Tsar & Tsai Lex News is aimed at providing the readers and clients
- important recent changes in the laws and regulations in Taiwan,
- practical views and interpretations on the laws,
- important legal news and case developments, and
- information on recent activities of Tsar & Tsai Law Firm. If you have any comments or questions, please feel free to contact us (Tel: 886-2-6638-6999; e-mail: Law@TsarTsai.com.tw ).
Editors: Edgar Chen / George Shih
The Ministry of Finance (“MOF”) promulgated the “Revenue Service’s guidelines for reviewing taxpayer’s application for the deferral of the tax payment or for payment by installments due to Coronavirus disease (COVID-19).”
In order to assist taxpayer who fails to pay within the prescribed time limit due to the impact of COVID-19, MOF promulgated the “Revenue Service’s guidelines for reviewing taxpayer’s application for the deferral of the tax payment or for payment by installments due to COVID-19 (Guidelines)” according to Article 26 of Tax Collection Act on March 25, 2020. The Guidelines is effective immediately.
The Guidelines apply to those whose tax payment is during the implementation of Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens (Special Act) (from January 15, 2020 until June 30, 2021). Tax categories include various national and local taxes that are easily affected by COVID-19, such as: Business Tax, Profit-Seeking Enterprise Income Tax, Consolidated Income Tax, House and Land Transactions Income Tax, Commodity Tax, Tobacco and Alcohol Tax, Specifically Selected Goods and Services Tax, House Tax, Land Value Tax, and Vehicle License Tax etc. According to the Guidelines, the extension period is limited to a maximum of one year, and the number of installments (each period is calculated as one month) is limited to a maximum of 36 periods.
Applicable targets are mainly individuals and enterprises of which are provided relevant revitalization measures by competent authorities (including Ministry of Economic Affairs, Ministry of Transportation and Communication, Ministry of Health and Welfare, Council of Agriculture, Executive Yuan and Ministry of Culture) of their respective industries according to Paragraph 3, Article 9 of Special Act. For example, in accordance with the relief measures promulgated by Ministry of Economic Affairs, the manufacturing industry, service industry and other industries registered in accordance with the law whose the average turnover for the two consecutive months since January 2020 has decreased by 15% compared with the six months before December 2019 or the same period of the previous year are the applicable targets of the Special Act. According to the Guidelines, such industries or businesses will be able to apply to this tax preference. (Yijia Chao, Esq.)
The Judicial Yuan passed the amendment to Section 199 of the Directions for the Conduct of Civil Actions
On March 25, 2020, the Judicial Yuan announced the amendment to Section 199 of the Directions for the Conduct of Civil Actions, which will come into force immediately. When an ancillary civil action along with the criminal procedure filed in the second instance of summary proceeding in district court by those who injured by an offence, is pronounced to transfer to the civil division of the said court by a ruling, the civil division of the said court shall make the first judgment under the second instance of summary proceeding irrespective of the price or value of the claim. (Linda Huang, Esq.)
New “Fast-Track” trademark examination mechanism to hit the road on May 1 for applicants to secure their rights quickly
To encourage applicants to utilize TIPO’s e-filing application system and to speed up trademark examination, TIPO will enforce a “Fast-Track” mechanism soon. From May 1, 2020 on, the trademark applicants who pay their fees duly and whose documents meet the following requirements at the time of application will find their cases examined two months earlier than others: (1) using e-filing applications; (2) only applications for plain trademark are eligible, excluding non-traditional trademark, certification mark, collective membership mark and collective trademark; (3) the names of the designated goods or services are exactly the same as the ones listed in TIPO’s e-filing system; (4) the fees are paid through a designated bank account or an electronic payment sheet in printed form by the counter or via eATM; and (5) a power of attorney should be presented if there is an agent or agents in power.
Once all requirements are met, this type of applications will be prioritized for examination. The applicant should expect to know whether his or her trademark can be registered 1.5 months earlier than the current average first action (FA) period. This will help the applicant use his or her trademark to expand business activities and build a portfolio sooner. Nevertheless, the “first-to-file” principle still applies here. That is, the applications which arrive at TIPO first will still be registered first, thus expelling late comers.
