Under the revisions passed by parliament late Friday, the fine has been raised to up to Tw$15 million for using toxic or expired ingredients and up to Tw$3 million for using an unapproved amount of food additives.
The tougher law comes as Taiwan battles its latest food scare after a banned industrial chemical was found in powered starch used to make a variety of snacks and desserts last month.
The affected products include flat rice noodles, rice cakes, tofu puddings, dumplings, and tapioca balls used to make Taiwan's popular "pearl" bubble tea.
Several large food companies have recently recalled some products suspected of containing either the chemical maleic anhydride, an industrial preservative or expired ingredients.
Taiwanese doctors have cautioned that consuming too much maleic anhydride, which is used to make food chewy, can lead to kidney failure.
In 2011, Taiwan launched a massive recall of sports drinks and juices after some products were found to be tainted with a banned chemical in its worst food scandal in decades.
Several countries at the time had banned imports of certain food items from Taiwan containing the DEHP, a chemical used to make plastics, that experts say can cause hormone problems in children.