On December 31st, 2003, Chen Shui-bian, then-president of the Republic of China, signed and promulgated the Referendum Act to protect ROC citizens' right to hold referenda.

As early as the end of World War II, the concept of referenda was gradually growing in Taiwan. Some hopes, on the one hand, to achieve specific political goals through the principle of self-determination; on the other hand, they wanted to express their policy opinions through voting. Article 17 of the Constitution of the Republic of China (Taiwan) states that "[t]he people shall have the right of election, recall, initiative and referendum". For a long time, however, the initiative and referendum rights were dominated by the National Assembly. It was not until the 1990s, when politics became more open, that discussion of referenda gradually came to the fore. The Democratic Progressive Party (DPP) had long advocated for the establishment of a Referendum Act; in the 1990s, DPP legislator Chai Trong-rong (known as the "Taiwan's Father of the Referendum") and other advocates continued to propose bills. They expressed through these drafts a hope that the people to have the right of hold referenda regarding sovereignty, national territory, the country's name, the national flag, national anthem, etc.

In 2000, the DPP first came to power. It would be difficult to promote a referendum bill to determine the future of the country; but the DPP also wanted to fulfill the promise they had made during the election to hold a referendum regarding Taiwan's 4th nuclear power plant. As a result, they chose to push for a less controversial and more limited initiative and referendum bill. Subsequently, several parties — the Executive Yuan; the Kuomintang (National People's Party, KMT); the Taiwan Solidarity Union (TSU) Legislative Yuan caucus; and the People First Party (PFP) — all submitted their own drafts for such a bill to the Legislative Yuan for review.

While legislative review of the various draft versions was still ongoing in 2003, Chen Shui-bian announced his intention to hold a referendum before the presidential election that was to be held in the following year. The Executive Yuan considered the signing and voting procedures stipulated in the existing initiative and referendum bill versions to be both complicated and time-consuming, however, possibly making a referendum impossible to complete before the election. As a result, the Executive Yuan withdrew their draft of the bill. Later, the DPP, KMT, PFP Alliance, and Chai Trong-rong proposed three more draft bills for a "Referendum Act". In November, the Referendum Act passed its third reading. With regard to national referenda, this Act was defined as applying to "referendums on laws", "initiatives on legislative principles", "initiatives or referendums on important policies", and "referendums on constitutional amendments".

Generally speaking, the version of the bill that ended up being passed was based primarily on drafts put forward by the KMT and PFP. Thus, some media called it a "Victory for the pan-Blue coalition". The DPP advocated a provision that would give the president the right to hold referenda on matters of foreign force and threats to national sovereignty (the so-called "defensive" clause); despite controversy, the defensive clause was passed by the Legislative Yuan on the third reading. Public opinion generally takes this to mean that if the Beijing regime ever uses military force against Taiwan, Taiwan can hold a referendum and let the citizens decide whether to opt for unification or independence.

References: [維基百科("Wikipedia")(Chinese)] (https://zh.wikipedia.org/wiki/公民投票法); [台灣公民投票的發展 ("The Development of Referenda in Taiwan") (Chinese)] (http://ir.lib.pccu.edu.tw/retrieve/64998/邱奕統06.pdf), [BBC中文網("BBC News Chinese Edition")(Chinese)] (http://news.bbc.co.uk/chinese/trad/hi/newsid_3240000/newsid_3243800/3243858.stm)