Dear Friends,

COVID-19 outbreak has brought substantial impact on our life and business in all aspects.   Many governments around the world including Taiwan have enacted various rules and adopted many measures to respond to the event, including but not limited to lock-down, "Stay At Home" rules, deferral or reduction of tax payment and subsidy.   

Businesses and economics are suddenly faced with the decision to alter, streamline or close their operations as the pandemic is bringing about unpredictable challenges that require quick and thoughtful decision making and immediate action.  We summarize and call your attention to certain important issues below in Taiwan (for which the government may have adopted responding measures or actions).  Feel free to contact us if you have any questions:

2021-08-20

1. Company Act:Taiwan Depository & Clearing Corporation (TDCC) launched a live streaming platform for shareholders' meetings since 16 August 2021.  Shareholders may attend a shareholder’s meeting through video conference, and enjoy the functions of online check-in, watching live meeting, raising questions and online voting via the TDCC’s platform.  The system will help facilitate the shareholder activism and effectively implement the Covid prevention policy.

2. Taxation:On 6 August 2021, the Ministry of Finance announced a ruling that, from 1 September 2021 to 30 September 2021, the profit-seeking enterprises severely impacted by COVID-19 and meeting either of the following conditions may file the application form and relevant supporting documents to the local taxation bureau to apply for exemption from provisional payment of profit-seeking enterprises income tax:

(1) Being provided with relevant bail-out measures by the competent authority in accordance with the Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens and its relevant rules; or

(2) The impact of COVID-19 resulting in a sharp decrease of operational income in a short time.

2021-07-22

1. Labor:On 13 July 2021, the Ministry of Labor (MOL) issued a press release that the business entity may conduct labor-management conference via video conference during the pandemic upon the resolution of labor-management conference, or the meeting notice stating that the conference will be held via video conference with the approval by the first resolution of the video conference.  However, the business entity shall ensure that the video is clear to identify and available to all attendees.

2. Taxation:On 30 June 2021, the MOF announced the amendment to the "Guidelines for Tax Collection Authority assessing Applications of Tax Payment in Installments of Tax Payer Impacted by COVID-19". We summarize below:(1)The applicable period is extended to align with the implementation period of the "Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens".(2)The taxpayers who have been previously approved for postponement or installment of tax payment, may reapply for the extension to their approved postponement or installment due to the impact under the third level or higher level epidemic alert announced by the Central Epidemic Command Center. Also, the extension period for postponement or installment of tax payment may exceed the 3 years limitation period prescribed under the Guidelines for the Postponement or Instalment of Tax Payment.

2021-07-07

Mike Lu / Sue Su

2021-06-07

1. Securities:On 20 May 2021, the Financial Supervisory Commission (FSC) issued a public announcement that in response to the pandemic, public companies shall stop from holding shareholders' meetings during the period from 24 May 2021 to 30 June 2021 which shall be postponed to the period from 1 July 2021 to 31 August 2021.  The relevant requirements under the Company Act and the Securities and Exchange Act that a shareholders' meeting must be held within 6 months after the close of each fiscal year shall cease for the time being.

2. Special Act:On 31 May 2021, the Legislative Yuan passed the three reading of the amendment to the Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens, under which the limit of the special budget is increased to NT$840 billion and the applicable period is extended by one year to 30 June 2022.

3. Banking:On 25 May 2021, the FSC announced that in response to the COVID-19 pandemic, during the period where the Central Epidemic Command Center announced the Level 3 (or above) epidemic alert in any city or country, banks may adopt alternative measures to provide financial product and service to clients in compliance with internal control and under internal authorization, such as to conduct the business online, by fax, or email, where supporting measures shall be established to confirm the authenticity of transaction instruction by customers.  The FSC also explained that, in consideration of the safety of employees and rights of customers, banks may apply to adjust the daily business hour in accordance with the "Regulations Governing Financial Institutions' Business Hours and Suspension during Natural Disasters".

Mike Lu / Sue Su

2020-05-22

1. SITE/SICE:On 18 May, 2020, the Securities Investment Trust and Consulting Association of R.O.C. (SITCA) announced the Guidelines for Off-site Working or Work-from-home due to Pandemic by Securities Investment Trust Enterprises (SITE) and Securities Investment Consulting Enterprises (SICE)(“Guidelines”).  The Guidelines includes such as: the SITE/SICE shall establish controlling measures for work-from-home arrangement and assign senior manager(s) for supervision; employees working from home are deemed as working in the office and the SITE/SICE shall set up rules of conduct for the arrangement; and fund managers and traders shall apply off-site working first except for certain identified special situations.  The SITE/SICE shall reflect the Guidelines in the internal control and internal audit system of the SITE/SICE in two (2) weeks after the announcement of the Guidelines.

