Judicial Yuan Interpretation

1.      Interpretation No. 784

 

On 25 October 2019, the Judicial Yuan announced Interpretation No. 784, stating that students may initiate administrative lawsuit if they believe their rights are infringed by schools' disciplinary actions even if these actions are not expulsions or the like and that the Interpretation No. 382 is modified to this extent.  Further, courts and other agencies handling administrative disputes shall constrain themselves and respect professional judgment and discretion of teachers and schools when reviewing disciplinary actions allegedly infringing students' rights.

 

Reported by: Kang-Shen Liu / Doris Huang

 

Labor

2.      Adjustment to Minimum Basic Wage

 

On 5 November 2019, the Ministry of Labor (MOL) announced that the minimum basic wage will be adjusted to NT$23,800 per month and NT$158 per hour from 1 January 2020.

 

Reported by: David Tsai/ Alex Li

 

3.      Amendment to Regulations for Implementation of Annuity Insurance under the Labor Pension Act

 

On 6 November 2019, the MOL announced the amendment to the Regulations for the Implementation of Annuity Insurance under the Labor Pension Act.  We summarize the key points below:

 

(1)   The employers who actually engages in labor work and a commissioned worker may voluntarily contribute the premium of annuity insurance within 6% of monthly income from their performance of professional practice.

 

(2)   The statute of limitation for the pension claim is amended from 5 years to 10 years.

 

Reported by: David Tsai/ Paul Hsu

 

4.      Amendment to Income Grading Table of National Health Insurance

 

On 8 November 2019, the Ministry of Health and Welfare issued a ruling to amend the Income Grading Table of national health insurance to cooperate with the adjustment to the minimum basic wage from NT$23,100 to NT$23,800 from 1 January 2020.  The ruling will be effective on 1 January 2020.

 

Reported by: David Tsai/ Alex Li

 

Banking

5.      Principles for Directors and Supervisors of Banks Concurrently Served by Responsible Persons of Other Financial Institutions

 

On 13 November 2019, the Financial Supervisory Commission (FSC) issued a ruling related to the principles for directors and supervisors of banks concurrently served by the responsible persons of other financial institutions.  Except for banks and such other financial institutions which are under control and subordinate relationship under the Company Act, those concurrent service shall be divided into the types of "presuming not to have conflict of interests", "presuming to have conflict of interests", and "deemed to have conflict of interests".  For the circumstances of "presuming not to have conflict of interests", such responsible persons may concurrently serve as the directors and supervisors of banks only after signing a declaration of non-existence of conflict of interests.

 

Where the director or supervisor of a bank is concurrently served by any of the following responsible persons of a financial institution, a conflict of interests is presumed.  An explanation and a declaration of non-existence of conflict of interests shall be submitted before the concurrent service is made:

 

(1)   Directors or supervisors of a domestic or foreign bank (where its parent company has a banking establishment in Taiwan).

 

(2)   The manager in charge of a department of a business different from the investee bank of a domestic or foreign bank (where its parent company has a banking establishment in Taiwan).

 

Conflict of interest is deemed to exist between a director or supervisor of a bank and any of the following responsible persons of a financial institution and these such offices cannot be served concurrently:

 

(1)   The chairperson or general manager of a domestic or foreign bank (where its parent company has a banking establishment in Taiwan).

 

(2)   The manager in charge of a department of the same business with the investee bank of a domestic or foreign bank (where its parent company has a banking establishment in Taiwan).

 

Reported by: Stacy Lo/ Doris Huang

 

Taxation

6.      Reporting Period under Regulation Governing Implementation of Common Standard on Reporting and Due Diligence for Financial Institutions

 

On 8 November 2019, the Ministry of Finance (MOF) announced that the reporting period for gross proceeds of the custodian accounts where the reporting financial institution is the custodian, broker, designated person or agent under item 2, subparagraph 5, paragraph 1 of the Regulation Governing Implementation of Common Standard on Reporting and Due Diligence for Financial Institutions is 1 June to 30 June 30 each calendar year starting from 2021.

