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Offshore Funds
1. Amendments to ''Regulations Governing Offshore Funds'' (''Regulations'')
On September 15, 2015, the Financial Supervisory Commission ("FSC") issued a press release to amend the draft of Article 24 of Regulations in connection with the qualifications of the offshore fund management institution against the draft amendments issued on April 13, 2015. In addition to the qualifications proposed previously which the assets under management (''AUM'') shall reach certain threshold, three more alternatives are provided. Furthermore, the offshore fund institutions are classified to three levels depending on the amount of its offshore funds sold in Taiwan and the shareholding of its local establishment and provided with different alternatives. Three additional alternatives are as follows:
(1) The amount of AUM invested in funds issued by Taiwanese SITEs reaches the threshold required by the FSC.
(2) The amount of AUM mandated to Taiwanese enterprises for investment advisory services reaches the threshold required by the FSC.
(3) Allocate a certain amount each year to facilitate to set up a fund with an FSC designated institution for the purposes of personnel training and industry development. The fund shall be used exclusively for its designated purposes.
Reported by:Jeffrey Liu / Judy Tai
Tax Treaty between Taiwan and China
2. Agreement Across the Taiwan Strait for the Avoidance of Double Taxation and the Enhancement of Taxation Cooperation
We summarize the key points for the Agreement Across the Taiwan Strait for the Avoidance of Double Taxation and the Enhancement of Taxation Cooperation ("Agreement") below.
(1) Items: This Agreement applies to the profit-seeking enterprise income tax, individual income tax and alternative minimum tax in Taiwan and to the individual income tax and business income tax in China.
(2) Permanent establishment (PE): PE refers to fixed business premises where enterprises engage in business. Subject to certain qualifications, PE also constitutes if an enterprise provides services through employees or other persons retained by it within the other party's territory for more than 183 days within 12 months.
(3) Business profits: If Taiwan enterprises run business through a PE in China, China may impose tax on the business profits of that PE.
(4) Dividends: If a Taiwan company receives dividends from a China company in which it holds 25% or more stake, China may impose taxes on no more than 5% of such dividends. In other cases, the tax amount is up to 10%.
(5) Royalties (Franchises): If Taiwan residents receive royalties (franchises), the tax amount imposed by China is no more than 7%.
(6) Capital gain: If Taiwan residents receive income from transfer of shares of companies in China, only Taiwan may tax such income in general.
(7) Personal income: In general, where a Taiwan resident stays in China for 183 days or more within 12 months to provide services, China is entitled to tax his/her income.
(8) Elimination of double taxation: In general, the tax amount paid by Taiwan residents in China may be credited against the tax payable in Taiwan.
(9) Exchange of information: In principle, any information received by one party shall only be utilized for tax-related purposes but not for criminal proceedings. Both parties are not obligated to exchange the information spontaneously or proactively.
Reported by:Kang-Shen Liu / Mark Chen
Labor
3. Ruling on Forewarned Report of Mass Redundancy
Our firm has issued a letter of inquiry with the Ministry of Labor to better understand several issues in relation to the applications of Act for Worker Protection of Mass Redundancy (“Act”). Among them is whether the application of the report requirement of Article 11 of the Act is on condition that the lay-off has reached the threshold of Article 2 of the Act. The Ministry of Labor replied to our firm on August 5, 2015, explaining that the purpose of Article 11 of the Act is to prevent a business entity from laying employees off without forewarning and affecting the right of labor, and therefore requires the business entity to report when any of the forewarned indicia provided in such Article occurs.
Reported by:David Tsai / Robin Huang
4. Ruling on Menstrual Leave
The Ministry of Labor announced a ruling on September 8, 2015, explaining that menstrual leave shall be counted as sick leave and therefore count toward the maximum number of sick leave days. If an employee still has a need to take menstrual leave, she may still take it according to Article 14 of the Act of Gender Equality in Employment, provided that the employer may refuse to pay her wages.
Reported by:David Tsai / Robin Huang
Intellectual Property
5. Notes on the Examination Procedures for Trademark Dispute Cases
To accelerate trademark opposition, invalidation and revocation proceedings, the Taiwan Intellectual Property Office announced on September 1, 2015, the Notes on the Examination Procedures for Trademark Dispute Cases (Notes). The Notes specifically set forth a one-month time limit in principle for responding to an Office Action in both formality and substantive examinations. The deadline may be extended once for one month upon request; however, the request shall be rejected if there is no legitimate reason for the extension of time. Further, the Registrar Office may conduct the proceedings directly without issuing a notice to either party requesting submission of an observation, if a previously filed observation is likely to delay the proceedings, or if the facts and evidence have been sufficiently clear.
