For an academic or research institution which assigns or licenses its intellectual property rights developed on its own and owned by it pursuant to Article 6, Paragraph 1 of the Fundamental Science and Technology Law to a company for its own use in exchange for the shares of the company which are distributed to the authors of such intellectual property rights in Taiwan pursuant to Article 3, Paragraph 3 of the same law, the Ministry of Science and Technology (hereinafter, the “MOST”) formulated the Operating Guidelines for the Application to Defer Income Taxes on the Distribution of Shares to Authors in Taiwan by Academic or Research Institutions in Taiwan (hereinafter, the “Guidelines”) to stipulate the circumstances where tax deferral may be chosen in order to encourage academic and research institutions to promote and utilize the fruits of their research and development.
First, the intellectual property rights within the meaning of Article 2 of the Guidelines refer to the intellectual property rights derived from a science and technology research and development project which is undertaken by a Taiwanese academic or research institution subsidized, retained or funded by the government or which is conducted under a science and technology research budget prepared by a public research organization (institution).
Second, to facilitate the handling of matters subsequent to a determination, an academic or research institution in Taiwan which distributes shares to authors in Taiwan shall submit an application to each competent authority for a determination of the shares by December 31 of the year in which the shares are distributed to the authors in Taiwan at the latest. In addition, each competent authority shall notify the academic or research institution of the determination results within two months after the day the application of the academic or research institution is accepted, and the authors, company or the local tax authority of the company shall be notified.
Third, since each competent authority is required to determine if the intellectual property rights offered as a consideration for capital contribution are output from a science or technology project at the time of review, Article 5 of the Guidelines specifically provides that the application for income tax deferral as well as relevant documents shall be submitted by an academic or research institution to determine the state of rights and ownership.