The qualified trademark applications cases will be noted as “Fast-Track cases” in a detailed form in TIPO’s trademark search system about 1 month after e-filing, and its status will also be shown. (Kevin Wei, Trademark Department)
The Financial Supervisory Commission (“FSC”) amended the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Public Banks and Publicly Held Bills Finance Companies, requesting disclosure of major shareholders in quarterly financial report.
On March 23, 2020, the FSC issued a letter (No. Jin-Guan-Yin-Fa-Zi-10902706971) to revise the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies”, “Regulations Governing the Preparation of Financial Reports by Public Banks” and “Regulations Governing the Preparation of Financial Reports by Publicly Held Bills Finance Companies”, amending that financial holding companies, public banks and publicly held bills finance companies listed in Taiwan Stock Exchange (TWSE) or trading on the Taipei Exchange (TPEx) shall disclose information of major shareholders in quarterly financial report, including shareholders with a stake of 5% or greater and the number of shares and stake held by each shareholder to enhance corporate governance and increase transparency of financial report. The revised Regulations will become effective from 2020 fiscal year. (Rebecca Lin, Esq.)
The FSC amended the Regulations Governing Information to be Published in Annual Reports of Banks, Financial Holding Companies and Bills Finance Companies and Regulations Governing Information to be Published in Financial Institution Prospectuses for Offering and Issuance of Securities to enhance disclosure of information concerning corporate governance.
On March 24, 2020, the FSC issued a letter (No. Jin-Guan-Yin-Fa-Zi- 10902707461) to revise the “Regulations Governing Information to be Published in Annual Reports of Banks”, “Regulations Governing Information to be Published in Annual Reports of Financial Holding Companies”, “Regulations Governing Information to be Published in Annual Reports of Bills Finance Companies” and “Regulations Governing Information to be Published in Financial Institution Prospectuses for Offering and Issuance of Securities”. The gist of the revisions includes:
- Enhance disclosure of corporate governance enforcement: (1) Where the chairman and the highest level manager are the same person, spouses, or relatives within the first degree of kinship, an explanation of necessity and the measures adopted in response thereto shall be included; (2) disclosure of resignations and dismissals of chief corporate governance officer.
- Facilitate transparency of remuneration of directors, supervisors and senior executives and reasonable pricing: (1) banks, financial holding companies and bills finance companies listed in Taiwan Stock Exchange (TWSE) or trading on the Taipei Exchange (TPEx) shall disclose information of individual remuneration paid to each of their top 5 management personnel under certain circumstances; (2); disclosure of the remuneration paid to each individual director and supervisor in case the company is ranked in the lowest tier in the corporate governance evaluation for the most recent fiscal year or the Corporate Governance Evaluation Committee has resolved that the company shall be excluded from evaluation; (3) disclosure of remuneration of directors, supervisors and senior executives paid by parent companies.
- Increase the quality of non-financial information disclosure: (1) disclosure of legal penalty against the company or its internal personnel in case such penalty could have a material effect on shareholder equity or securities prices; (2) disclosure of repurchasing ratio and relevant information of treasury stock. (Rebecca Lin, Esq.)
MOF indicated that the Epidemic Compensation is exempt from Income Tax.
The MOF issued a letter interpretation No. Tai-Tsai-Shui-Zi-10904533040 (dated March 31, 2020), which indicated that Individual Epidemic Compensation provided by the municipality/city/county governments according to the Article 3 of Compensation Measures for Severe Pneumonia with Novel Pathogens during Isolation and Quarantine is considered the gift from the government. Thus it is exempt from Income Tax according to Article 4 of Income Tax Act. (Yijia Chao, Esq.)
The Ministry of Economic Affairs (“MOEA”) issued an interpretation letter regarding the application of the principle of prohibiting agents from representing both parties simultaneously.
On February 20, MOEA issued an interpretation letter (No. Jing-Shang-Zhi -10902404220), elaborating that Paragraph 4 of Article 108, i.e., the principle of prohibiting agents from representing both parties simulatneouly, shall applies mutatis mutandis to Article 59 of the Company Act, only when the application is not contractdicatory to the nature of these two articles. For example, if the shareholder gratuitously grant her property to the company, it is not necessary to trigger the application of the principle of prohibiting agents from representing both parties simultaneously of Article 59. (Michael Hsu, Esq)
The MOEA issued an interpretation letter regarding the exemption from setting aside the legal reserve again whenever the company allocates its profits owing to reversal.
