Investment
1.Draft Amendment to Statute for Industrial Innovation
On 19 December 2024, the Executive Yuan passed the draft amendment to the Statute for Industrial Innovation, which is subject to the review of the Legislative Yuan. We summarize below:
(1) In order to promote industrial upgrading, investment tax credits are newly provided for artificial intelligence products or services, energy saving and carbon reduction, etc. The application of tax benefits for corporations or limited partnerships investing in intelligent machinery, introduction of the 5th-generation mobile networks, and cyber security products or services are extended until 31 December 2029, and the upper limit of applicable expenses for investment tax credit is raised to NTD1.8 billion.
(2) To avoid the outflow of critical technologies, it is amended that if a company or limited partnership engaging in foreign investment invests in a specific country or region, a specific industry or technology, or the investment amount reaches a certain amount of money or more, it shall obtain a prior approval from the central competent authority, and the central competent authority will have discretion to determine the method of approval or rejection.
(3) To reduce the threshold of capital contribution to NTD 150 million for limited partnership venture capital enterprises eligible for tax benefit, as well as the required proportion and amount of investment in innovative startups.
(4) To relax the conditions for individuals making cash investments in specific high-risk innovative startups to qualify for tax benefits.
(5) To add penalties on companies failing to perform the specific actions ordered by the central competent authority due to incompliance when making investment.
(6) To add that anyone who is already entitled to a tax benefit in accordance with other laws shall not be entitled to the tax benefit under this Statute in respect of the same matter.
Reported by: Stacy Lo / Linda Chu
Fair Trade
2.The Fair Trade Commission’s Principles for Handling Cases Related to Online Keyword Advertising
On 12 December 2024, the Fair Trade Commission announced the “The Fair Trade Commission’s Principles for Handling Cases Related to Online Keyword Advertising.” We summarize below:
(1) An enterprise shall not use keyword advertising or web page programming to unfairly exploit the efforts of others.
(2) To determine unfairness, the following must be considered:
(a) Whether the other enterprise has input a significant amount of effort in its representation, and whether that effort is being exploited by the action in question.
(b) Whether the result of such exploitation misleads consumers into a conception that the two enterprises are from the same origin or have some connections/associations, such as cooperation, affiliation, or sub-brand etc.
(3) An enterprise violates Article 25 of the Fair Trade Act if it unfairly exploits others’ efforts.
報告人：劉康身律師/郭芝妤
Anti-Money Laundering
3.Scope of enterprises or persons providing virtual asset services
On 24 December 2024, the Executive Yuan issued a ruling related to the scope of enterprises or persons providing virtual asset services under Paragraph 2, Article 5 of the Money Laundering Control Act, which refers to those who engage in the following activities for others in Taiwan:
(1) exchanging virtual assets with New Taiwan Dollars, foreign currencies, and currencies issued in China, Hong Kong, or Macao;
(2) exchanging virtual assets with each other;
(3) transfer of virtual assets;
(4) custody and management of virtual assets or provision of related management vehicle; and
(5) participating in and providing financial services related to the issuance or sale of virtual assets.
Reported by: Stacy Lo / Eva Chiu
Real Property
4.Draft amendment to Regulation Governing Floor Area Ratio Incentive for Urban Renewal
On 26 December 2024, the Executive Yuan announced the draft amendment to the Regulation Governing Floor Area Ratio Incentive for Urban Renewal in response to the amendment to Article 65 of the Urban Renewal Act dated 13 November 2024. The draft amendment broadens the scope of eligibility for floor area ratio incentives from buildings completed before the implementation of floor area ratio control to those who have registered their applications for construction permits, increasing property owners’ willingness to participate in urban renewal projects. For details on the amendments to the Urban Renewal Act, please refer to Issue 451.
Reported by: Alex Li
Financials
5.Ruling Related to Banks Handling Credit Business with Financial Leasing Companies
To maintain financial stability and promote the healthy development of the housing market, the Financial Supervisory Commission (FSC) issued a ruling related to banks handling credit business with financial leasing companies on 3 December 2024. We summarize below:
(1) When handling credit business with financial leasing companies established under the Commercial Group Act, which is a member of the Leasing Association, or financial leasing companies invested by financial institutions (financial leasing companies), banks shall conduct thorough credit review, understand the client’s operating model and types of business, evaluate the reasonableness of the fund’s usage and the line of credit, and regularly monitor whether the actual use of funds aligns with the originally stated purpose.