Mike Lu / Sue Su

2020-05-15

1. Taxation:The Ministry of Finance (MOF) announced the "MOF Operation Principles for the Refund of Overpaid Business Tax Applied by a Business Entity Due to COVID-19 Event"(Operation Principles)” for a qualified business entity which has difficulty in operation due to the COVID-19 event to apply for the refund of overpaid business tax for up to an cumulated amount of NTD 300,000.  Any balance of overpaid business tax after refund shall be used for deduction of the payable business tax.  The application can be made during the period from 15 January 2020 to 30 June 2021.

Mike Lu / Sue Su

2020-05-08

1. Taxation:The Ministry of Finance (MOF) announced on 28 April 2020 the amendment to the Regulations Governing the Implementation of the Common Standard on Reporting and Due Diligence for Financial Institutions.  Where a reporting financial institution affected by a natural disaster, incident, or force majeure fails to report the information of each reporting account and undocumented account in respect of the previous calendar year within the reporting period, the MOF may, based on the situation, extend the reporting period and make a public announcement of such extension.

2. Taxation:The Ministry of Finance announced three measures to cope with the COVID-19 event:

(1) Due to the updates of the Accounting Standards, dividends or earnings distributed during the period from15 January 2020 to 30 June 2021 from the "net increase" of the retrospective adjustment of the retained earnings at the beginning of 2018 can be deducted from the undistributed earnings of 2018 for taxation purpose.

(2) The losses incurred in the first quarter of 2020 can be converted into the estimated losses in the first half of 2020 for deductions of the undistributed earnings of 2018.  However, when reporting the undistributed earnings of 2019, the additional business income tax imposed in respect of the undistributed earnings of 2018 shall still be amended and paid depending on the actual profits and losses of 2020. 

(3) The rental and concession fee in respect of the real estate owned by the government but not used by public agencies are reduced by 20%, and the real estate owned by the government and used by public agencies may at the relevant managing authorities' discretion reduce the relevant rental and concession fee on a case-by-case basis.  Payment of such rental or concession fee can be deferred until the end of this year based on applications.

3. Finance:The Bankers Association of The Republic of China (BAROC) announced on 27 April 2020 that when implementing the off-site working or work-from-home, financial institutions shall refer to the suggestions for the protection of information security and using the equipment, such as video conference system, virtual private network (VPN) and the virtual desktop infra-structure (VDI)  issued by the Financial Information Sharing and Analysis Center (F-ISAC).  The financial institutions shall also implement the internal remote operation management regulations in accordance with the relevant requirements of the standard for the financial institution information system security issued by the BAROC. 

4. Securities Firms:The Securities Association (TSA) announced the guidelines for application of work-from-home by securities firms accepting orders to trade foreign securities or trade foreign bonds as an agent in response to COVID-19 (Guidelines) on 20 April 2020.  Securities firms shall apply for an approval from from the Financial Supervisory Commission.

The Guidelines include the supervisory and control measures for work-from-home of trading foreign securities by orders, trading foreign bonds as an agent and underwriting procedures, etc..  The Guidelines also include the operational procedures for work-from-home for agents to accept the price negotiation, transaction instructions and other relevant matters from the clients via email, phone or video chat when trading foreign bonds .

Mike Lu / Sue Su

2020-04-30

1. Corporate Governance:The Ministry of Economic Affairs (MOEA) issued a clarification on 24 April 2020 to confirm that as a director attending a board meeting is deemed to have attended the meeting in person, there is no need for the director attending through video conference to sign on the attendance sheet as long as the meeting minutes indicate that the director is attending thorough video conference.  Note however that public companies shall refer to the Regulations for Board Meeting by Public Companies instead and are subject to further clarification by the Financial Supervisory Commission.

Mike Lu / Sue Su

2020-04-24

1. Business Operation:To assist the industries suffered due to COVID-19 outbreak, the Ministry of Economic Affairs announced on 21 April 2020 the "Application Notice for Salary and Working Capital of Commercial Service Industries Suffered due to Covid-19", under which the government will subsidize 40% of their regular salary of full time employees for 3 months (maximum NT$20,000 per month) and one time working capital of NT$10,000 multiplying the number of full time employees of commercial service industries with tax registration where the revenue declined by 50%.