 

Reported by: Stacy Lo/ Melissa Tsai

 

7.      Directions Regarding Enterprises or Financial Institutions Applying for Deferral of Land Value Increment Tax upon Land Transfer Due to Mergers and Acquisitions

 

On 4 November 2019, the MOF announced the amendment to Paragraph 5 of the Directions Regarding Enterprises or Financial Institutions Applying for Deferral of Land Value Increment Tax upon Land Transfer Due to Mergers and Acquisitions. We summarize the key points below:

 

(1)   In the case of any further transfer of the land where the land value increment tax was deferred due to merger or acquisition (M&A), such deferred land value increment tax shall be paid on a priority basis over any and all liabilities and mortgage from the proceedings derived from the disposition of such land.

 

(2)   If the tax authority considers that the M&A was used in form to evade or reduce tax, the tax deferral shall not be applicable and the land value increment tax so deferred previously shall be levied and paid.

 

Reported by: Stacy Lo/ Mindy Liao

 

8.      Rulings Related to Sukuk

 

On 11 November 2019, the MOF issued a ruling elaborating the securities transaction tax and income tax on Sukuk in "Ijarah" type and "Wakalah" type.  We summarize the key points below:

 

(1)   Securities Transaction Tax

 

Trading of Sukuk is temporarily exempt from securities transaction tax until 31 December 2026.

 

(2)   Income Tax

 

(a)   Fixed Income

 

The fixed income paid under Sukuk is not sourced from the Republic of China (ROC), and the tax will be levied as follows:

 

(A)   Individual residing in the ROC who obtains the fixed income is exempt from the consolidated income tax, provided that such fixed income shall be included in basic income of the individual.

 

(B)   Where a profit-seeking enterprise having its head office in the ROC obtains the fixed income, such income shall be consolidated with the domestic income to levy the profit-seeking enterprise income tax.

 

(C)   No income basic tax or income tax will be levied where an individual not residing in the ROC or a foreign profit-seeking enterprise obtains the fixed income.

 

(b)   Securities Transaction Income

 

(A)   The securities transaction income derived from Sukuk trading is exempt from the income tax.

 

(B)   A profit-seeking enterprise having its head office in the ROC and foreign profit-seeking enterprise with fixed place of business or business agent in the ROC shall include the securities transaction income derived from Sukuk trading into the profit-seeking enterprise basic income.

 

Reported by: Stacy Lo/ Bella Chiu

 

Securities

9.      Draft Amendment to Regulations Governing Securities Firms

 

On 1 November, 2019, the FSC announced the draft amendment to Regulations Governing Securities Firms.  We summarize the key points below:

 

(1)   Where a securities firm conducts hedging operation for the exchange-traded note (ETN), it can be exempted from the restriction that the total amount of its investment cost of holding equity securities issued by affiliated parties shall not exceed 10% of its net assets.

 

(2)   A securities dealer may trade foreign securities and engage in foreign derivative financial product transactions with its overseas affiliated enterprises, subject to certain restrictions on outstanding amounts of transactions, under either condition below:

 

(a)  Approval by a special resolution of the board (adopted by a three-fourths vote of a board meeting attended by two-thirds or more of all the directors); or

 

(b)   Subject to certain conditions, a general authorization is granted by the above board resolution to the management department to handle in accordance with the internal operation rules. 

 

Reported by: Jeffrey Liu/ Lily Huang

 

Insurance

10.   Draft Amendment to Regulations Governing Use of Insurer's funds in Special Projects, Public Utilities and Social Welfare Enterprises

 

On 4 November 2019, the FSC announced the draft amendment to the Regulations Governing Use of Insurer's funds in Special Projects, Public Utilities and Social Welfare Enterprises for public consultation.  We summarize the key points below:

 

(1)   The amendment provides the relevant rules which shall be followed by the insurance enterprises when investing in the venture capital enterprises.

 

(2)   The amendment relaxes the applicable threshold under which the public investment cases conducted not in accordance with the Act for Promotion of Private Participation in Infrastructure Projects (Act) invested by the insurance enterprise may be reviewed afterwards.  The amendment also relaxes requirement to the effect that where the insurance enterprises invest in cases conducted under the Act and the private institutions of which are enterprises invested by the limited partnerships, such cases may be reviewed afterwards.

