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Employment
1. Increase in minimum basic wage
On August 29, 2014, the Ministry of Labor issued a press release stating that the minimum monthly basic wage and minimum hourly basic wage will respectively be adjusted by the Basic Wage Commission from NT$19,273 to NT$20,008 per month and from NT$115 to NT$120 per hour as of July 1, 2015.
Reported by: David Tsai / Robin Huang
2. Draft Amendment of Enforcement Rules of Act of Gender Equality in Employment
On September 2, 2014, the Ministry of Labor announced a draft amendment of Articles 4, 7 and 14-1 of the Enforcement Rules of the Act of Gender Equality in Employment. We summarize below:
(1) If the subject of a complaint of sexual harassment covered by the Act of Gender Equality in Employment ("AGEE") is an intern, the school where the intern studies shall supervise the business entity where the intern works, implement immediate and effective correctional and remedial measures and provide necessary assistance. The local competent authority shall coordinate with the educational establishment.
(2) Paternity leave of three days can now be taken by an employee for a period of fifteen days before/after the date of labor.
(3) The announcement period for an institution and name of person violating the AGEE shall be no less than 1 year.
Reported by: David Tsai / Robin Huang
Third-party payment
3. Bill of the Act Governing Electronic Payment
The Executive Yuan passed on September 4, 2014 the draft Act Governing Electronic Payment Institutions ("Act"). This provides the legal framework for third-party payment service.
The term "Electronic Payment Institution" in this draft Act refers to a company approved by the Financial Supervisory Commission ("FSC") to:
(1) use the platform of internet electronic payment as an intermediary to accept users to register and open an internet account ("Electronic Payment Account") for recording fund transfers and stored value; and
(2) use electronic devices to connect and pass collection and payment messages for the purpose of engaging in the business of "collection and paying agents for actual transactions", "collection of stored value", "fund transfer among Electronic Payment Accounts" and other businesses approved by the FSC.
A company only acting as a "collection and paying agent for actual transactions" with the balance below a certain threshold is not deemed to be an Electronic Payment Institution under the draft Act.
Banks concurrently engaging in Electronic Payment Institution business are also covered by the Act, provided that no further approval is required if the banks obtained FSC approval to engage in such business before the Act came into force.
We summarize the draft Act below:
(1) Except for banks and Chunghwa Post Co. Ltd, or unless otherwise approved by the FSC, Electronic Payment Institutions must run such business exclusively.
(2) The minimum paid-in capital of an Electronic Payment Institution is NTD$300 million.
(3) An offshore institution shall not, individually or jointly, engage in third-party payment service in Taiwan unless otherwise approved by the FSC.
(4) The balance of stored value (whether in NT$ or other currency) of each user received by the Electronic Payment Institution and each transfer made shall not exceed NT$30,000 or its equivalent.
(5) For an exclusive Electronic Payment Institution, payment collection and withdrawal by a user shall be made through exclusive deposit accounts in the same currency with banks.
(6) An exclusive Electronic Payment Institution shall set aside and deposit sufficient reserves if the aggregate stored value reaches a certain threshold. The stored value less the reserve together with the payment received as an agent, shall be placed in trust in full or fully guaranteed by a bank.
(7) An exclusive Electronic Payment Institution shall not use the funds so stored unless otherwise instructed, withdrawn by the user or falling under the purposes provided under the Act, such as purchase of government bonds, treasury bills, negotiable certificates of deposit or other financial products approved by the FSC at a certain ratio.
(8) To the extent of the payment made by users, the users’ right takes precedence over that of any creditors of the Electronic Payment Institutions.
Reported by: Stacy Lo / Mark Chen
Food and Drugs Administration
4. Regulations that Single Food Additives Must be Clearly Labeled with Their Permit License Number
The Ministry of Health and Welfare announced on September 9, 2014 the Regulations that Single Food Additives Must be Clearly Labeled with Their Permit License Number, which took effect on the same date. The old “Regulations on Added Matters that Must be Labeled on Food Additives” were revoked accordingly.
Reported by: Jolene Wang / Crick Liang
Fair Trade
5. Amendments to Guidelines on Giveaways and Prizes
The Fair Trade Commission ("FTC") announced amendments to the Guidelines on Giveaways and Prizes on August 29, 2014, which took effect immediately. The key points are an increase in the cap of maximum prizes to NT$5 million and increasing the threshold of annual revenue and the cap on annual prize amounts by 1.5 times of the original cap. For more information, please refer to our Alert Sheet "FTC Giveaway Guideline" issued on August 23, 2014.
Reported by: Stacy Lo / Angela Lin
Securities Firms
6. Amendments to regulations related to securities firms
On August 29, 2014, the Taiwan Stock Exchange issued a ruling (Ref. No.:Tai-Zheng-Jiao-Zi-1030016879) to amend certain clauses of "Operating Rules of the Taiwan Stock Exchange Corporation", "Taiwan Stock Exchange Corporation Securities Borrowing and Lending Rules", "Taiwan Stock Exchange Corporation Regulations Governing Brokerage Contracts of Securities Brokers", "Operation Directions for Applications by Overseas Chinese, Foreign Nationals, and Mainland Area Investors for Registration to Invest in Domestic Securities or Trade Domestic Futures", and so forth to accommodate regulatory changes, namely (1) securities firms are permitted to serve as agents of overseas Chinese and foreigners for investment in Taiwan securities; or (2) certain domestic or foreign investors are permitted to open two or more trading accounts with the same securities firms in the same business location.