2. Shareholders’ Meeting:The Ministry of Economic Affairs announced a ruling on 16 April 2020 to clarify that a company may file an application to postpone its annual shareholders’ meeting on the basis of having a “justifiable reason” if there is any difficulty for it to call the meeting during the COVID-19 outbreak period, provided however that a public company shall follow the securities authorities’ ruling instead if such ruling provides otherwise.

3. Shareholders’ Meeting:The Financial Supervisory Commission (FSC) announced a ruling on 20 April 2020 that, until the Central Epidemic Command Center is discharged, a shareholders of public company attending a shareholders’ meeting is required to wear false mask and cooperate to take temperature.  Any shareholder not wearing a mask or having fevers reaching forehead temperature of 37.5°C or ear temperature of 38°C for twice in a row shall be forbidden from entering into the venue of the shareholders’ meeting. 

4. Finance:The FSC announced on 20 April 2020 that in response to COVID-19 outbreak, people going to the banks shall wear the masks and take temperature.  People with high temperature or not wearing masks cannot enter into the banks.

5. Employment:The Ministry of Labor (MOL) announced the Rehabilitation Regulations of the Ministry of Labor to the Workers Adversely Affected by Severe Pneumonia with Novel Pathogens (Regulations) on 20 April 2020 to provide the legal basis to subsidize the employers and workers affected by the COVID-19. 

The key points of the Regulations include: 

(1) The employer can apply for deferral of payment of labor insurance, employment insurance and labor pension; 

(2) Self-employed or workers without a  specific employer can apply for living allowance;

(3) A worker can apply for relief loan.

6. Employment:The MOL announced a press release on 17 April 2020 that it has issued a ruling that the wage during the isolation/quarantine leave and family care leave for COVID-19 shall not be included for calculation of the average wage defined under Subparagraph 4 of Article 2 of the Labor Standards Act.

7. Securities Firms:The Taiwan Stock Exchange (TWSE) recently announced the Guidelines for Application of Work-from-Home by Securities Firms due to COVID-19（Guideline).  We summarize below:

(1) Application requirements

 A securities firm shall first find another business premise (including the off-site back-up business premises), and shall separately operate the business along with the original business premise.  To apply for work-from-home, any one of the following 3 conditions must be met, that is outbreak of material cases announced by the Central Epidemic Command Center (e.g. local transmission), an employee in the business premise with a confirmed case of COVID-19, or the key business personnel and their proxies in household isolation, quarantine, or self-health management.

(2) Application procedure

 A securities firm shall, enclosing the contingency plan and other required documents, apply to the TWSE, for further forwarded to the FSC for approval.

The period of work-from-home shall not exceed 3 months.  However, with justifiable reasons, an extension for another 3 months can be applied for before the expiry date.

The Guideline also lists out the supervisory and control measures for work-from-home of consigned trading, proprietary trading, and settlement and declaration functions, etc.  The operational procedures for work-from-home shall also be included in the internal audit and internal control system of the securities firms.

Mike Lu / Sue Su

2020-04-17

1.Taxation:The Ministry of Finance announced on April 13 to extend the filing deadline for tax return for 2019 to 30 June 2020. The relevant operation periods, including the operation period for information inquiry for income and withholdings and the submission deadline for required documents for e-filing, are also extended accordingly.

2.Work-From-Home Policy of Securities Firms, Futures Commission Merchants and Securities Investment Trust Enterprises (SITE):The Financial Supervisory Commission (FSC) stated on 9 April 2020 that securities firms, futures commission merchants and SITE shall meet any of the 4 conditions when implementing their work-from-home policy, including outbreak of material local transmission cases, an employee with a confirmed case of COVID-19, half of the employees or more being in household isolation/quarantine, or any other special needs. The companies' IT security, risk control management, and internal control mechanism shall be in place. Implementation of work-from-home policy by securities firms and futures commission merchants shall be subject to a prior approval from the Taiwan Stock Exchange or Taiwan Futures Exchange followed by a post report to the FSC. Details of relevant measures will be announced by the Taiwan Stock Exchange, Taiwan Futures Exchange and the Securities Investment Trust & Consulting Associa tion of the R.O.C. after discussion.

