{"id":101964,"date":"2025-04-28T09:23:08","date_gmt":"2025-04-28T09:23:08","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=101964"},"modified":"2025-09-01T13:58:32","modified_gmt":"2025-09-01T13:58:32","slug":"taiwan-technology-outsourcing","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/taiwan-technology-outsourcing\/","title":{"rendered":"Taiwan: Technology Outsourcing"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-101964","comparative_guide","type-comparative_guide","status-publish","hentry","guides-technology-outsourcing","jurisdictions-taiwan"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Lee and Li, Attorneys-at-Law<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/Firm-Logo_Lee-and-Li.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Lee and Li, Attorneys-at-Law<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/Firm-Logo_Lee-and-Li.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Technology Outsourcing laws and regulations applicable in Taiwan<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Market overview: Please provide a high-level overview of the outsourcing market in your jurisdiction (e.g. who are the key players and in what sectors (public and private) are you seeing outsourcing services being adopted)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Taiwan&#8217;s outsourcing market has experienced significant growth in recent years, particularly within high-tech sectors such as semiconductors, consumer products, and information technology. Notably, Taiwan&#8217;s semiconductor industry features a comprehensive industrial chain that encompasses design, manufacturing, packaging, and testing. This integrated structure enables companies to concentrate on design and market development while outsourcing various manufacturing processes to specialized third-party service providers, thereby integrating such processes to form completed products. This approach optimizes resource allocation, enhances efficiency, and reduces costs.<\/p>\n<p>Moreover, many technology companies consider the outsourcing of software development and information systems to be advantageous. By outsourcing these functions, companies can focus on their core competencies while leveraging the expertise and resources of external providers. Such business models improve the efficiency of product development while enhancing the quality of the final products.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Market overview: What is the current attitude of the government and of regulators to the use of outsourcing in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, the government&#8217;s attitudes towards outsourcing are illustrated by the regulatory framework that governs public-sector transactions and the specific requirements imposed on regulated industries. The Government Procurement Act mandates that outsourcing by government bodies must be conducted in accordance with stipulated procurement procedures, ensuring transparency and competitiveness in the outsourcing process.<\/p>\n<p>In Taiwan, many industries remain unregulated in terms of outsourcing, allowing businesses in such industries to outsource operations without the burden of oversight.<\/p>\n<p>Businesses in other industries, such as financial institutions and insurance companies, are subject to stricter regulations designed to protect consumer interests and maintain financial stability.<\/p>\n<p>Overall, while the government supports outsourcing in public sectors through structured regulations, it adopts a more hands-off approach for private sector outsourcing, allowing for greater business efficiency and innovation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Procurement: Are there specific procurement-related laws or regulations governing outsourcing by public sector or government bodies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, the outsourcing and procurement of goods and services by government and public-sector entities are regulated by the Government Procurement Act (&#8220;GPA&#8221;). As the foundational legal framework for government procurement in Taiwan, the GPA mandates that procurement processes primarily occur through competitive tendering to ensure fairness, transparency, efficiency, and quality of procured goods and services.<\/p>\n<p>The tendering process typically involves the publication of tender notices and qualification assessments to verify that bidders meet criteria used for selecting suppliers and bids meet similar requirements. The GPA emphasizes quality assurance, and requires government bodies to consider both the price and the quality of the products and services offered by bidders.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Procurement: Are there specific procurement-related laws or regulations governing outsourcing by private sector organisations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, the financial and insurance industries are the most notable examples of private-sector industries in which outsourcing is regulated, with particular procurement-related laws governing outsourcing applying specifically to such sectors. For instance, the Regulations Governing Internal Operating Systems and Procedures for the Outsourcing of Financial Institution Operations and the Directions Governing Procedures for the Outsourcing of Insurance Industry impose stringent requirements on the outsourcing of cloud services. These requirements encompass risk management, monitoring, and data protection measures to ensure the security and integrity of customer information that is stored, transferred and accessed via the internet.<\/p>\n<p>In contrast, private-sector organizations outside the insurance and financial industries are not subject to specific laws concerning outsourcing of cloud services. As a result, such businesses (i.e., those outside of insurance and financial industries) can procure such services without the need for prior approvals or reporting obligations. This provides non-regulated entities with greater flexibility in their outsourcing operations, while ensuring that financial institutions adhere to comprehensive guidelines designed to protect customer data and maintain operational integrity.