(2) For new credit facilities or renewal of existing credit to financial leasing companies, if the funds are to be used for financing activities related to the real estate industry, banks shall handle according to the following:
(a) Understand the financial leasing company’s risk control mechanisms for its financing activities related to the real estate industry, disclose it in the credit review information, and require the financial leasing company to comply with the relevant control measures stipulated in the Regulations of the Central Bank of the Republic of China (Taiwan) Governing the Extension of Mortgage Loans by Financial Institutions ; and
(b) Banks shall include the portion of loans provided to financial leasing companies that are used for financing activities related to the real estate industry in the internal risk control total limits for real estate loans that are excluded from the limits under Article 72-2 of the Banking Act, and banks shall not raise the aforementioned total limits accordingly.
(3) For other credit facilities extended to financial leasing companies, banks shall require the financial leasing companies to undertake or commit that the funds will not be diverted to financing activities related to the real estate industry, and stipulate the handling measures when violating such undertaking or commitment.
Reported by: Stacy Lo/ Zoe Chen
Insurance
6.Amendment to Directions for Operation Outsourcing by Insurance Enterprises
On 4 December 2024, the FSC agreed to amend Subparagraph 1, Paragraph 1, Article 5 of the “Template for cooperative promotion agreement among banks, securities firms, insurance companies, insurance agents, or insurance brokers” to revise the language of “sign” to “sign or by other electronic means.”
Reported by: David Tsai / Joe Liao
Trade
7.Amendments to Regulations Governing Issuance of Certificates of Origin and Certificates of Processing
On 25 December 2024, the Ministry of Economic Affairs (MOEA) announced to amend the “Regulations Governing Issuance of Certificates of Origin and Certificates of Processing”. We summarize below:
(1) When the number of certificates of origin or certificates of processing applied is more than five originals and ten copies, documents indicating that the International Trade Administration, MOEA has given special approval are required.
(2) For matters where the applicant is unable to prepare the required applications due to inconformity with the Regulations, the applicant shall additionally submit documents indicating that the International Trade Administration, MOEA has given special approval before submitting the application.
Reported by: Kang-Shen Liu / Sean Tsai
Securities
8.Amendments to Securities Transaction Tax Act
The Legislative Yuan passed the third reading of amendment to Articles 2-2 and 12 of the Securities Transaction Tax Act on 31 December 2024. We summarize below:
(1) To extend the applicable period of securities transaction tax rate of 1.5‰ for day trading of securities until December 31, 2027.
(2) To remove provisions for the deposit delivery and public announcement delivery of securities transaction tax payment notices, where the relevant provisions of the Administrative Procedure Act will apply.
Reported by: Stacy Lo / Eden Hsieh
SICE/SITEs
9.Announcement by the Financial Supervisory Commission: Japan Recognized as an Approved Jurisdiction for Offshore Exchange-Traded Funds (ETFs)
On 19 December 2024, the FSC announced, in accordance with Subparagraph 1, Article 26 of the Regulations Governing Offshore Funds, that Japan is recognized as an approved jurisdiction for the registration and management of offshore ETFs, which means that qualified Japan ETF can be introduced to Taiwan via cross listing (under Regulations Governing Offshore Funds) or feeder fund (under Regulations Governing Securities Investment Trust Funds) for sale.
Reported by: Jeffrey Liu / Winnie Su
10.Ruling Regarding New Types of Business for SITE/SICE Under Article 3.3.3 of the Securities Investment Trust and Consulting Act – Private Equity Funds
On 27 December 2024, the FSC announced a ruling to update its previous ruling regarding the authorization of securities investment trust enterprises (SITEs) to operate private equity fund businesses, which was released on 3 August 2017. Please refer to Item 7 of the Lexgroup Newsletter (Issue No. 451) for the summary of the updates.