Reported by:Jolene Wang / Crick Liang
Investment in China
6. The Amendment to the Scope of Allowed Manufacturing Industry in China
On September 4, 2015, the Investment Commission of the Ministry of Economic Affairs announced an amendment to partial items of "Prohibited Items of Manufacturing Industry under Investment or Technical Cooperation in Mainland Area", which allows Taiwanese investment in 12-inch wafer manufacturing businesses in China, provided that the total number of new factories is limited to 3, Taiwanese investors have control over the investment, and other requirements are met.
Reported by:Kang-Shen Liu / Chenchi Wang
Close-end Company
7. Regulations Governing Close-end Companies Took Effect September 4, 2015
The Ministry of Economic Affairs issued an announcement on September 4, 2015, stating that the chapter on close-end companies under the Company Act shall take effect September 4. Please refer to our Alert Sheet issued on June 18, 2015 for the relevant information.
Reported by:Kang-Shen Liu / Angela Lin
Banking
8. The FSC Relaxed the Limitation on the Percentage that Offshore Funds Invested in by OBUs Out-of-trust Assets May invest in the Taiwan Stock Ｍarket
FSC issued a ruling on September 1, 2015. This ruling states that for offshore funds invested in by offshore banking units ("OBU") out-of-trust assets under foreign-currency trust businesses in accordance with Sub-paragraph 11, Paragraph 1, Article 4 of the Offshore Banking Act ("Act"), or businesses in Sub-paragraph 10, Paragraph 1, Article 4 of the Act by means of trust, the percentage that the offshore funds may invest in Taiwan stock market will raised from 30% of a fund's net asset value to 50% of a fund's net asset value.
Reported by: Stacy Lo / Angela Lin
9. Amendment to the definition of investment-type financial products
On September 10, 2015, the FSC amended the "Regulations for Financial Services Enterprise Ensuring Suitability of Financial Products or Services to the Financial Consumer" and "Regulations Governing Risk Disclosure and Explanation of the Important Content of Contract before a Financial Services Enterprise Providing Financial Products or Services", which revised the definition of investment-type financial products to exclude the gold business, securities investment trust funds, and futures trust funds traded on the exchange or OTC market.
Reported by:Stacy Lo / Mark Chen
10. Restrictions on Types and Amounts of the Securities in which a Commercial Bank May Invest
On September 14, 2015, the FSC announced a ruling stipulating that if a bank engages in securities underwriting business in order to act as a financial advisor and sale consulting securities firm for issuance of bond, and its proprietary trading department purchases such bonds under certain circumstances, the following requirements under the Directions Governing Limitations on Types and Amounts of the Securities in which a Commercial Bank May Invest must be met. Firstly, the limit on the securities investment amount must be followed. Secondly, no investment in bonds issued by a company where the bank's responsible person acts as its director, supervisor, or manager, may be exempted.
Reported by:Stacy Lo / Mark Chen
SITE&SICE
11. Relaxation of Personnel Double-hatting Rule for Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises ("SITE and SICE")
On September 16, 2015, the FSC issued rulings (Ref. No. Jin-Guan-Zheng-Tou-Zi-1040022418 and Jin-Guan-Zheng-Tou-Zi-10400224181), stating that the personnel of SITE and SICE may concurrently hold a position in their offshore institutions which have an investment relationship with the enterprise or are controlled by the same parent company as a group with SICE and SITE. The position includes (1) director and supervisor; (2) the internal auditor, legal compliance, risk management and accounting personnel of SITE and SICE may concurrently hold a position of the same nature at an offshore institution; and (3) other positions permitted by the FSC under incentive plan. Where the general manager or department head of SITE and SICE have such double-hatting arrangement, or the offshore position is permitted by the FSC under an incentive plan, prior approval from the FSC will be required.
Reported by:Jeffrey Liu / Judy Tai
AML
12. Amendment to the Trust Association of the R.O.C.'s template for Anti-Money Laundering and Countering Terrorism Financing Guidelines for Trust Enterprises
The Trust Association issued a ruling (Ref. No. Zhong-Tuo-Ye-Zi-1040000776) on September 14, 2015, to amend the "Template for Anti-Money Laundering and Countering Terrorism Financing Guidelines for Trust Enterprises" and to announce the ''Guidelines for Risk Assessment of Money Laundering and Terrorism Financing and Related Programs set-up on AML/CTF '' for the industry's reference. Regarding the banks’ concurrently conducting trust businesses, they shall complete the plan, establishment and control measures related to the risks of money laundering and terrorism financing by December 31, 2015, and implement the same from January 1, 2016. In addition, the Banks shall complete its initial assessment of the risks in connection with money laundering and terrorism financing exposed by it by June 30, 2016, and set up a plan to combat each accordingly.
Reported by:Jeffrey Liu / Caitlyn Kao
Public Company
13. Amendment to the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies"
The FSC announced the amendment to the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies" and the "Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter" on August 27, 2015, relaxing the current restrictions so that independent directors and members of the remuneration committee of public companies may concurrently act as the independent directors of their parent companies or subsidiaries in Taiwan or abroad.
Reported by:Kang-Shen Liu / Angela Lin
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2015-09-22