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Laws and Regulations: Are there any other specific laws or regulations that apply to outsourcing? If not, what key general laws and regulations are most relevant?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, while there are no specific laws exclusively governing outsourcing beyond the Government Procurement Act and regulations applicable to certain regulated industries, such as the financial sector, several key general laws are relevant to outsourcing activities.<\/p>\n<p>For instance, the Civil Code, for example, governs rights and obligations arising from civil contracts. Additionally, the Copyright Act and the Patent Act regulate the granting, licensing, protection, and transfer of intellectual property rights, thereby ensuring proper ownership and usage of creative and innovative works. The Trade Secrets Act further protects confidential business information from unauthorized disclosure, while the Personal Data Protection Act governs the collection and processing of personal data, ensuring compliance with established privacy standards. Furthermore, labor laws, including the Labor Standards Act, address issues related to labor dispatch relationships, promoting fair treatment of workers involved in outsourced operations.<\/p>\n<p>Last but not least, it is important to note that outsourcing arrangements involving &#8220;technical cooperation&#8221; between enterprises in Taiwan and Mainland China (excluding Hong Kong and Macau SAR) must receive prior approval from the Ministry of Economic Affairs, as per Article 35 of the &#8220;Act Governing Relations between the People of the Taiwan Area and the Mainland Area.&#8221; The scope of such technical cooperation is strictly limited to items not designated as prohibited by the Executive Yuan. For the purposes of this regulation, &#8220;technical cooperation&#8221; encompasses the transfer or licensing of know-how, patents, and copyrights related to computer software. Non-compliance with these regulations may result in fines ranging from NT$50,000 to NT$25,000,000. In cases involving prohibited items, offenders may also face criminal liabilities, including imprisonment, detention, and\/or additional fines.<\/p>\n<p>Collectively, these laws establish the legal framework that governs outsourcing practices in Taiwan.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Laws and Regulations: Do any specific regimes apply to outsourcing arrangements in particular sectors (e.g. financial services)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, the regimes that govern outsourcing arrangements are specifically applicable to financial institutions and insurance companies. Please refer to our answer to Question 4 for more details.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Competition law: To what extent might outsourcing arrangements require notification or approval under merger control rules?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under Taiwan&#8217;s Fair Trade Act, outsourcing arrangements generally do not require combination notifications (merger filings) unless they qualify as a &#8220;merger&#8221; as defined in Article 10 and meet the specified merger thresholds, which are mainly related to the market shares and domestic sales figures of the participating enterprises from the previous fiscal year.<\/p>\n<p>In the context of outsourcing, if an arrangement involves only the outsourcing of a portion of business activity to a third party, such contractual arrangement typically does not constitute a &#8220;frequent joint operation&#8221; or &#8220;entrustment&#8221; as per Subparagraph 4, Paragraph 1, Article 10 of the FTA. Furthermore, if neither party to an outsourcing agreement exercises control over the other&#8217;s business operations or personnel management, such arrangement does not meet the criteria for control outlined in Subparagraph 5, Paragraph 1, Article 10 of the FTA. Therefore, such outsourcing arrangements would not trigger the combination notifications (merger filings) requirement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Competition law: To what extent are the terms of outsourcing agreements the subject of restrictions under competition law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, outsourcing agreements between competing enterprises at the same production and\/or marketing stage that involve technology licensing may be subject to restrictions under competition law, specifically the Fair Trade Act.<\/p>\n<p>Particularly, if such parties engage in practices such as price-fixing, quantity limitations, or restrictions on trading partners that adversely affect market competition, these actions may be classified as concerted action under Articles 14 and 15 of the FTA. Such violations can result in penalties including imprisonment for up to three years, detention, and\/or fines not exceeding 100 million NTD. Furthermore, any contractual provisions that limit the licensee&#8217;s ability to conduct research and development or compete, or that segment customers unrelated to the license, could be in violation of Article 20 of the FTA. Such article imposes additional restrictions, including prohibitions of exclusive sales through the licensor or mandates for purchases from designated parties without adequate justification. Violators of Article 20 of the FTA may face imprisonment for up to two years, detention, and\/or fines not exceeding 50 million NTD.