Taiwan Legal And Regulatory Updates - January 2019.

Legal News & Analysis - Asia Pacific - Taiwan - Regulatory & Compliance - Tax

4 February, 2019

 

The amended Company Act became effective on November 1, 2018

 

The newly amended Company Act, enacted August 1, 2018, officially entered into effect on November 1, 2018. (Albert Liao)

 

The draft of the amendment to Articles 14 and 126 of the Income Tax Act was adopted by the Executive Yuan

 

By virtue of the Constitutional Court’s Interpretation No.745, which states that it is a violation of the principle of equal rights that the current law disallows wage earners to deduct their necessary expenditure by itemizing or other methods when the necessary expenditure exceeds the permitted special income deduction, the Executive Yuan adopted the amendment to Article 14 and 126 of the Income Tax Act on December 6, 2018 to allow future wage earners to deduct such expenditure using “fixed amount deduction” method or “itemized expenditure deduction” method when calculating taxable income, provided that the itemized deduction shall be limited to three catigories of provable expenditure, to wit: expenditure for occupational outfits, expenditure for professional education or training, and expenditure for occupational tools, that the itemized expenditure must be directly related to the tax payer’s occupation or profession, and that the annual total amount of each such category shall not exceed 3% of the tax payer’s wage income. (Connie Huang) 

 

The “Labor Matters Act” has been enacted by the Legislative Yuan, implementation date thereof to be announced by the Judicial Yuan

 

The Legislative Yuan passed the “Labor Matters Act” on November 9, 2018 and published by the President on December 5, 2018.  Important provisions of the Act include: (1) all levels of courts shall establish a special labor branch (Art. 4). (2) The “labor matters” include civil disputes arising from employment relationship, violation of prohibition against workplace gender discrimination, employment discrimination, occupational injuries, disputes regarding non-competition agreements, etc. (Art. 2). (3) In principle, a mandatory medication shall be required in all labor matters (Art. 16). (4) To maintain substantive equality between the parties, the court shall as a general rule conclude the oral argument in one hearing when trying a labor matter, shall conclude the first instance trial within 6 months, and may investigate evidence sua sponte or on its own initiative (Arts. 32 and 33). (5) Workers are entitled to the presumption that they have obtained the employer’s consent to work during and throughout the hours as recorded in the attendance records; as such, the employer bears a heavier burden of proof to rebut the presumption (Art. 38). (6) The Act is also applicable retrospectively to those labor matters occurred before the implementation of the Act.  The implementation date of the Act is to be announced by the Judicial Yuan (Arts. 51 and 53). (Max Lee)

 

The Legislative Yuan passed the amendment to Article 11-2 of the Tax Collection Act to cope with electronic payment trend

 

The amendment allows people to transact matters or submit documents required by law in the form of electromagnetic records or electronic transmission, and authorizes the Ministry of Finance to promote electronic payment by way of subsidies or consultation. (Connie Huang)

 

Amendment to the regulations related to anti-money laundering

 

By virtue of the amendment to the Money Laundering Control Act on November 9, 2018, the following regulations were amended:

 

(1) amendment to the Regulations Governing Anti-Money Laundering of Financial Institutions on November 14, 2018, which provides that the transactions need to be reviewed and audited for purpose of anti-money laundering shall include all transactions (not limited to currency transactions) of NT$ 500,000 or more, and that the financial instituions conducting review and audit of suspicious money laudry or terrorism financing shall maintain the relevant records;

 

(2) amendment to the Regulations Governing the Implementation and Report of Anti-Money Laundering and Countering the Financing of Terrorism for Jewelry Retail Businesses on November 9, 2018, under which the definition of a jewelry retail business is changed and re-defined as a company or business conducting the business of the wholesale and/or retail of precious metals, precious stones or jewelry, regardless whether it joins the Gold and Silver Jewelry Commercial Association or not so that all such businesses must abide by the reporting requirements of Money Laundering Control Act and the releant regulations;

 

(3) promulgation of the Regulations Governing Internal Audit and Internal Control System of Anti-Money Laundering and Countering Terrorism Financing of Financial Leasing Enterprises on November 9, 2018, which requires that financial leasing enterprise should establish relevant internal control and audit system; and (4) amendment to regulations related to internal control systems of banks, securities and insurance companies, including

 

(i) the Regulations Governing Internal Audit and Internal Control System of Anti-Money Laundering and Countering Terrorism Financing of Banking Business and Other Financial Institutions Designated by the Financial Supervisory Commission,

 

(ii) the Regulations Governing Internal Audit and Internal Control System of Anti-Money Laundering and Countering Terrorism Financing of Securities and Futures Business and Other Financial Institutions Designated by the Financial Supervisory Commission, and

 

(iii) the Regulations Governing Implementation of Internal Control and Audit System for Anti-Money Laundering and Countering Terrorism Financing of Insurance Companies, Post Offices Engaging in Simple Life Insurance Business and Other Financial Institutions Designated by the Financial Supervisory Commission. (Abraham Cheng)

 

The Securities and Exchange Act was amended to require public traded companies to disclose the information relevant to the average salary of all employee and the history of change in annual financial report

 

The Legislative Yuan passed the amendment to the Securities and Exchange Act on November 8, 2018, providing that any company whose stock is listed on the stock exchange or traded over-the-counter shall, under the regulations prescribed by the Competent Authority, disclose in annual reports the information relevant to the average salary of all employees and the history of the change thereof. The Financial Supervisory Commission (“FSC”) is also planning a two phrase disclosure requirement, beginning June, 2019, on the non-supervisor average salary employees warefare, EPS, the employee average salary cost, and the comparison of the average salary of companies in the same industry, and, in second phase, on the median salary. (Andy Lee)

 

The FSC announced an interpretation pertaining to Item 5, Paragraph 3, Article 146-1 of the Insurance Act   

 

The FSC published an interpretation (Ref No. Jin-Guan-Bau-Zai-Zhi 10704504271) on November 12, 2018, where the FSC states that pursuant to Item 5, Paragraph 3, Article 146-1 of the Insurance Act, the shareholders of an insurance company cannot exercise the right to convene a special shareholders meeting prescribed in Article 173-1 of the Company Act if the agenda of such special shareholders includes the election of directors or supervisors. The above FSC interpretation has been effective since November 1, 2018 (Steven Yen)

 

The Executive Yuan announced the effective date and related rules and regulations of The Act Governing Information Security

 

On November 21, 2018, the Executive Yuan announced that The Act Governing Information Security would become effective on January 1, 2019, and published “The Enforcement Rules of the Act Governing Information Security”, “The Classification Regulations Governing Liability Level of Information Security”, “The Reporting and Reaction Regulations Governing Information Security Breach”, and “The Auditing Regulations Governing the Implementation of Information Security Protection Policy of Specific Private Entities”. The regulations require that the Specific Private Entities, such as infrastructure providers, establish their own information security protection policy, report to government authority online within 1 hour after learning of an information security breach, and complete the damage control or recovery procedure within 36 or 72 hours depending on the severity of the breach. An entity violating the afore-mentioned regulations may be fined a maximum of NT$ 5 million. (Leonard Chen)

 

 

For further information, please contact:  

 

C. Y. Huang, Partner, Tsar & Tsai Law Firm

CYHuang@TsarTsai.com.tw