Labor
1. Enforcement Rules of Labor Incident Act
On 15 November 2019, the Judicial Yuan announced the Enforcement Rules of the Labor Incident Act, which will become effective on 1 January 2020. We summarize the key points below:
(1) If a labor incident initiated before the enforcement of the Labor Incident Act (LIA) has not been closed, the upcoming procedure shall be proceeded in accordance with the LIA. If the parties have not proceeded with the oral debate on the merit of the case, the labor may apply for the transfer of jurisdiction according to the relevant regulations of the LIA.
(2) If a labor incident initiated before the enforcement of the LIA, the court fees shall be decided according to the applicable law upon the initiation, application, or appeal.
(3) Except for the labor incidents that shall be reviewed by the Intellectual Property Court, a labor incident remanded after the enforcement of the LIA shall be handled by the labor professional court or division.
(4) A labor incident initiated before the enforcement of the LIA which remains under the mediation procedure, the mediation procedure shall be proceeded in accordance with the provision of the Civil Procedure Act.
Reported by: David Tsai / Paul Hsu
2. Guidelines for a Business Entity to Conduct Labor-Management Meeting
On 25 November 2019, the Ministry of Labor (MOL) announced the Guidelines for a Business Entity to Conduct Labor-Management Conference. We summarize the key points below:
(1) The business entity shall provide necessary fund, equipment, and place for labor-management conference.
(2) The business entity shall announce the seats to be elected, date, time, location and method of the election of labor representatives.
(3) The business entity shall hold the labor-management conference on a periodic basis, which shall be at least once every three months.
(4) Upon the resolution of labor-management conference, the meetings can be held via video conference, but the business entity shall ensure that the video is clear and available to all attendees.
(5) The record of video conference shall be able to identify the attendees in order to determine number of the attendees and threshold of the resolution.
(6) If the resolution made at the labor-management conference involves in the consent stated in Labor Standard Act, it may set forth the deadline.
Reported by: David Tsai / Alex Li
3. Directions for Classifying an Employment Agreement
On 19 November 2019, the MOL announced the Directions for Classifying an Employment Agreement and a checklist to decide the subordination nature of an employment agreement, to facilitate the employer and the employee to distinguish an employment agreement and other kinds of labor service agreement. The more items checked, the higher possibility to be considered as an employment agreement. We summarize the key points below:
(1) A business entity and a service provider may freely agree on the nature of a labor service contract, but the nature of an agreement shall not be bound by the title or formality of the agreement.
(2) If the overall nature of an agreement includes all or a part of the following factors that the service provider is likely considered to a certain extent subordinating to the business entity, and then it will be considered as an employment agreement:
(a) Personnel subordination:
(A) The service hours are directed or controlled by the business entity.
(B) The method to provide services is directed or controlled by the business entity.
(C) The venue of services is directed or controlled by the business entity.
(D)The service provider cannot refuse the work assigned by the business entity.
(E) The service provider is obligated to accept or subject to assessment of the service quality by the business entity.
(F) The service provider needs to comply with the discipline or internal rules of the business entity, and is subject to punishment or unfavorable treatment for any violation thereof.
(G)The service provider shall provide services in person, and cannot assign a proxy unless otherwise consented.
(H) The service provider cannot provide services in his/her own name.
(b) Economic subordination:
(A) The service provider would collect the remuneration based on the services provided, but not the result of the services provided, and bear no business risk.
(B) The business cost such as the equipment, machine, material or tool required for providing service is not equipped, managed or maintained by the service provider.
(C) The service provider does not provide services for his/her own business purpose.
(D)The business entity adopts standardized agreement to regulate the service provider, who can only obtain remuneration based on the unilateral standards or unilateral change of the business entity.
(E) The business entity limits the service provider to provide services via the business entity, and the service provider cannot transact with a third party privately.
(c) Organizational subordination:
(A) The service provider is adopted into the organization system of the business entity and have to cooperate with his/her colleague through work division to complete the work
(d) Other criteria:
(A) The service provider is insured by the labor insurance as a result of the application by the business entity, or the business entity contributes the labor pension for the service provider.
(B) The business entity withholds tax against the salary income, and reports the same to the tax authority.
(C) The nature of the agreement between the business entity and other employees providing same services is categorized as an employment agreement.
Reported by: David Tsai / Paul Hsu
Taxation
4. Ruling Related to Article 43-1 of Income Tax Act
On 15 November 2019, the Ministry of Finance (MOF) announced a ruling in respect to the one-time transfer pricing of multinational corporations before annual accounting settlement under Article 43-1 of Income Tax Act. We summarize the key points below:
(1) A profit-seeking enterprise conducting the controlled transaction and one-time transfer pricing before annual accounting settlement shall meet the requirement below:
(a) The participants of a controlled transaction shall reach an agreement in advance on the transaction terms and all the pricing factor of the transaction. In addition, the receivables and payables after adjustment according to the agreement shall be recorded in the financial accounting book.
(b) Other participants of a controlled transaction shall make the correspondent adjustment simultaneously.
(2) Customs duties, business tax, commodity tax and income tax returns will be filed at the prices after adjustment, provided that the profit-seeking enterprises shall provide the relevant documents as evidence.
(3) A profit-seeking enterprise which conducts the one-time transfer pricing shall still follow the requirements under Article 43-1 of the Income Tax Act, the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm's-Length Transfer Pricing, and the relevant laws and regulations when filing their annual income tax returns.