<\/p>\n<p>Moreover, prior to the 2015 amendment of the FTA, the improper acquisition of trade secrets was considered a violation of the FTA if such acquisition posed a risk to competition or impeded fair competition. However, since the relevant provisions were removed from the FTA, the misappropriation of trade secrets is now governed by the Trade Secrets Act, which imposes civil and criminal liabilities for such violations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Intellectual property (\u2018IP\u2019) rights: What IP (registrable and non-registrable) is typically created in the course of an outsourcing arrangement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Outsourcing commonly involves production of copyrightable materials, such as software code, marketing materials, and documentation. This process can involve different types of intellectual property (IP), both registrable and non-registrable. Registrable IP includes patents, trademarks, and copyrights, while non-registrable IP encompasses trade secrets, know-how, confidential information, unregistered trademarks, and moral rights.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Intellectual property (\u2018IP\u2019) rights: In an outsourcing arrangement, would any contractual terms or formal steps be required to vest supplier-created IP in the customer?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In an outsourcing arrangement, in order to vest supplier-created intellectual property (IP) in the customer, it is necessary to establish clear contractual terms. The following points outline the necessary considerations:<\/p>\n<p>(1) Patents: To ensure that any patents resulting from research and development projects are owned by the customer, the contract must explicitly state that the customer holds the rights to apply for patents and any resulting patent rights. Without such a provision, the default legal position is that the supplier retains these rights, while the customer may only have the right to use the outcomes of the R&amp;D.<\/p>\n<p>(2) Copyrights: For copyrightable works, the agreement should specify whether the customer is to be recognized as the author and copyright holder. If the contract does not clarify this, the supplier will automatically be deemed the copyright holder. Therefore, if the intended arrangement is to assign copyright ownership to the customer, it is essential that the agreement include clauses to such effect.<\/p>\n<p>(3) Trade Secrets: Ownership of trade secrets generated during the R&amp;D process must also be clearly defined in the contract. If the contract is silent on this issue, the supplier will retain ownership of the trade secrets, while the customer may only use them for its business operations. To avoid ambiguity, the contract should explicitly state whether any trade secrets developed under the contract will belong to the customer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Intellectual property (\u2018IP\u2019) rights: How are confidential information, know-how and trade secrets protected in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, trade secrets are primarily protected under the Trade Secrets Act. Under the TSA, trade secrets are defined as information such as methods, techniques, processes, formulas, programs, designs, or other information used for production, sales, or operations that meets the following criteria:<\/p>\n<ol style=\"padding-left: 0\">\n<li>It is not known to persons generally involved in this type of information;<\/li>\n<li>It has economic value, actual or potential, due to its secretive nature; and<\/li>\n<li>The owner has taken reasonable measures to maintain its secrecy.<\/li>\n<\/ol>\n<p>The TSA provides a clear framework for identifying and protecting trade secrets, outlining both civil and criminal liabilities for misappropriation. Additionally, trade secrets are protected under the Taiwan National Security Act if they fall within the category of national core critical technologies defined therein.<\/p>\n<p>Confidential information and know-how that does not qualify as trade secrets may still be protected under the Copyright Act, Criminal Code and\/or contract or tort law under civil law principles.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Data: What is the regime in your jurisdiction for regulating the protection and processing of personal data and what are the main implications for outsourcing arrangements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The protection and processing of personal data in Taiwan are primarily governed by the Personal Data Protection Act. This legislation delineates the obligations of entities that handle personal data and establishes the rights of individuals concerning their personal information. Under the PDPA, &#8220;personal data&#8221; is defined as any information that can identify an individual, either directly or indirectly.<\/p>\n<p>Non-governmental agencies are required to inform individuals about the purpose, type, duration of use, geographical area, recipients, and methods of data collection when gathering personal data. Importantly, consent from individuals is mandatory for the use of their data for specified purposes, thereby creating a clear framework for transparency and accountability in data handling.<\/p>\n<p>When outsourcing data processing activities, organizations must comply with the PDPA and must require service providers to do the same. This includes verifying that third-party service providers obtain required user consents and adhere to the same standards of data protection as those imposed on the outsourcing company. Organizations should also implement appropriate security measures and conduct due diligence to mitigate risks associated with data breaches or non-compliance. Failure to comply with the PDPA can result in legal penalties and reputational damage.