Lexgroup Newsletter (Issue No. 443)

Tax

1.Ruling on Article 42 of Estate and Gift Tax Act

On 14 June 2024, the Ministry of Finance issued a ruling to explain Article 42 of the “Estate and Gift Tax Act”.  According to the ruling, if there is a trust contract, where the trustee is a trust enterprise, stipulating that the trust affair includes handling the deceased beneficiary’s funeral matters, it is not required to present tax payment certificate, tax exemption certificate, exclusion from gross estate certificate or consent to transfer certificate for the actual amount paid for the funeral matters within the scope of funeral expense deduction of estate tax for the year of decease from the remaining trust benefit of the deceased beneficiary of the trust account.  However, the taxpayer shall still add the payment of funeral expenses to the gross estate of the deceased beneficiary to declare estate tax.

Reported by: Paul Hsu / Zoe Chen

Compulsory Execution

2.Directions for Court Handling Compulsory Enforcement on Monetary Claim under Life Insurance Contracts

On 17 June 2024, the Judicial Yuan announced the “Directions for Court Handling Compulsory Enforcement on Monetary Claim under Life Insurance Contracts”.  We summarize below:

(1)If a creditor petitioning for enforcing a monetary claim under a life insurance contract does not specifically identify the object of execution but requests the court to investigate matters related to the debtor’s life insurance contract, such compulsory execution should be the jurisdiction of the court of the debtor’s domicile or residence;

(2)When the court of the debtor’s residence or domicile handles a case of execution and recognizes the necessity of investigation, it may order the creditor to investigate and report, or investigate at its discretion. After ascertaining the relevant matters of the debtor’s life insurance contract, the court shall carry out the execution action according to the law within the scope of the purpose of settling the debt;

(3)The micro whole-life insurance products and other life insurance contracts without termination fee cannot be subject to compulsory execution, and the insurance benefits claimed after the occurrence of an insured event cannot be subject to compulsory execution;

(4)When the execution court enforces a monetary claim under a life insurance contract, if the amount of the claim does not exceed the amount necessary to support the life of the debtor and his/her relatives living together for three months, and the debtor has no property to be enforced except for the claim for money under the life insurance contract, or the amount subject to the execution is not sufficient to satisfy the debt, the monetary claim shall not be enforced. However, if the execution court, in consideration of the debtor’s and creditor’s living conditions and other circumstances, recognizes that the case is unfair, the case shall not be subject to the above limitation;

(5)After the seizure of a monetary claim under a life insurance contract, the enforcement court may terminate the life insurance contract for the purpose of exchanging the price to settle the claim;

Reported by: Paul Hsu / Julia Kuo

Financials

3.“Guidelines for the Use of Artificial Intelligence (AI) in the Financial Industry”

On 20 June 2024, the Financial Supervisory Commission (FSC) promulgated the “Guidelines for the Use of Artificial Intelligence (AI) in the Financial Industry” (Guidelines).  We summarize below:

(1)To provide the definition of artificial intelligence (AI).

(2)To suggest that financial institutions shall have supervisory and management measures for third-party operators of AI.

(3)To suggest that when using AI financial institutions shall implement core principles on a risk-based basis, which are recommended as follows:

(a)Governance and accountability mechanisms shall be established.

(b)Financial institutions shall emphasize fairness and human-centered values , pay attention to the emergence of bias and avoid discrimination.

(c)Client’s privacy and rights shall be protected.

(d)System robustness and security shall be ensured.

(e)System transparency and explainability shall be ensured.

(f)The development strategy and implementation of AI systems shall ensure the integration of sustainable development principles.

Reported by: Stacy Lo/ Eden Hsieh

4.Interpretation of Article 50-1 of Banking Act

On 12 June 2024, the FSC issued an interpretative ruling of Article 50-1 of the Banking Act, which provides that the requirement under the second sentence, Paragraph 1, Article 50 of the Banking Act that the maximum cash profits to be distributed shall not exceed 15% of the bank’s paid-in capital, shall not apply if the cash profits distributed is converted from the special reserve set aside by the bank in accordance with the laws and regulations.

Reported by: Stacy Lo / Eva Chiu

Labor

5.Amendment to the Qualifications and Criteria Standards for Foreigners Undertaking the Jobs Specified Under Subparagraph 1 to 6 of Paragraph 1 of Article 46 of the Employment Service Act

On June 14, 2024, the Ministry of Labor announced the amendment to the “Qualifications and Criteria Standards for Foreigners Undertaking the Jobs Specified Under Subparagraph 1 to 6 of Paragraph 1 of Article 46 of the Employment Service Act”.  We summarize below:

((1)”Social worker” is added to specialized or technical work.

(2)Adding the work contents (e.g., investment, management, trading, and business auditing, etc.) of foreigners employed in tax and finance sector and in securities, futures, and financial business.

(3)Adding the work contents (e.g., scheduling and supervision, etc.) of foreigners employed in manufacturing sector.

Reported by: Paul Hsu / Alex Li

Criminal Code

6.Addition of Article 141-1 of Criminal Code of the Republic of China

On 24 June 2024, the President announced the amendment to the “Criminal Code of the Republic of China”, which provides that if a public official who makes a false statement on an important relevant matter within his or her knowledge during a hearing or an interpellation in the Legislative Yuan, he/she shall be sentenced to imprisonment for no more than one year, short-term imprisonment, or a fine of no more than two hundred thousand dollars.

Reported by: Paul Hsu /Julia Kuo

Legislation

7.Amendments to Law Governing the Legislative Yuan’s Power

On 24 June 2024, the President announced the amendments to the “Law Governing the Legislative Yuan’s Power”.  We summarize below:

(1)To add the solutions when the date of the opening of session cannot be determined.

(2)To normalize the national report conducted by the President, and provide that the oral inquiries from legislators shall be answered promptly by the President in order.

(3)To adopt registered ballot on the important matters, and to specify the procedures for handling the case of the right to consent of personnel at law level.

(4)To add the provision providing that the bill directly entering the second reading shall be subject to the consult among political parties.

(5)To specify that the person being interpellated shall not counter-interpellate, refuse to response, refuse to provide information, conceal information, give false responses or commit other acts to contempt of Congress, and to specify the punishments in violation of the above regulations.

(6)To add the provisions on the implementation of investigation power, including the power to request relevant personnel to provide documents, information and files, and to specify the punishments in violation of the above regulations.

(7)To add the institution of hearing and relevant regulations.

Reportedby: Paul Hsu / Sean Tsai


Editors:
Mike Lu (Partner)
Stacy Lo (Partner)
Jeffrey Liu (Partner)
Kang-Shen Liu  (Partner)
David Tsai  (Partner)
Angela Lin (Partner)

Paul Hsu (Partner)
Counselors:
Echo Yeh
Sue Su
Jolene Wang (Lexcel Partners IP Firm)
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