30 March, 2018
The Ministry of Economic Affairs (“MOEA”) ruled that company specimen is no longer required on the letter of consent issued by a shareholder of unlimited company, limited company or unlimited company with limited liability shareholders for those matters requiring shareholder’s consent
On January 30, 2018, the MOEA stated in a letter ruling that company specimen is no longer required on the letter of consent issued by a shareholder of unlimited company, limited company or unlimited company with limited liability shareholders for those matters requiring shareholder’s consent (e.g., amendment to articles of organization). The ruling took effect upon the date of publication.
The company limited by share may issue the shares less than NTD 1 par value
On February 1 2018, the MOEA issued a letter ruling stating that while Article 156 of the Company Act provides that the capital of a company limited by shares shall be divided into shares and each share shall have the same par value. It does not prohibit issuing the shares at the par value of a figure less than one dollar. Hence, the MOEA retracked its own ruling in 1992 that requires the par value of shares be one dollar, two dollars or three dollars, etc.
The Financial Supervisory Commission Relaxes the Regulations on Investment by Commercial Banks in Venture Capital and Management Consulting Business
On December 25, 2017, the FSC promulgated the “Regulations on Application for Investment in Venture Capital and Management Consulting Business by Commercial Banks” (the “Regulations”), which provides that venture capital business and management consulting business conducting establishment or public offering of venture capital business are “the other financial related business designated by the competent authorities” referred to in Article 74 Paragraph 4 of the Banking Act that the commercial banks may invest. The Regulations provides that the total investment amount in the venture capital business and management consulting business conducting establishment or public offering of venture capital business by the commercial bank shall not exceed 3% of commercial bank’s net worth as of the date of the investment. The Regulations further provides that the shareholding of the commercial bank and its subsidiaries in the business invested through the venture capital business and management consulting business conducting establishment or public offering of venture capital business shall not exceed 15% of the voting shares of such business, excpt that the above restriction shall not apply if only the venture business subsidiary of the commercial bank participates in such investment and the amount of the investment does not exceed certain threshold. In addition, the Regulations prohibits the person-in-charge or employees of the commercial bank from holding the managerial position in the business that it investes through the venture capital business.
The Ministry of Finance promulgated the “Regulations Governing the Reduction and Exemption of Income Tax of Foreign Special Professionals”, which provides tax benefits in favor of foreign special professionals
To attract foreign special professionals to come to Taiwan, the MOF promulgated the “Regulations Governing the Reduction and Exemption of Income Tax of Foreign Special Professionals” (the “Regulations”) on January 30, 2018. The Regulations provides that during the three year period beginning the tax year in which a foreign special professional resides in Taiwan for a full 183 days and earns an annual salary of more than three million dollars for the first time, half of the portion of his/her salary exceeding three million dollars may be excluded from his/her gross income for purpose of calculating income tax liability in each qualified tax year. According to the Regulations, if a foreign special professional has not resided in Taiwan for a period of 183 days or has not earned an annual salary of more than three million dollars, the beginning of the three year period where the aforementioned tax benefit may be applicable can be deferred to the year in which he/she first meets said threshold. The maximum number of tax years that a foreign special professional may enjoy the aforementioned tax benefit shall be three years. The standards of definding “foreign special professionals” will be determined and published by the competent authorities of various industries respectively.
The Ministry of Finance announced the amendment to Standards of Withholding Rates for Various Incomes and increased the withholding rate of distributed dividends applied to foreign investors to 21%
For purpose of balancing the taxes imposed on domestic and foreign investors, the MOF announced the amendment to Standards of Withholding Rates for Various Incomes, and increased the withholding rate of distributed dividends/profits applied to foreign investors to 21% on December 29, 2017, to take effect beginng the year of 2018.
The Ministry of Finance ruled on calculation of income tax imposed on cross-border sales of electronic services conducted by foreign profit-seeking enterprises
On January 2, 2018, the MOF issued a letter ruling on income tax imposed on cross-border sales of electronic services conducted by foreign profit-seeking enterprises. The important points include: (1) the meaning of domestic source income: other than the income derived from the merchandise produced and manufactured overseas, which is in principle not considered domestic source income, the income or remuneration received from the electronic services via the internet or other electronic means that carry instantaneity, interactivity, conveniency and continuity, the electronic services used for sales at a domestic physical location and the online platforms that are used for cross-border transactions are domestic source income if either transaction party is a national of this country or or a domestic service with physical location in this country; (2) deduction of expense: the expense may be calculated according to the actual data or by referring to the ratio of expense to the net profit from the main business item of the entities in the same industry, or deemed to be 30% of the income if the above-mentioned calculation methods are not applicable, provided, however, that if the auditing authority should determine from examination of actual data that the ratio is higher, then the high ratio of expense calculated from the actual data shall be used; (3) ratio of contribution to profit from domestic source income versus foreign source income: except that the contribution to profit by domestic source income shall be 100% where the entire transaction process takes place in this country or the service is both rendered and used in this country, the contribution ratio shall be determined according to the actual data or deemed to be 50% each, provided, however, that if the auditing authority should determine thereafter from examination of the actual data that the contribution rate of domestic source income is higher than 50%, then the higher ratio calculated from the actual datat shall be used.
For further information, please contact:
Alex Cheng, Tsar & Tsai Law Firm
law@tsartsai.com.tw
