Your buxiban may be restructuring soon

Legal Legal - Work
1

A certain website that shall remain nameless recently carried a story about buxibans supposedly being reclassified as businesses next year and therefore being subject to business tax.

As you might expect, in the process of the article being translated and condensed (from a CNA article of course), something was lost.

Here’s the actual announcement from the MOF.

http://www.mof.gov.tw/Pages/Detail.aspx?nodeid=137&pid=75237

The gist of it is that buxiban companies and unregistered buxibans will lose their business tax exemption on Jan 1, 2018, but 立案補習班之教育勞務，維持現行規定，免徵營業稅 i.e. registered buxibans (not companies) will keep the exemption wrt their income from teaching (though not textbook sales).

Later the same day, CNA put out an article quoting some accountants about this development. There’s some discussion about whether or not buxibans will pass on the tax to consumers, but what’s really interesting is that, as one accountant explained, a buxiban company can avoid the tax by simply transfering ownership of its buxibans to individuals. :money_mouth_face:

Bottom line: if you work for a company-owned buxiban, ask what they plan to do about this (and assume they’re going to do something even if they say they aren’t). If there’s a change in registration, and you later need to prove that you worked for the same buxiban all along, the more evidence you have that the details remained the same, the better. These details can include things like the work location, your job title, other staff, the name advertised to the public, etc.

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What? Company owned? You mean franchises? Or are some buxibans spinoffs from other companies? I do not get how businesses are formed here. Aren’t they all owned by individuals, or groups of individuals?

How would this affect the employees, other than paying higher tax (instead of reporting the minimum, the would report the whole thing)?

Wow, this AND the new criminal check rules…strange times in buxiban land.

3

Because a buxiban is established in accordance with the Supplementary Education Act and not the Company Act, it’s not a company. A buxiban can be established by either a natural person or a juridical person (such as a company), and the latter should be reflected in the name, e.g. 台北市私立〇〇短期補習班 vs. 〇〇有限公司附設台北市私立〇〇短期補習班. (I wouldn’t be surprised to find out some buxibans don’t conform to this standard. Local education departments set their own rules.)

It shouldn’t make a difference for employees, but if you get laid off after a restructuring, a dispute over the duration of your seniority (年資) could affect your severance pay. It could also be an issue for anyone trying to claim a pension.

Summary: denying seniority merely on the basis of a change of registration is illegal.

4

This is something that has confused me for years.

Are language schools, like Hess, Eagle, or Joe Mamma’s English School buxibans? anjingbans? I have no idea about this.

So, they are set up similar to Inc (Ltd) and LLCs?

How would this affect contracted employees?

5

Each company/group can choose its own path through the maze of regulations, e.g. a collection of nominally independent buxibans with the same owner and using the same brand name, or a collection of companies-within-companies plus a collection of buxibans attached to one of the companies and using the same brand name, or a more complex arrangement. (I’ve never really looked into anqinbans, but I assume it’s basically the same idea with them.)

You have to look at each one on a case-by-case basis to be sure. PM me if you want help deciphering your own employer’s information. :slight_smile:

6

You did the best you can, and I thank you.

But, I am too stupid to understand. I am not a business minded person.

So, if I wanted to start “Johannes School of English” then I would have to register as a single-owner company or single-owner independent with the local BoE and get taxed accordingly?

But if I wanted to start 50 schools, individually named, but have them under the umbrella of a parent company, then I would have to register differently?

7

Each local education department has its own version of the rules, but I assume they would all let you establish as many buxibans as you want, whether as independent buxibans with variations on the same name (or completely unrelated official names but the same English name) or as 附設 units of a company.

Example 1:

Johannes gets some properties and recruits some staff. He goes to the education department in three different cities to establish the following buxibans, and they all advertise with the same English name, also advertising in Chinese that they’re all part of the “Johannes English Empire” or something. Officially they have different names and no relation to each other, except for the fuzeren just happening to be the same person (assuming they allow that – otherwise he would need to find two nominal fuzerens).

  • 台北市私立約翰英文短期補習班
  • 台中市私立約翰美語短期補習班
  • 高雄市私立約翰美英短期補習班

Each buxiban is exempt from business tax wrt to tuition fees. How long he can get away with this arrangement until the powers that be declare the buxibans a de facto company and therefore taxable (through an amendment to the law, through an administrative order, or possibly even through jurisprudence), I don’t know.

Example 2:

Johannes goes to the whatchamacallit department in whichever city he prefers, establishes a company, and applies for a license to conduct buxiban business through the company (which, once granted, will be visible in the online version of the company’s basic information). He gets some properties and recruits some staff. He goes to the education department in three different cities to establish the following buxibans in the company’s name, and they all advertise with the same English name, also advertising in Chinese that they’re all part of the “Johannes English Empire” and also that they’re all part of the same company. Each buxiban still has a different name, but there’s no mistaking them for independent buxibans because the names look like this:

  • 約翰英文股份有限公司附設台北市私立約翰英文短期補習班
  • 約翰英文股份有限公司附設台中市私立約翰美語短期補習班
  • 約翰英文股份有限公司附設高雄市私立約翰英美短期補習班

Starting on Jan 1, if the company wants to keep its tax exemption (wrt tuition), it needs to switch to the system described in example 1.

(I just made up all of those names – apologies if any of them happen to be real.)

Keep in mind, I’m just speaking from what I’ve read, not from experience. Someone who’s been through the whole process probably knows more. Also, afaik each buxiban should have its own tax registration, even in the second example, and I haven’t looked into the rules about transfering money between the buxibans and the parent company.

(Edit: forgot to add the “附設” to the names!)

8

It makes sense now. Thank you so much.