Taiwan weekly legal update: Patent Linkage system for Generic Drugs

Taiwan weekly legal update: Patent Linkage system for Generic Drugs

Patent Linkage system for Generic Drugs.

The Legislative Yuan has passed several amendments to “Pharmaceutical Affairs Act” which mainly focuses on the patent linkage system in order to keep pace with the global pharmaceutical management.

These new amendments introduce a patent linkage system which is similar to the “Orange Book” (Hatch-Waxman) of the USA. When new drugs introduced to the market, by the disclosure of patent information, the generic drugs would stay of license approval for a period of 12 months, providing generic drug-makers an opportunity to resolve patent disputes before new generic drugs are launched on the market. The first application filer who successfully challenges the validity of a pharmaceutical patent enjoys 12 months of market exclusivity. This is to encourage the domestic generic drug-makers to challenge the patent of generic drug-makers.

Other amendments are the data exclusivity, providing the patent drug for new indication a 3-year data exclusivity and another 5-year if clinical trial data provided.


Bill of Financial Technology Innovation and Experiment Act.

The Legislative Yuan has passed the “Bill of Financial Technology Innovation and Experiment Act”. The applicant could exercise FinTech experiments like product testing and new business pattern within a period of 1 to 3 years with the approval from the FSC.

According to article 4 of the Bill, any natural person, wholly owned or joint ventures and legal persons could apply for FinTech experiment, including one who wishes to engage in financial business through innovative business patterns. The authority would decide whether the application is to be approved within 60 days.

In addition, the applicant would be granted 1 year period for the experiment, and maximum 3-year extension if necessary. If the contents of the experiment involved certain aspects related to authorities other than FSC, the FSC could approve the application jointly with the authorities related according to article 25. During the experimental period, the applicant shall exempt from all (or partial) regulations and regulatory responsibilities.


Several amendments to Standards of Withholding Rates.

The Ministry of Finance described that for the purpose of providing a fair environment of dividends taxation, capital neutrality and to discourage tax evasion, the Ministry has announced several amendments to the “Standards of Withholding Rates for Various Incomes”. Tax payable for net dividends or profit distributed shall be withheld at a rate of 21% of the amount distributed or payable by the foreign shareholders.

The gap of dividends withholding between the taxpayer who is not residing or enterprise not having any fixed place of business within the territory of the ROC (legal entity and shareholders total rate at 33.6%) and the taxpayer who is residing in ROC (total rate at 49.68% ) was luring the domestic shareholders to conduct tax-evasion by transfer of status.

Thus, the Ministry adjusted the dividends withholding rate of foreign shareholders to 21%. And made amendments to the article 23-1 of “Statute for Industrial Innovation”, to establish a “pass-through” taxation regime.




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