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Data: What is the regime in your jurisdiction for regulating the processing of non-personal data and what are the main implications for outsourcing arrangements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, the processing of non-personal data, especially regarding the so-called National Core Key Technologies, is regulated by the amended National Security Act. This law protects sensitive technologies from disclosure to foreign entities, particularly those from Mainland China, Hong Kong, and Macau, to safeguard national security and economic interests. The National Science and Technology Council has identified 22 critical technologies across various sectors, including integrated circuit manufacturing technologies for processes below 14 nanometers, along with associated key gases, chemicals, and equipment technologies, as well as heterogeneous integration packaging technology.<\/p>\n<p>In light of the foregoing regulation on the National Core Key Technologies, outsourcing arrangements must include strict confidentiality clauses and compliance measures to prevent unauthorized disclosure of confidential information containing National Core Key Technologies. Additionally, companies must conduct thorough due diligence on foreign partners to mitigate risks associated with the transfer of critical technologies. Non-compliance can lead to severe penalties under the National Security Act, making it imperative to prioritize the protection of these technologies in outsourcing arrangements.<\/p>\n<p>On a related note, if the processing of non-personal data in outsourcing arrangements involves &#8220;technical cooperation&#8221; between enterprises in Taiwan and Mainland China (excluding Hong Kong and Macau SAR), prior approval from the Ministry of Economic Affairs will be required. For further details, please refer to our response to Question 5.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Cyber: Does your jurisdiction have specific cybersecurity legislation or regulations and what are the main implications for outsourcing arrangements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, cybersecurity legislation primarily focuses on the requirements for protecting sensitive information, such as personal data. The Personal Data Protection Act mandates that non-governmental organizations implement security measures to safeguard personal data against theft, alteration, damage, loss, or leakage. The Enforcement Rules of the PDPA outline specific technical and organizational measures that agencies should consider, guided by the principle of proportionality. These measures encompass the allocation of management resources, definition of personal data scope, establishment of risk assessment and breach response protocols, implementation of internal control procedures, promotion of awareness and training, management of facility security, maintenance of records, and ongoing enhancement of data security and maintenance practices.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Technologies: To what extent are certain technologies commonly used in outsourcing arrangements (e.g. artificial intelligence, robotic process automation, cloud computing and blockchain\/distributed ledger technologies) the subject of specific regulations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While certain technologies like AI, cloud computing, and blockchain are increasingly integral to outsourcing arrangements, Taiwan&#8217;s regulatory framework remains limited and sector-specific, primarily focusing on financial institutions and securities.<\/p>\n<ol style=\"padding-left: 0\">\n<li>Cloud Computing: Outside of regulated sectors like banks and insurance companies, there are no specific laws governing the outsourcing or use of cloud services in Taiwan. This means that non-financial institutions can procure cloud services without prior approval or reporting obligations.<\/li>\n<li>AI-based technologies: Currently, Taiwan lacks specific regulations for AI usage and procurement. Although there were plans to introduce the Artificial Intelligence Fundamental Act by the end of 2023, the rise of generative AI has postponed this to late 2024. In the interim, regulatory authorities are developing administrative guidelines to promote responsible AI use across various industries.<\/li>\n<li>Blockchain-based solutions: There are no national laws specifically addressing blockchain procurement. The Taiwan Financial Supervisory Commission (FSC) classifies cryptocurrencies as digital &#8220;virtual commodities,&#8221; and therefore subject to existing civil regulations. However, a 2019 ruling determined that virtual currencies with investment characteristics are classified as &#8220;securities&#8221; under the Taiwan Securities and Exchange Act. Sales of security tokens are subject to different regulations based on a threshold of NTD 30 million, with lower amounts potentially exempt from filing obligations while higher amounts must undergo testing in a financial regulatory sandbox to meet requirements of the SEA.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Employment law: Do your jurisdiction\u2019s employment laws and regulations have specific implications for outsourcing arrangements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In outsourcing arrangements, the employment relationship typically exists between the worker engaged in the outsourced tasks, who is considered the employee, and the outsourcing service provider, which acts as the employer. The outsourcing service provider is obligated to comply with relevant employment laws, including the Labor Standards Act and the Labor Insurance Act, concerning wages, working hours, and other labor rights. Notably, a client of the outsourcing service provider does not assume any employer responsibilities in this context.<\/p>\n<p>However, if the outsourced services are provided under a labor dispatch arrangement, such relationships are governed by Article 17-1 of the Labor Standards Act. This provision prohibits the &#8220;dispatch-requiring entity&#8221; (i.e., the client of the outsourcing service provider) from engaging in personnel selection activities prior to the &#8220;dispatching entity&#8221; (i.e., the outsourcing service provider) entering into an employment contract with the dispatched worker (i.e., the individual performing the outsourced tasks). Failure to comply with this regulation may result in fines ranging from NTD 90,000 to NTD 450,000. Furthermore, if the dispatching entity fails to pay wages, the dispatch-requiring entity may be held jointly liable for the unpaid amount, as well as for compensation related to occupational injuries.