Act for the Development of Biotech and Pharmaceutical Industry Article 9

To encourage top executives and technology investors to participate in the operation of Biotech and Pharmaceutical Companies and R&D activities, and to share in their operational achievements, the new shares issued by a Biotech and Pharmaceutical Company to top executives as bonuses or compensation and to technology investors in return for their technology know-how contributions may be excluded from their taxable income for the year in which such shares are acquired. Once this choice is made, it cannot be altered. However, if a top executive or technology investor chooses to exclude such new shares from their taxable income for the year in which such shares are acquired, when the shares are transferred (including a book-entry transfer to a securities depository account), the total transfer price of such shares, or the market price thereof at the time of gifting or distribution as estate or on the book-entry transfer date, shall be included as income in the year of the transfer and be declared for income tax assessment in accordance with the Income Tax Act.Where a top executive or an individual technology investor chooses to exclude the shares from their taxable income for the year in which such shares are acquired in accordance with the preceding paragraph, and has held such shares and continued to be employed by or provide services relating to their technology know-how to the Biotech and Pharmaceutical Company for at least two years, if the shares are transferred (including a book-entry transfer) at a price (either the total transfer price or the market price at the time of gifting or distribution as estate or on the book-entry transfer date) higher than the market price or purchase price at which such individual acquired such shares, such original acquisition price instead shall be used as the revenue amount for the year of the transfer and be declared for income tax assessment in accordance with the Income Tax Act. However, the above provisions shall not apply if the top executive or the individual technology investor has not declared the price of the shares for income tax assessment or has declared the price for income tax assessment but cannot provide documentary proof of the original acquisition price, and the taxation authority cannot verify the original acquisition price.The term "transfer" in the two preceding paragraphs refers to the purchase and sale, gifting, distribution as estate, cancellation of shares as a result of capital reduction, corporate liquidation, or ownership changes due to other causes."Top executives" as referred to in Paragraph 1 hereof are those who have biotechnology and pharmaceutical-related expertise or skills and hold the position of CEO or a managerial officer, at the minimum, in a Biotech and Pharmaceutical Company; "Technology investors" referred to in Paragraph 1 hereof are the investors that provide a Biotech and Pharmaceutical Company with the technology know-how that it needs in return for the acquisition of its shares.Where an individual technology investor's income is calculated in accordance with Paragraph 1 or 2 hereof but is not declared or substantiated by any documents, the sum of their costs and necessary expenses shall be calculated at thirty percent (30%) of their revenue and be deducted from their taxable income.The tax incentives under Paragraphs 1 and 2 are available only if the Biotech and Pharmaceutical Company submits the required documents and information in the prescribed format to the Competent Authority for certification in the year in which its top executives or technology investors acquire the shares issued. A copy of the results of the certification shall be provided to the taxation authority where the Biotech and Pharmaceutical Company is located.In the year in which the top executives or individual technology investors to whom Paragraph 2 applies have held the shares and been employed by or provided the services relating to their technology know-how to the Biotech and Pharmaceutical Company for two (2) years, the Biotech and Pharmaceutical Company shall submit documents proving such individuals' shareholding and services aforementioned to the Competent Authority for recordation. A copy of each of the evidentiary documents shall also be submitted to the taxation authority where the Biotech and Pharmaceutical Company is located.The scope of biotech and pharmaceutical expertise or technology referred to in Paragraph 4, the required format, documents, deadlines and procedures for certification and recordation referred to in the preceding paragraphs, and other relevant matters shall be prescribed by the Competent Authority.The procedure and required documents for declaring deferral of the income tax payable on the shares acquired by the top executives and technology investors under Paragraphs 1 and 2, and other related matters shall be prescribed by the Ministry of Finance.