Reported by: Jeffrey Liu / Judy Tai
SITE
7. Rulings related to fund of funds and discretionary investment enterprise
On September 3, 2014, the Securities Investment Trust and Consulting Association ("SITCA") forwarded an instruction from the FSC dated August 27, 2014, which requested that where a securities investment trust enterprise ("SITE") launches a fund of fund ("FOF") to invest in sub-funds of the SITE or its group company, it is subject to follow certain restrictions. For example, if the FOF aims to invest in sub-funds of group companies, the sub-funds are prohibited from receiving management fees. Where the FOF does not aim for such investment but nonetheless makes such an investment, the management fee for sub-funds shall be charged at half-rate. In addition, the SITE must also state that the investment in sub-funds of its group will not exceed 70%. Managers of discretionary investment mandate businesses shall disclose clearly in the investment introduction if they will invest in the sub-funds of the manager or its group company.
Reported by: Jeffrey Liu / Judy Tai
Insurance
8. FSC Publishes Draft Amendments to "Regulations Governing Foreign Investments by Insurance Companies"
The FSC has published draft amendments to Regulations Governing Foreign Investments by Insurance Companies ("Amendments").
(1) Where the insurance company has received FSC approval, the total amount of the investments in offshore insurance-related enterprises or onshore insurance-related enterprises (which is the control or affiliation company) and the equity investment in Mainland China may not be subject to the 40% restriction of the owners’ equity;(Amendment to Article 13)
(2) Concerning the qualification of the insurance company which will invest in foreign banking enterprises or other offshore insurance-related enterprises; (Amendment to Article 13-1)
(3) Concerning the subsequent compliance requirements for insurance enterprises approved to invest in offshore insurance-related enterprises; (Amendment to Article 13-3) and’
(4) Offshore assets invested by insurance enterprise may be custody by TDCC; (Amendment to Article 16).
Reported by: David Tsai / Angela Chang
9. FSC Amends "Directions for Reviewing Life Insurance Products"
On September 3, 2014, the FSC amended the "Directions for Reviewing Personal Insurance Products" regarding termination fees for universal life insurance and interest sensitive life insurance and means to offset interest sensitive life insurance premiums.
Reported by: David Tsai / Angela Chang
Securities
10.Draft amendments to "Regulations Governing the Offering and Issuance of Securities by Foreign Issuers" and relevant regulations
The FSC issued a press release on 3 September 2014 announcing draft amendments to the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers and the Regulations Governing the Offering and Issuance of Securities by Securities Issuers. The amendments aim to facilitate sub-contracting of the handling of applications from local / foreign issuers for initial public offerings of stocks and equity increases for cash before an initial exchange listing or OTC listing to the Taiwan Stock Exchange Corporation ("TWSE") or the GreTai Securities Market. The FSC also announced draft amendments to the Regulations Governing the Offering and Issuance of Overseas Securities by Issuers, which propose to allow TWSE listing or OTC listing companies to participate in the issuance of depositary receipts that are not for equity increase in overseas OTC markets. Such an issuance shall be within 10% of the total issued and outstanding shares.
Reported by: Kang-Shen Liu / Angela Lin
Tax
11.Amendments to Enforcement Rules for Income Tax Act and Guidelines for Examination of Profit-seeking Enterprise Income Tax
To complement the amendment to the Income Tax Act and Offshore Banking Act, the Ministry of Finance announced a draft amendment to the Enforcement Rules for Income Tax Act ("Enforcement Rule") and Guidelines for Examination of Profit-seeking Enterprise Income Tax ("Guidelines") on September 3, 2014. We summarize the key points below:
(1) Enforcement Rule:
a.The calculation method for shareholders to deduct the amount in the balance of a tax deductable account when the profit-seeking enterprise allocates the share dividend or earnings for the year 1998 or any following year.
b.Where the head office of an offshore banking unit ("OBU") is located in Taiwan, except for the income generated from credit extension to individuals, legal entities, government agencies or financial institutions in Taiwan, all other income OBU income shall be consolidated into the income of the head office for tax reporting and profit-seeking enterprise income tax shall be levied in accordance with the relevant regulations.
c.From January 1, 2015, for individual shareholders not resident in Taiwan or profit-seeking enterprises whose head office is not in Taiwan, of the 10% profit-seeking enterprise income tax on non-distributed earnings 50% will be set off against the tax payable on net share dividends or net earnings.
(2) Guidelines: For a profit-seeking enterprise which is a sole proprietorship or a partnership, the calculation method for administrative fines on omission or under-reporting of taxable income is amended.
Reported by: Stacy Lo / Mark Chen
Finance
12.Domestic business units of local banks permitted to assist overseas subsidiaries and branches in matters related to deposit and credit extension business
The FSC issued a ruling (Ref. no.: Jin-Guan-Yin-Fa-Zi-10300235840) on September 9, 2014, allowing domestic business units of local banks ("Domestic Unit") to assist overseas subsidiaries and branches to handle information confirmation and transmission, client identification verification and execution relating to deposit and credit extension businesses. This applies to overseas branches for deposit business and both overseas subsidiaries and branches for credit extension business. Such assistance can only be provided to enterprise clients and their responsible persons. In addition, local banks shall establish cross-border consumer dispute resolution mechanisms, strictly enforce the Know Your Customer review and control plans on anti-money laundering as well as have relevant internal control and audit systems. Overseas subsidiaries and branches assisting Domestic Units to handle matters related to deposit or credit extension business shall comply with local laws and regulations.
Reported by: Stacy Lo / Angela Lin
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2014-09-23