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Employment law: How are employees transferred under an outsourcing arrangement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In outsourcing arrangements, employees are not automatically transferred by law, except in cases of mergers, acquisitions, or group reorganizations. Employers must adhere to specific principles when transferring employees, unless alternative agreements are made with the employees.<\/p>\n<p>As a general rule, employers may only transfer an employee based on the following principles, unless otherwise agreed by the employees:<\/p>\n<ol style=\"padding-left: 0\">\n<li>The transfer should be based on the needs of business operations and should not be motivated by improper purposes.<\/li>\n<li>Wages and other working conditions should not be changed to the detriment of the employee being transferred.<\/li>\n<li>The employee should still be able to satisfactorily perform the required duties in terms of physical ability and skills after the transfer.<\/li>\n<li>The employer should provide necessary assistance if the relocated workplace is too far away for the employee.<\/li>\n<li>The livelihood interests of the employee and their family should be considered.<\/li>\n<\/ol>\n<p>Under the Labor Standards Act, pregnant female workers have the right to request a transfer to a position requiring less strenuous work. Employers cannot deny such requests or reduce wages. These regulations ensure that the health and safety of both the mother and the fetus are prioritized.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Tax: What are the general tax considerations in your jurisdiction with implications for outsourcing arrangements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, outsourcing arrangements have specific tax implications based on the service provider&#8217;s residency and remuneration levels. For a Taiwan company providing outsourcing services, if such company&#8217;s monthly remuneration exceeds NT$200,000, it is required to declare and pay business tax every two months, with a general applicable tax rate of 5%. For companies receiving remuneration between NT$40,000 and NT$200,000 per month, business tax is assessed quarterly at a rate of 1% of the turnover. Sales below NT$40,000 are exempt from business tax. Additionally, if annual remuneration exceeds NT$120,000, a 20% income tax is imposed on the entire taxable income, capped at half of the income exceeding NT$120,000.<\/p>\n<p>For a foreign technical outsourcing service provider without a fixed place of business in Taiwan, which offers electronic services such as cloud storage computing to buyers in Taiwan (including individuals, profit-seeking enterprises, or organizations), the remuneration received will be subject to special income tax regulations. Relevant costs and expenses may be deducted in accordance with applicable regulations, and the Taiwan-sourced income will be calculated based on the contribution of domestic profits, after which a 20% income tax will be levied.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">ESG: Are there any specific ESG requirements in your jurisdiction (e.g. relating to carbon emissions, modern slavery, anti-bribery\/corruption, waste electronic equipment, etc.), and what are the implications of these for outsourcing arrangements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Taiwan&#8217;s current legal framework does not include specific regulations governing ESG considerations in outsourcing arrangements. Furthermore, there are no explicit prohibitions against forced labor. While anti-bribery laws primarily focus on public officials, there is limited regulation of bribery in the private sector. In cases involving employees of private entities, allegations of bribery may instead lead to charges of breach of trust under the Criminal Code or violations of the Securities Exchange Act.<\/p>\n<p>Regarding carbon emissions, the Ministry of Environment has announced the implementation of carbon fees under the Climate Change Response Act, which will affect companies emitting over 25,000 metric tons of CO2 annually, starting in 2026. The initial fee is set at 300 NTD per ton, with the potential to increase to between 1,200 and 1,800 NTD per ton by 2030. This regulatory change will require affected outsourcing firms to monitor and report their emissions, which may significantly impact their operational costs and sustainability practices.<\/p>\n<p>Additionally, waste generated during the outsourcing process must be managed in accordance with the Waste Disposal Act. Failure to properly dispose of hazardous waste can result in severe penalties, including imprisonment and fines. Authorities also have the right to recover clean-up costs from parties deemed responsible for improper disposal.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Cross-border: Do cross-border or multi-jurisdictional outsourcing arrangements raise any specific challenges or concerns in your jurisdiction (e.g. relating to export control or data transfer laws)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Cross-border outsourcing in Taiwan may present challenges, particularly concerning data transfer regulations and export control compliance. Businesses pursuing international operations must navigate these complexities to ensure adherence to legal requirements.