 

Reported by: David Tsai/ Aaron Lai

 

11.   Amendment to Regulations Governing Capital Adequacy of Insurance Enterprises

 

On 7 November 2019, the FSC announced that the process of public consultation of the amendment to the "Regulations Governing Capital Adequacy of Insurance Enterprises" is complete and will be announced soon.  We summarize the key points below:

 

(1)   The amendment amends the criteria for the classification of the capital adequacy ratio of the insurance enterprises.

 

(2)   The insurance enterprises shall report to the competent authority the net value ratio audited by the CPA within 3 months after the close of each fiscal year and within 2 months after the end of each semi-annual fiscal year.

 

(3)   An insurance enterprise shall disclose the net value ratio for each fiscal year and every semi-annual fiscal year, and starting from the first half year of 2019

 

(4)   The amendment will take effect on 1 April 2020.

 

Reported by: David Tsai/ Aaron Lai

 

Intellectual Property

12.   Amendment to Patent Examination Guidelines

 

On 5 November 2019, the Ministry of Economic Affairs (MOEA) announced an amendment to the Patent Examination Guidelines, Part II, Substantive Examination for Invention patents, Chapter 13, Pharmaceutical-Related Inventions (the Guidelines), which will take effect as of January 1, 2020.

 

The Guidelines was first released on 3 June 2009 and once amended on 1 January 2013. In view of the rapid changes in the pharmaceutical industry, this amendment adds more illustrative examples regarding novelty, inventive step and support by the specification, particularly for pharmaceutical inventions involving various therapeutic applications.  This amendment also clarifies the constructions of some wordings in claims and format requirements, e.g. for Swiss-type claims, and adjusts the chapter structure and text deletion and modifications.

 

Reported by: Jolene Wang/ Linda Cheng

 

13.   Amendment to Hong Kong Patents Ordinance

 

New patent system in Hong Kong will be effective on 19 December, 2019, which is summarized below:

 

(1)   The introduction of original grant patent (OGP): Under the existing "re-registration" system in Hong Kong, applicants have to file a corresponding application in designated IPOs (including China, UK, or UK designated from EPO) before filing a standard patent application in Hong Kong. Applicants will have an option of filing standard patent applications directly in Hong Kong via the new OGP system, which saves the cost and the time of filing.

 

(2)   The refinement of the existing short-term patent (STP) system: The newly refinement includes the provisions that each single application should include two independent claims at most; a patentee or a third party can file a post-grant substantive examination to Hong Kong IP department; when a patentee of STP initiate an infringement litigation for a STP which is not substantively examined, the patentee should provide sufficient information in respect with the STP, or the litigation is deemed unreasonable and the defendant has the right to appeal for remedy.

 

(3)   The use of certain misleading or confusing titles/descriptions relating to patent practice in Hong Kong will also be prohibited.

 

Reported by: Jolene Wang/ Huaili Lu

 

Cable

14.   Draft Amendment to Cable Radio and Television Act

 

On 4 November 2019, the National Communications Commission (NCC) announced the draft amendment to Articles 55 to 55-4 of the Cable Radio Television Act.  The draft Article 55 provides that the system operators, channel operators and channel agents may apply to NCC to initiate arbitration proceeding, or NCC can at its discretion to submit the disputes to arbitration if they may give rise to significant impact.  Draft Articles 55-1 to 55-4 set out the arbitration procedural requirements.

 

Reported by: Kang-Shen Liu / Alex Li

 

Food

 

15.   Amendment to Standards for Specification, Scope, Application and Limitation of Food Additives

 

On 7 November 2019, the Ministry of Health and Welfare issued a ruling to amend the Standards for Specification, Scope, Application and Limitation of Food Additives, providing that the designation of nitrous oxide is changed from a food product to a food additive, and nitrous oxide can be used in various foods in a suitable amount as actually needed in food manufacturing or processing only. The ruling shall be effective on 1 July 2020.

 

Reported by: Jolene Wang/ Ethan Lin