On March 3, 2020, MOEA issued an interpretation letter (Jing-Shang-Zhi-10902005780), illustrating that as long as the company has set aside legal reserve for its special reserve, when the company allocates the special reserve as profits owing to reversal, it is unnecessary for the company to set aside the legal reserve again. (Michael Hsu, Esq)
The MOEA issued an interpretation letter to clarify that the Board of Directors shall have the authority to distribute cash dividends, even if the amount of cash dividends is zero.
On March 18, 2020, MOEA issued an interpretation letter (No. Jing-Shang-Zhi-10902407350), dwelling on that, subject to Paragraph 5 of Article 240 of the Company Act, under the authorization of Articles of Incorporation, the Board of Directors is entitled to distribute cash dividends. As to the resolution of not distributing dividends, i.e., zero sum of cash dividends, this resolution shall still be categorized into the authority of the Board of Directors. Nevertheless, making up the deficits is irrelevant to the distribution of cash dividends; as a result, it does not trigger Paragraph 5 of Article 240. (Michael Hsu, Esq.)
The Solutions for Labor Related Issues in Enterprises Due to the Impact of COVID-19 Pandemic
Hannah Chang, Esq./ Jackie Lin, Esq.
Due to the impact of COVID-19 pandemic, companies are facing financial difficulties. The solutions for labor related issues in enterprises are briefly introduced as follows:
- May employers reduce employees’ working hours or implement the “unpaid leave”?
By consulting with each employees and obtaining their individual consent, employers may temporarily reduce employee’s working hours or implement the “unpaid leave”; provided, however, that
- a written agreement shall be entered into between the employer and each employee, and the local government shall be notified;
- the reduced monthly salary shall not be less than the statutory monthly minimum wage (i.e., NT$23,800 starting from January 1, 2020);
- the period for such adverse adjustments to working hours and wage shall not be longer than 3 months which may be extended with a separate consent from each affected employee;
- during such period, the labor pension shall be continued based on the original wages, unless otherwise agreed by the affected employees. For the labor insurance and national health insurance, if there is a reduction in wages, employers may apply for insured amount reduction by providing the relevant salary information with the competent authorities; in addition, the affected companies may apply to the competent authorities for an extension of 6 months for labor insurance and labor pension payment; and
- during such period, the affected employees, without affecting the implementation of on-the-job training, should be allowed to seek other part-time job, which is free from the restriction of the non-compete clause in the original employment agreement, and the employer shall not unreasonably prohibit the affected employees to do so, provided however, to avoid controversy, it is advisable that the relevant details of part-time jobs be included in written agreements.
- May employers reduce employee’s salary?
By consulting with each employees and obtaining their individual consent, employers may temporarily reduce employee’s salary; the employers shall however follow the above-mentioned regulations for working hours reduction and “unpaid leave” implementation.
- May employers choose not to proceed with planned salary increases?
Employer may postpone or cancel the planned salary increases by obtaining each affected employee’s or Labor-Management Committee’s consent. However, the actual practice shall be implemented case by case.
- Acquisition International Magazine has announced the “AI Global Excellence awards 2020” and Tsar & Tsai was awarded with “Most Outstanding M&A Law Firm 2020 – Taiwan”.
- Jennifer Lin, Esq. was selected by “Who’s Who Legal Magazine” as “World’s Leading Patent Lawyer” in 2020.
- Jackie Lin, Esq. was selected by “Who’s Who Legal Magazine” as “World’s Leading M&A & Governance Lawyer” in 2020.
- Matt Liu, Esq. was selected by “Who’s Who Legal Magazine” as “Competition Lawyer” in 2020.
- 2020 Global Law Experts Annual Awards has announced that Tsar & Tsai was awarded with “Capital Markets Law Firm of the Year in Taiwan – 2020” and “Cross Border Finance Law Firm of the Year in Taiwan – 2020”.
- The “Formosa 2 Offshore Windfarm Project Financing” and “Yunlin Offshore Windfarm Project Financing” advised by Tsar & Tsai were selected by TXF Awards 2019 as”Deal of the Year 2019”.
- Tsar & Tsai was recognized by “Corporate America Today – Annual Awards 2020” as “Full Service Law Firm of the Year – Taiwan”.
- Tsar & Tsai was awarded by “Proximo Deals of the Year Awards 2019” as “APAC Offshore Wind Deal of the Year–YunNeng Wind Power”.