable to the shareholders of the profit-seeking enterprises described in Paragraph 1 hereof and the VCs described in the preceding paragraph, the requirements, deadline for filing applications, application procedures, valid period, tax credit rate and other relevant matters shall be prescribed by the Competent Authority in conjunction with the Ministry of Finance.