<\/p>\n<ol style=\"padding-left: 0\">\n<li>Data Transfer Regulations: Under Taiwan&#8217;s Personal Data Protection Act, cross-border data transfers are generally permissible, but they are subject to restrictions imposed by central authorities. Transfers may be prohibited if they threaten national interests, violate international agreements, or involve countries lacking adequate data protection laws. Notably, the National Communications Commission and the Ministry of Health and Welfare have restricted data transfers to Mainland China due to inadequate protections. A proposed ruling by the MOHW aims to further restrict data transfers by drug wholesalers and retailers to Mainland China, pending specific conditions.<\/li>\n<li>Export Control Compliance: Taiwan has established a control list for Strategic High-Tech Commodities (&#8220;SHTC&#8221;), guided by international frameworks despite Taiwan&#8217;s not being a member of key export control regimes. The Foreign Trade Act mandates that exports of SHTC require authorization, and any changes in intended use or end user must be approved. Violations can result in severe penalties, including criminal charges and administrative fines. Specific categories of SHTC, particularly those related to dual-use items and sensitive technologies, face stringent export controls.<\/li>\n<li>Sector-Specific Restrictions: Certain sectors, particularly semiconductor manufacturing, face additional scrutiny. Twelve categories of semiconductor wafer fabrication equipment require export permits, and detailed technical specifications must be provided. This adds another layer of complexity for businesses engaged in cross-border outsourcing, as compliance with both data protection and export control laws is essential to avoid legal repercussions.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Liability: Are there limits on what liabilities can be contractually excluded in your jurisdiction (e.g. are there certain liabilities which cannot be limited or excluded by law)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Civil Code allows parties to a contract to limit or exclude their liabilities, with certain exceptions. Specifically, liability arising from intentional acts or gross negligence cannot be waived or limited by contract. In other words, the parties must bear responsibility for serious misconduct, ensuring a level of accountability in contractual relationships.<\/p>\n<p>Additionally, the Civil Code recognizes the doctrine of changed circumstances. If unforeseen events occur that significantly alter the obligations of the parties, they may seek judicial intervention. This allows for the adjustment of contractual obligations to reflect new realities, thereby preventing unfair outcomes.<\/p>\n<p>In practice, it is common for contracts in Taiwan to include &#8220;force majeure&#8221; clauses. These clauses provide relief from liability when unforeseen circumstances arise that are beyond the control of the parties, such as natural disasters or other significant disruptions. By incorporating such clauses, parties can protect themselves from liabilities that would otherwise be imposed due to events that could not have been anticipated at the time of the contract&#8217;s signing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Disputes and enforcement: How are contractual disputes in outsourcing arrangements typically resolved in your jurisdiction and what remedies are commonly available in relation to contractual breaches?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Taiwan, contractual disputes arising from outsourcing arrangements are typically resolved through litigation or arbitration. Both methods are widely accepted, with arbitration being favored due to its efficiency and confidentiality. An arbitration award in Taiwan is treated with the same authority as a final court judgment, providing a strong mechanism for enforcing agreements.<\/p>\n<p>However, if a foreign arbitration award needs to be enforced in Taiwan, it must first be submitted to the courts for recognition. The Taiwanese courts generally take a favorable position on granting recognition of foreign arbitration awards. Nonetheless, there might be specific grounds on which recognition may be denied, including the absence of reciprocity, violations of Taiwan&#8217;s public order and good morals, disputes that cannot be arbitrated under Taiwanese law, or significant defects in the arbitration agreement or procedure.<\/p>\n<p>In terms of remedies available for contractual breaches, parties may seek various forms of relief, including specific performance, damages, or termination of the contract. The specific remedy pursued often depends on the nature of the breach and the terms outlined in the outsourcing agreement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Disputes and enforcement: What, if any, other enforcement measures are typically relevant to outsourcing arrangements (e.g. regulatory fines and other sanctions)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In outsourcing arrangements, various enforcement measures may be relevant, depending on the specific context, the nature of the services being outsourced, and the contractual terms involved. In Taiwan, the primary recourse for a customer in the event of a breach of contract by the supplier, under general law, is to seek damages, typically in the form of monetary compensation to cover the customer&#8217;s losses and lost profits, as outlined in the Civil Code. Additionally, the Civil Code permits the parties to specify agreed punitive damages in the contract.<\/p>\n<p>Enforcement measures may also include regulatory fines and sanctions imposed by relevant authorities, particularly if the outsourcing arrangement involves compliance with specific industry regulations or standards. For instance, if the outsourcing provider fails to meet regulatory requirements, such as data protection laws or industry-specific compliance standards, such provider may face fines or sanctions from regulatory bodies.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">4571<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/101964","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=101964"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}