3.Intellectual Property:The Taiwan Intellectual Property Office (TIPO) recently announced again that patent/trademark applicants may ask for reinstatement if the delay of a statutory time period is caused by natural calamity or other causes not attributable to the applicants, according to Article 17 of the Patent Act and Article 12 of the Enforcement Rules of the Patent Act, or Article 8 of the Trademark Act and Article 9 of the Enforcement Rules of the Trademark Act. Therefore, any patent or trademark applicant who fails to comply within a statutory time period due to the COVID-19 may file a request for reinstatement with evidentiary document. According to the TIPO, such cases will be determined leniently on a case-by-case basis.

4. Corporate Registration:Certain tax report and accounting software can connect to the "Company, Business, and Limited Partnership One-stop Service Request" system (the System) of the Ministry of Economic Affairs, and in response to the Covid-19 outbreak, the corporate establishment registration information in such tax report and accounting software now can be directly uploaded to the System, which makes the online registration more convenient.

2020-04-10

1.Taxation:Due to the COVID-19, the Ministry of Finance recently announced various measures  to reduce tax payers’ burden.  They include (i) exemption of income tax on subsidies, incentives and compensation received from the government due to COVID-19; (ii) loss deduction for the following 10 years; (iii) early tax refund; (iv) reduction of business income tax, VAT, vehicle license tax, house tax and the amusement tax; and (v) extension of the filing deadline for various tax and deferral of payment of various tax or payment in installments.

2.Corporate Governance:The Financial Supervisory Commission (FSC) has expressed in its guidelines announced for prevention from Covid-19 for shareholders’ meeting that shareholders attending the meeting shall wear false mask throughout the meeting and keep distance in the seating arrangement.    Now the guidelines were amended to include appropriately reducing the working personnel at the meeting venue, keeping distance among counters for distributing gift, and indicating in the meeting notice to ask the attending shareholders to cooperate to receive temperature test at the meeting.  The FSC suggests investors utilizing electronic voting at the meeting during the Covid-19 outbreak period. 

3.Private Participation in Infrastructure Projects:On 31 March 2020, the Minister of Finance (MOF) announced a press release that the MOF has required the relevant competent authorities to reduce or defer the payment of the rental or concession fee or to allow the  payment in installments if a private sector participating in the public infrastructure has difficulties in paying the rental or concession fee due to COVID-19.  The MOF also stated that it has passed the draft amendment to Article 4 of the Regulations for Favorable Rentals Regarding Public Land Lease and Superficies in Infrastructure Projects to provide clear legal framework for the above.

4.Lease by Insurance Companies:

The FSC announced on 2 April 2020 that it will promulgate a set of "temporary measures" to facilitate insurance companies to help their tenants in response to COVID-19:

Insurance companies may evaluate how their tenants are affected before deferring or cutting rental or offering other rental-related aids on a case-by-case basis.

Insurance companies may submit applications to the FSC for approval to apply temporary measures to those leased and used premises with rental-related aids until 30 June 2021.

The lease-out rate and earnings rate of the premises caught by the temporary measures need not be examined each month when temporary measures apply.

5.Employment:On 20 March 2020, Labor Insurance Bureau announced a press release that the employer who has reported a non-paid work leaves policy to the local labor competent authority or is the affected industries defined by the competent authorities under Paragraph 3, Article 9 of the Special Act for Control, Subsidy and Revitalization under COVID-19, can apply for a six-month deferral to reserve the labor insurance, employment insurance and labor pension for the employee from April 2020. 

6.Foreigner Investment:The Investment Commission announced on 9 April 2020 that for applications which are unable to provide an notarized, legalized or authenticated original copy of power of attorney due to impact of COVID -19 outbreak on the express couriers, investors may provide an electronic copy or photocopy first for the application followed by a supplement of the original copies in 6 months after the approval.

Mike Lu / Sue Su

2020-04-01

1. Employment :The Taiwan Central Epidemic Command Center (CECC), Ministry of Labor (MOL) and Financial Supervisory Commission (FSC) have announced many rulings to deal with quarantine, independent health management (IHM), stay-at-home, respirators, leaves (with or without payment), termination, measures for health test, occupational safety and health, business travel, etc.  The MOL also provides a standard agreement together with guideline for the temporary reduction of the working day and wage to accommodate the extreme economic impact.

2. Contract performance: The outbreak, if resulting in any shutdown of business operation or any failure to perform contracts, such as failing to hold activities (e.g. concert, exhibition or seminar) due to restriction on gathering, failing to provide property for use due to lock-down, failing to provide service due to restriction on travel etc., may constitute a force majeure (不可抗力), change of circumstance (情勢變更) or a cause that is not attributable (不可歸責) to your company.  Proper measures may need to be taken so as to make allegation or help mitigate the risk of breach of contract or other legal liabilities.

