Taxation
1.Ruling on Income Tax Act
On 1 November 2024, the Ministry of Finance issued a ruling regarding Income Tax Act. We summarize below:
(1) A profit-seeking enterprise that uses the blue tax return form or entrusts an accountant to audit and certify its financial statements must pay the taxes due within each statutory filing period and file the income tax return, so as to apply the proviso of Paragraph 1, Article 39 of the Income Tax Act and determine the tax on its net income after the deduction of losses incurred in the preceding ten years.
(2) f a profit-seeking enterprise fails to file and pay taxes by the deadline but does not meet the criteria for the imposition of a delinquency charge, such failure may be considered a minor violation. In such cases, enterprises which satisfy the requirements of “filed by the deadline” and “using the blue tax return form or having the financial statements audited and certified by an accountant,” may still apply the offsetting of profits and losses in accordance with Paragraph 1, Article 39 of the Income Tax Act.
Reported by: Paul Hsu / Julia Kuo
Securities
2. Non-Executive Employees Specified in Paragraph 6, Article 14 of Securities and Exchange Act
On 8 November, 2024, the Financial Supervisory Commission (FSC) issued a ruling to supplement the definition of “non-executive employees” under Paragraph 6, Article 14 of the Securities and Exchange Act. We summarize below:
(1) For a company whose stock is listed for trading on the stock exchange or over-the-counter securities exchange, “non-executive employees” shall refer to non- managerial officer whose salary is below a certain threshold. Such threshold may be determined by the company based on its characteristics, provided that it is not lower than the salary level for non-executive employees defined under the “Regulations on Salary Increases for Employees of Small and Medium Enterprises” (currently NT$50,000).
(2) The board of directors must evaluate regularly whether any adjustments are required. This should be incorporated into the internal control system as well.
(3) The company must complete the relevant amendments to its Articles of Incorporation before the 2025 annual shareholders’ meeting.
Reported by: Jeffrey Liu / Eva Chiu
Financials
3.Key Points for Pilot Business Application of Financial Industry
On 29 October 2024, the FSC announced the Key Points for Pilot Business Applications of Financial Industry to make the pilot business application for the financial sectors consistent. We summarize below:
(1) To expand the applicable financial sectors, including banks, credit cooperatives, bill finance companies, credit card companies, trust companies, electronic payment institutions, securities firms, securities investment trust enterprises, securities financing business, securities investment consulting enterprises, futures commission merchants, leverage transaction merchants, futures trust enterprises, futures brokerage business, futures advisory businesses, insurance companies, insurance cooperatives, insurance agents, and insurance brokers.
(2) To expand the scope of pilot business applications to include business items that are not yet opened under administrative rules, interpretations, self-regulatory rules of financial industry associations, or regulations of peripheral entities. For business items prohibited under laws and regulatory orders, applications shall be made in accordance with the Financial Technology Development and Innovative Experimentation Act for innovative experimentation.
(3) To add a priority review mechanism for financial inclusion related cases. If the pilot business may facilitate the promotion and implementation of financial inclusion, the FSC will prioritize acceptance and review of the application.
Reported by: Stacy Lo/ Zoe Chen
SITE/SICE
4.Draft Amendment to Article 17 of Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises
On 5 November, 2024, the FSC announced the draft amendment to Article 17 of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises, which proposes to remove the investment ratio limit restricting discretionary investment mandate accounts managed by securities investment trust or securities investment consulting enterprises from investing in more than 10% of the total issued shares of any single company.
Reported by: Jeffrey Liu / Eden Hsieh
| Editors: Mike Lu (Partner) Stacy Lo (Partner) Jeffrey Liu (Partner) Kang-Shen Liu (Partner) David Tsa (Partner) Angela Lin (Partner) Paul Hsu (Partner) | Counselors: Echo Yeh Sue Su Jolene Wang (Lexcel Partners IP Firm) |