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Taxation
1. Amendment to Article 11-1 of Tax Collection Act
On 13 May 2020, the President announced the amendment to Article 11-1 of the Tax Collection Act, which provides that the following can be collaterals for the tax:
(1) Taipei Exchange listed securities, with a 20% discount; and
(2) Land easy for sale, free from any dispute and sufficient to make full payment; or house with the title registration completed.
Reported by: Stacy Lo / Doris Huang
2. Standard on Reporting and Due Diligence for Financial Institutions
On 28 April 2020, the Ministry of Finance (MOF) announced an amendment to the Regulations Governing the Implementation of the Common Standard on Reporting and Due Diligence for Financial Institution, which provides that a Reporting Financial Institution affected by a natural disaster, incident, or force majeure fails to report within the reporting period described in the regulations, the MOF may, based on the situation, extend the reporting period and make a public announcement of such extension.
Reported by: Stacy Lo / Melissa Tsai
3. Ruling Regarding Article 66-9 of Income Tax Act
On 4 May 2020, the MOF announced a ruling on Article 66-9 of the "Income Tax Act" (Act), which provides that the estimated loss in the first half of 2020 which is calculated pro-rata according to the loss of 2020 Q1 may be deducted from the undistributed surplus earnings of 2018 in accordance with the Act considering the impact of COVID-19. However, when declaring the undistributed surplus earnings of 2019, the profit seeking enterprise shall further adjust the deduction amounts of 2018 based on the actual profit and loss of 2020.
Reported by: Stacy Lo / Mindy Liao
4. Deductions of Undistributed Earnings of 2018 Undistributed Retained
On 29 April 2020, the MOF announced that due to updates of the accounting standards, during 15 January 2020 to 30 June 2021, dividends or earnings distributed due to the "net increase" of the retained earnings at the beginning of 2018 can be deducted from the undistributed earnings of 2018 for taxation purpose.
Reported by: Stacy Lo / Bella Chiu
Criminal Law
5. Draft Amendments to Criminal Code of the Republic of China
On 7 May 2020, the Executive Yuan announced the draft amendments to the Criminal Code of the Republic of China ("Criminal Code"). We summarize below:
(1) Adding a criminal offence of severe obstruction of duty engaged by the officer: A person who employs threat or violence against a public official by (i) driving a motor vehicle; or (ii) carrying weapons or other dangerous goods with the intention of usage shall be sentenced to imprisonment for not less than six months but not more than three years. (Article 135 of the Criminal Code)
(2) Amending publicly assemble obstruction of duty engaged by the officer: The requirement of the "publicly assemble obstruction" is amended, and the fine penalty of the offense is raised. (Article 136 of the Criminal Code)
(3) Adding a criminal offense of internet gambling: A person who uses telecommunications equipment, electronic communications, Internet or other similar methods to gamble shall be punished. (Article 266 of the Criminal Code)
(4) Amending revocation of parole: During the parole period, if the offender has committed another offense subject to the imprisonment for more than six months or a more severe punishment, the parole shall be revoked. If the offender has committed another offense subject to the imprisonment for six months or less and causes the difficulty to maintain the order of law, the parole may be revoked. (Article 78 of the Criminal Code)
Reported by: David Tsai / Cindy Chien
Finance
6. Measures for Financial Institutions to Apply for Establishment of Local Branch in 2020
On 23 April, 2020, the Financial Supervisory Commission (FSC) issued a press release, stating that ’’the average before-tax return on equity of domestic banks and credit cooperatives during the past three years (from 2017 to 2019)’’ of 2020 under Subparagraph 4, Paragraph 2 of Article 3 of the Regulations Governing Domestic Branches of Financial Institutions is 9.12%. In addition, to encourage domestic banks with great performances on the relief package for the loans from 1 March 2020 to 30 September 2020, the implementation will be considered as a favorable item for the evaluation in November 2020.
Reported by: Stacy Lo / Lily Huang
Securities and Exchange Act
7. Amendment to Securities and Exchange Act
On 19 May 2020, the President announced the amendment to the Article 14 of the Securities and Exchange Act to require companies having stocks listed on the Taiwan Securities Exchange or traded on Taipei Exchange to disclose, in addition to the average salary of all the company's employees and any adjustments thereto, the salary and remuneration policy, and the remuneration of the directors and supervisors of such companies in their annual financial reports in accordance with the regulation stipulated by the competent authority.
Reported by: Jeffrey Liu / Lily Huang
Securities
8. Draft Amendments of Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities and Directions for the Conduct of Wealth Management Business by Securities Firms
On 29 April 2020, the FSC announced the draft amendments to the "Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities" (Regulations) and "Directions for the Conduct of Wealth Management Business by Securities Firms" (Directions) to relax the requirements for qualified securities firm to provide consigned trading service of foreign securities service to service high-assets clients. We summarize below:
(1) Draft amendment to Regulations
(a) To specify the definition of the high-assets clients;
(b) To specify the qualifications and requirements of the securities firms providing the subject service and require that the securities firms obtain the approval in advance; and
(c) To specify that the securities firms consigned to trade of foreign structured products for high-assets clients may, to the extent specified in the regulations, be exempted from the products review process and requirements for having a master agent required by the Regulations Governing Offshore Structured Products; provided that the securities firms must (a) confirm required items with offshore institution(s) or local agent(s) of the said foreign structured products in writing, and (b) establish appropriate product suitability system.