Reported by: Jeffrey Liu / Eden Hsieh
11.Ruling Regarding New Types of Business for SITE/SICE Under Article 4.3.3 of the Securities Investment Trust and Consulting Act- Family Office
On 30 December 2024, the FSC announced a formal ruling allowing Securities Investment Consulting Enterprises (SICE) (including SITE concurrently operating SICE business) to accept clients’ engagement to collaborate with professionals or firms offering services such as trust, finance, accounting, legal, tax, philanthropy, and education for providing family office integration consulting services. Please refer to Item 8 of the Lexgroup Newsletter (Issue No. 453) for the summary.
Reported by: Jeffrey Liu / Jason Su
12.Amendments to FSC Rulings Related to the Delegation of Administrative Commission to TWSE, TPEX, and TDCC to Review Onshore/Offshore Fund Offering Applications/Reports
On 30 December 2024, the FSC announced the amendments to rulings related to the delegation of review work to Taiwan Stock Exchange Corporation (TWSE), Taipei Exchange (TPEX), and Taiwan Depository & Clearing Corporation (TDCC) in connection with onshore/offshore fund applications/reports, which have become effective from 1 January 2025. The changes in the types of applications/reports delegated to each of these organizations are as follows:
(1) TWSE: To add applications for follow-on offerings of actively managed exchange-traded funds (Active ETFs); to adjust the review scope of applications for public offerings of listed ETFs to include funds related to environmental, social, and governance (ESG) themes; and to add reports for public offerings not limited to domestic investments, provided that Active ETFs are excluded ; and to exclude public offering application of any sub-fund under an umbrella which simultaneously include ETFs and Active ETFs.
(2) TPEX: To add applications for follow-on offerings of Active ETFs listed on the over-the-counter (OTC) market; to adjust the scope of applications for public offerings of OTC-listed ETFs to include funds related to ESG themes; and to add reports for public offerings not limited to domestic investments, provided that Active ETFs are excluded; and to exclude the public offering application of any sub-fund under an umbrella which simultaneously include ETFs and Active ETFs.
(3) TDCC: To add report for sales and offering of offshore funds; and to adjust the scope of report of public offerings of onshore funds to include funds related to ESG themes and to add report for public offerings of fund not limited to domestic investments.
In addition, relevant application (report) documents, the Q&A of the Regulations Governing Offshore Funds, as well as the application handling procedures and/or review guidelines for each respective organization have also been revised accordingly.
Reported by: Jeffrey Liu / Amy Su
13.The Related Rulings and Regulations Regarding the Introduction of Actively Managed Exchange Traded Funds and the Relaxation of Restrictions on the Benchmark Constituents of Passively Managed Exchange Traded Funds
(1) On 25 December 2024, the FSC announced amendments to the “Regulations Governing Securities Investment Trust Funds” and other related rulings, which introduce the Active ETF and relax restrictions on the benchmark constituents of the passively managed exchange traded funds (Passive ETF), along with the inclusion of relevant provisions. The key points are generally consistent with the previous draft, so please refer to Lexgroup Newsletter (Issue No. 449) for the summary of the updates.
(2) On 30 December 2024, the FSC further issued several related rulings, waiving and/or implementing certain restrictions on Active ETFs. We summarize below.
(a) SITEs that purchase domestic Active ETFs for the purpose of adjusting fractional shares in their proprietary funds are not subject to the holding period restrictions. When a SITE raises an Active Bond ETF that invests in non-investment grade bonds, it shall still comply with the relevant provisions according to its investment strategy. Additionally, when a SITE raises an Active ETF that invests in total loss-absorbing capacity bonds, the bond ratings shall still meet the required minimum level as determined by relevant specific credit rating agencies, and the percentage of the investment in such bonds shall comply with the relevant provided restrictions.
(b) The types of funds which fund managers are allowed to manage concurrently have also been amended by adding “Active Equity ETF” under the category of “Actively Managed Equity Funds,” and “Active Bond ETF” under the category of “Actively Managed Bond Funds.”
(3) On 31 December 2024, Taiwan Stock Exchange, TPEX, and TDCC announced amendments to their respective operational rules and applicable filing documents to be in line with item (1) above.
Reported by: Jeffrey Liu / Jason Su / Eva Chiu
| 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) |