3. Government procurement: The Public Construction Commission has announced on 6 March 2020 that if the outbreak would cause adverse impact on the performance of the government procurement contract, the contractor may submit relevant facts and evidences to the relevant procuring agency to seek for an extension of performance period or a waiver if the performance becomes impossible.

4. Taxation: From 15 January 2020 to 30 June 2021, if the outbreak has a material adverse impact on the revenues or business of the tax payer causing the taxpayer fails to pay in full a tax within the statutory period, the taxpayer may file an application with the tax authorities to defer certain tax payment for up to one year or to make the payment in installments within up to three years.

5. Rental reduction: The Central Bank of the Republic of China (Taiwan) (CBC) announced that the discount rate, the rate on accommodations with collateral, and the rate on accommodations without collateral were reduced by 0.25 % points to 1.125%, 1.50%, and 3.375%, respectively on 20 March 2020.  Such movement may reduce the required return rate for the rent and leasing activities of insurance companies.  In addition, insurance industry has requested the FSC to further reduce the required rent return rate.   Further, the central government is now considering reducing the rent for the premises leased out by the government.   Tenants may consider a commercial request for rent reduction.  

6. Wet signature requirement: Unless otherwise required under law or any specific agreement or document, Article 4 of the Electronic Signatures Act allows an electronic document to be served as a declaration of intent if agreed by the counter party.  As such, specific expression by email of consent or disagreement should be able to serve as evidence for the intended purpose, provided that the parties involved agree to the formality of the electronic mechanism.

7. Capital market: The FSC announced the following measures to stabilize the securities market, which took effect for 3 months starting from 19 March 2020:

(1)   For covered short selling, the number of shares of any one issuer sold short on any given trading day by all sellers combined was reduced from thirty percent (30%) of the daily average trading volume of the same category of such issuer’s securities during the previous thirty (30) business days to ten percent (10%), provided that the covered short selling by securities firms or futures dealers for certain hedging or market maker purpose is not restricted; and

(2)   The scope of permissible collaterals for margin trading was relaxed.  Namely, with the consent of the lenders, the investors may provide collaterals with liquidity and of which the value may be reasonably and objectively evaluated for the shortfall of the margins.

The FSC further announced to apply uptick rule on all stocks effective on 19 March 2020.  Namely, except for shorts by securities firms or futures dealers for certain hedging purpose, if the closing price of a particular stock falls 3.5% or more on a trading day, no short can be made on the next trading day if the price of the respective stock is below the closing price of the last trading day.  

In addition, the FSC called for the securities proprietary traders and insurance companies to invest in Taiwan securities market, and encouraged Taiwan listed companies to buy back shares.  The FSC also emphasized that it may evaluate and take appropriate measures timely in case the stock market unreasonably crashes.

8. Asset management business – The FSC approved an amendment by the Securities Investment Trust and Consulting Association (SITCA) to the template agreement for securities investment trust fund (including template trust agreements for domestic open-ended equity funds, overseas equity funds (i.e. multi-currencies denominated funds and NTD multi-currency funds, open-ended balanced funds, and open-ended fund of funds) to allow the reduction on the NAV threshold for termination of the agreement to average of NTD 50 million (around USD1.6 million) for the latest 30 business before 30 September 2020.  Any amendment to the existing executed trust agreement reflecting the change does not require an approval of the beneficiary meeting but an application with a legal opinion on no material impact on the rights and benefits of beneficial owners shall be submitted to the FSC for approval.

9. Insurance Products - The FSC approved an amendment to the "Recognizing Standard of New Type of Life Insurance Product", providing that to rapidly satisfy the demand of medical insurance for consumers and relevant epidemic prevention agencies, medical insurance products which only shorten or cancel its waiting time for legal infectious disease would not be recognized as a new type of life insurance product, thus the issuance of such modified medical insurance products will not need to apply for and receive prior approval from the competent authority accordingly.

In addition to the above, the states, counties and cities in all other jurisdictions, all have different rules and it is important for multinational companies to examine the relevant and complicated rules in each place and operations in employment, transportation, infrastructure, taxation, health care services/medical devices, etc. as well.   In the interest of making timely guidance and resources, more alerts, podcasts or webinars may be available to you.  Again, feel free to contact us if you have any need or questions. 

Mike Lu / Kang-Shen Liu