(2) Draft amendment to Directions
To cope with the above purpose, the Directions also relax the qualifications for offshore structured products and bonds to be invested by high-assets clients, and refer the special requirements to the Regulations.
Reported by: Jeffrey Liu / Mindy Liao
SITE/SICE
9. Amendment to the Best Practice Principles of the Managers of Securities Investment Trust Enterprises
On 14 May 2020, the Securities Investment Trust and Consulting Association (SITCA) announced an amendment to the "Best Practice Principles of the Managers of Securities Investment Trust Enterprises", which provides the concrete measures that shall be included in the regulations governing the investment managers of discretionary investment business and fund managers on the usage of information and communication devices in the office, so as to realize the control on conflict of interests of personnel.
Reported by: Jeffery Liu / Doris Huang
SITE/SICE
10. TSWE Adds the Measure on Zero or Negative of the NAV of the Listed Fund
On 5 May 2020, theTaiwan Stock Exchange Corporation (TWSE) announced an amendment to Operating Rules of the TWSE, TWSE Governing Alteration of Trading Method and Suspension of Trading of Listed Securities, TWSE Procedures for Verification and Disclosure of Material Information of Trust Enterprises with TWSE Listed Beneficial Certificates and Offshore Fund Institutions and TWSE Rules Governing Information Filing by Companies with TWSE Listed Securities and Offshore Fund Institutions with TWSE Listed Offshore Exchange-Traded Funds. We summarize below:
Where the net asset value (NAV) per beneficiary unit of closed-end funds, ETF or offshore ETF becomes zero or negative,
(1) such circumstance shall be considered "material information" and shall be entered to the internet reporting system designated by TWSE according to the regulations.
(2) once the said information is announced on the Market Observation Post system, the TWSE may terminate the trading of the subject listed beneficiary certificates. The TWSE shall also immediately announce the suspension of trading of the subject beneficiary certificates until the date of delisting of the beneficiary certificates.
Reported by: Jeffrey Liu / Melissa Tsai
Company Act
11. Interpretation for the Board to Review Director Nominees
The Ministry of Economic Affairs (MOEA) issued a ruling on 23 April 2020 in relation to nominee list of director submitted by shareholders according to Paragraph 3, Article 192-1 of the Company Act under which the company shall call a board meeting to conduct a form review on the requirements under Sub-paragraphs 1 to 4, Paragraph 5, Article 192-1 of the Company Act (including such as whether the submission is made before the deadline, shareholding of the shareholder, number of nominees, and basic information of nominees). Therefore, such review by the board of directors shall be made through a resolution of the same.
Reported by: Mike Lu / Angela Lin
Foreign Investment
12. Adjustment to Negative List for Investment by Overseas Chinese and Foreign Nationals
On 1 May 2020, the Investment Commission, MOEA announced to add the business item codes to the negative list so that the investor of overseas Chinese and foreign nationals will be easier to confirm if the business items of enterprise invested by the investor are in line with the Negative List for Investment by Overseas Chinese and Foreign Nationals.
Reported by: Mike Lu / Will Chen
Cross Straight Relations with Mainland
13. Draft Amendment to Regulations Governing Permission of Trade Between Taiwan Area and Mainland Area
On 4 May 2020, the MOEA announced a draft amendment to the "Regulations Governing Permission of Trade between Taiwan Area and Mainland Area" (Regulations). To cope with the new type of products, Article 11 will be amended that any objects bearing video or audio to advocate for Chinese reunification shall be removed by importers after custom release.
Reported by: Mike Lu / Will Chen
Insurance
14. Amendment to Regulations Governing the Preparation of Financial Reports by Insurance Enterprises
On 11 May 2020, the FSC announced the amendment to "Regulations Governing the Preparation of Financial Reports by Insurance Enterprises" which provided the supporting measures for enterprises to adopt fair value model to evaluate investment property. Such measures include appraisal methods, parameters used in appraisal, fair value of insurance liabilities, etc. The amendment applies to the fiscal year of 2020.
Reported by: David Tsai / Alex Li
15. Amendment to Regulations Governing Transactions Other Than Loans between Insurance Enterprises and Interested Parties
On 23 April 2020, the FSC announced a press release stating that the amendment to the "Regulations Governing Transactions Other Than Loans between Insurance Enterprises and Interested Parties" (Regulations) will be announced soon. We summarize below:
(1) Where an interested party of the insurance enterprise is not involved in the direct transactions between the insurance enterprise and a third party, and the two transactions are different contracts, the Regulations do not apply.
(2) The acquisition and disposal of the Exchange Traded Note issued by an interested party may be conducted by general authorization.
(3) Where an interested party of the insurance enterprise is a company concurrently operating securities investment trusts business or securities investment consulting business, the transactions using entrusted assets in accordance with the "Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises" can be conducted by general authorization.
Reported by: David Tsai / Alex Li
Insurance
16. Draft Amendment to Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises
On 7 May 2020, the FSC announced the draft amendment to Article 30 of the Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises for public consultation. The amendment provides that except for the positions allowed to be concurrently served, the legal compliance supervisor of the head office shall not concurrently serve other positions.
Reported by: David Tsai / Aaron Lai
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2020-05-22