Reported by: Stacy Lo / Alex Li
5. Amendment to Regulations Governing Application of Tax Credits by Company or Limited Partnership for R&D Expenditures
On 22 November, 2019, the Ministry of Economic Affairs and the MOF announced the amendment to the “Regulations Governing Application of Tax Credits by Company or Limited Partnership for R&D Expenditures”. The tax credits against profit-seeking enterprise income tax payable for the current year and three years following the current year are now 15% and 10% of the R&D expenses respectively. The implementation period of the regulations has been extended to 31 December, 2029.
Reported by: Mike Lu / Lily Huang
Banking
6. Sole Proprietorship, Native Minor and Foreign Adult May Open a Deposit Account Directly Through the Internet
On 25 November 2019, the Bankers Association of the R.O.C issued a press release, informing various banks the amended Principal for Banks to Deal with Clients Opening a Digital Deposit Account through the Internet. We summarize the key points below:
(1) The sole proprietorship of which the responsible person is a native adult may open a deposit account through the internet by using the natural person certificate, business certificate and video conference to undertake the verification and uploading relevant certifications.
(2) A native minor who is 7 years old or older and has the national ID card may open a deposit account through the internet by verifying his or her guardian and uploading the certifications of the guardian and the minor.
(3) Foreigners who is 20 years old or older and has IC residence permit may open a deposit account through the internet after identity verification procedures.
Reported by: Stacy Lo / Bella Chiu
Public companies
7. Draft Amendment to Regulations Governing Information to be Published in Annual Reports of Public Companies and Regulations Governing Information to be Published in Prospectuses
On 22 November 2019, the Financial Supervisory Commission (FSC) announced the draft amendment to the "Regulations Governing Information to be Published in Annual Reports of Public Companies" and "Regulations Governing Information to be Published in Prospectuses" for public consultation. We summarize the key points below:
(1) Reinforce the information disclosure of the operation of corporate governance;
(2) Improve the transparency and reasonableness of the remuneration of companies' responsible person, including changing the class interval of remuneration from 8 classes to 10 classes and adding the circumstances where the individual disclosure of responsible person remuneration is required.
(3) Enhance the quality for disclosure of non-financial information. With reference to the international development trend of non-financial information disclosure, the disclosure items for fulfilling corporate social responsibility is amended.
Reported by: Stacy Lo / Cindy Chien
Securities
8. Draft Amendment to Regulations Governing the Preparation of Financial Reports by Securities Firms and Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants
On 14 November 2019, the FSC announced the draft amendments to Regulations Governing the Preparation of Financial Reports by Securities Firms and Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants. We summarize the key points below:
(1) To include the circumstances where a securities firm or futures commission merchant shall further disclose (a) the remuneration paid to each individual director, supervisor, general manager, etc.; and (b) top five highest remuneration paid to each individual officer in its financial report.
(2) To require that the amount, percentage and reason for decrease in audit fees paid for the current financial year be disclosed if such fees are lower than those paid for the preceding financial year by 10% or more, instead of 15%.
Reported by: Jeffrey Liu / Mindy Liao
Insurance
9. Ruling Related to Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises
On 21 November 2019, the FSC issued a ruling regarding the Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises (Regulations). According to Subparagraph 2, Paragraph 1, Article 6 of the Regulations, an insurance enterprise using a computerized information processing system shall include control operation for system development and program modification in its internal control system. The ruling indicates that for the change of the core information system, at least the cost benefit analysis, risk assessment, requirement analysis, designing and programming, function verification (including integrity, accuracy and stability), decision changing assessment and parallel test, etc. must be made.
Reported by: David Tsai / Aaron Lai
10. Amendment to Regulations Governing Insurance Brokers and Regulations Governing Insurance Agents
On 18 November 2019, the FSC announced the amendment to the "Regulations Governing Insurance Brokers and the Regulations Governing Insurance Agents". We summarize the key points below:
(1)Before issue of the policy, the insurer shall confirm that the inspection operation of relevant documents have been completed in accordance with the internal inspection rules of the insurance, broker, insurance agency company, and bank and the relevant operation records and supporting documents have been safe kept accordingly.
(2)The amendments add a provision that the bank shall establish a mechanism to inspect the consistency of the financial information between financial consumers who purchases the insurance product with bank loan, time deposit terminated or policy loan, and their transactions and shall assign non-sales department personnel to conduct phone interviews.
(3)The reinsurance broker business can be applied independently or the insurance broker business and reinsurance broker business may be concurrently applied.
(4)An insurance broker company shall preserve the complete documents regarding reinsurance contract and deliver them to the original insurer.
(5)The bank shall not authorize the its clerk engaging in the credit or deposits and remittances business to sell investment-linked insurance products or insurance products with termination fees (excluding injury insurance and mortgage life insurance with policy term no more than 3 years) and receive the remuneration.
Reported by: David Tsai / Aaron Lai
11. Draft Amendment to Regulations Governing Foreign Investments by Insurance Companies
On 26 November 2019, the FSC announced the draft amendment to the "Regulations Governing Foreign Investments by Insurance Companies for public consultation". We summarize the key points below:
(1)The amendment allows the insurance enterprises to invest in Sukuk.
(2)The requirements of the credit rating level and the calculation of the relevant limits of fixed income products are amended to be subject to the issuance rating of bonds. If there is no issue rating of bonds, such rating is replaced by credit rating of the issuance or guarantee institution. If the issuance rating of bonds is required originally, it shall not be replaced by credit rating of the issuance or guarantee institution.
(3)The amendment allows the funds of the insurance enterprises to be invested in the private placement bonds issued by the foreign listed enterprise and not traded on foreign exchange market or OTC market. The amendment also provides the conditions and limits of such investment.
Reported by: David Tsai / Aaron Lai
2019-12-10
