APAC Tax Matters: 12th edition

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Welcome to the twelfth edition of APAC Tax Matters, your update on tax issues throughout the Asia Pacific region.

Base erosion and profit sharing initiative

On 12 February 2013, the Organization for Economic Cooperation and Development (OECD) released its widely anticipated initial report on the issue of base erosion and profit shifting (BEPS) by multinational enterprises (MNEs).  It is likely that tax authorities in the Asia Pacific region will now commence to add their voices to the chorus of concern over BEPS.  

In this edition of APAC Tax Matters we have reports on two such initial offerings, one prepared by the Treasury in Australia and the other by New Zealand's Minster of Revenue, setting out their concerns that MNEs pay "their fair share" of tax.  No doubt readers can look forward to more pronouncements by Asia Pacific tax authorities on this topic.

Changes to Australia’s general anti-avoidance rule

Also from Australia, we report on amendments to Part IVA of the Australian tax code recently introduced into Parliament and concerns that the amendments will increase the ability of the ATO to challenge transactions and reorganisations. 

Transfer pricing updates in Australia, India and Malaysia

Transfer pricing features in our Australian roundup where we report on concerns over the introduction into Parliament of transfer pricing legislation providing the ATO with significant reconstructive powers. Our other transfer pricing items in this edition concern rules published in India for implementing Advance Pricing Agreements, and the possible use of transfer pricing rules by the Malaysian authorities as a means to challenge and disallow interest expenses despite the deferment to 31 December 2015 of thin capitalisation provisions  introduced in the Income Tax Act 1967.

New rules introduced in the Philippines

From the Philippines, we report on rules announced by the Securities and Exchange Commission concerning the merger of two foreign corporations and the effect on the absorbed corporation's Philippine branch office.

Singapore case law

From Singapore, we have better news concerning the Income Tax Board of Review's finding that a rigid reliance by the Singapore tax authorities on a list of circumstances was insufficient in determining whether the purpose of a substantial change in shareholding was to derive a tax benefit.

We also report on a decision allowing a company to carry forward unabsorbed losses incurred from its Singapore operations, before it was de-registered as a foreign company, for offset against its profits from a newly registered branch in Singapore.

New treaties concluded by Hong Kong, New Zealand and Taiwan

On treaties we report on Hong Kong's new treaty with Canada, New Zealand's new treaties with Japan and Papua New Guinea, and the entry into force of Taiwan's treaty with Germany.  As regards the application of existing treaties, we report from the Philippines on the deadline for filing tax treaty relief applications, whilst from mainland China we report on a notice issued by the State Administration of Taxes concerning certain issues related to the capital gains article in the China-Singapore treaty.

New tax updates from Vietnam, Thailand and Korea

Also included in this report are updates from Vietnam, Thailand and Korea on recent key tax issues impacting investment into those jurisdictions. 

We trust you find this edition of APAC Tax Matters a rewarding read.

Chee Weng Lee
Managing Partner -Tax Markets,
Asia Pacific