This e-newsletter gives you an overview of international corporate tax developments being reported globally by KPMG firms in the Asia Pacific region between 1 January and 31 January 2013.
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Tax area concerned |
Relevant date/case reference |
Description of measures and publication link
(Considerations in italic where necessary) |
| China |
| Tax legislation adopted and regulatory update |
Treaties/capital gains tax |
January 2013 |
China’s State Administration of Taxation issued an announcement to clarify the manner in which the capital gains tax provisions of China’s income tax treaty agreements are to be applied to capital gains realized on transfers of equity interests in Chinese enterprises by non-residents.
Read more |
| VAT |
January 2013 |
With the VAT pilot program for the modern services and transportation sectors now implemented in many of China’s major commercial centers, attention now turns to those industries that have yet to transition from the business tax to VAT—including the construction and real estate sectors.
Read more |
| Social security |
16 January 2013 |
Representatives of the governments of China and Korea signed a social security agreement for the avoidance of double social insurance contributions. The agreement’s effective date is 16 January 2013.
Read more |
| Other |
Financial Services |
Q4 2012 |
KPMG in China published the China Financial Regulation Alert series for banking, insurance and securities and futures which contains the major laws and regulations recently issued in the PRC which govern the banking, insurance, securities and futures, mutual fund, private equity, guarantee and trust sectors.
Read more |
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| Hong Kong |
| Proposed legislation |
Stamp Duty |
27 October 2012 |
A legislative proposal—the Stamp Duty (Amendment) Bill 2012—would introduce a buyer’s stamp duty, imposed at a flat rate of 15 percent with respect to purchases of residential properties acquired by companies and persons who are not Hong Kong permanent residents. The measures, once approved, will have effect from 27 October 2012.
Read more |
| January 2013 |
A bill introduced in January 2013 would amend the rules contained in Hong Kong’s Inland Revenue Ordinance and Stamp Duty Ordinance to place common types of Islamic bonds on a ‘level playing field’ with conventional bonds and to remove a perceived tax-related impediment to the development of a sukuk market in Hong Kong.
Read more |
| Administrative and case law |
Corporate income tax |
Aviation Fuel Supply Co. v. CIR, (4 December 2012) |
The Hong Kong Court of Appeal affirmed that a lump-sum payment received by the taxpayer when its franchise agreement with the airport authority was terminated was not earned by the taxpayer from the carrying on of business, but arose outside the course of the taxpayer’s business activity and thus was not taxable as business income.
Read more |
| Tax legislation adopted and regulatory update |
Treaties |
January 2013 |
Representatives of the governments of Hong Kong and Italy signed an income tax treaty. The Hong Kong-Italy income tax treaty will enter into force once both governments have completed their respective ratification processes.
Read more |
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| India |
| Administrative and case law |
Corporate income tax / Personal income tax/Treaties/
Withholding tax |
January 2013 |
Case law has been published with respect to the following subjects:
| • |
Payments for services of operating and maintaining a steel plant on cost-to-cost basis is ‘reimbursement’ and not fees for technical services |
| • |
Salary received by non-resident of India, for services rendered outside India, are not taxable in India, if tax treaty conditions are satisfied |
| • |
Profits from Indian project relating to services rendered both in and outside India are taxable by virtue of force of the “attraction principle” under the India-UK tax treaty |
| • |
Payment for acquiring satellite rights of films is “royalty” and subject to tax withholding. |
Read more |
| Corporate income tax/Treaties |
January 2013 |
Case law has been published with respect to the following subjects:
| • |
Trade tax paid in Germany, tax residency certificate sufficient for limited partnership to claim benefits under India-Germany income tax treaty |
| • |
Supreme Court concludes leasing company can claim higher-rate depreciation on leased vehicles used in ’running on hire’ business. |
Read more |
| Corporate income tax/Personal income tax/Withholding tax |
January 2013 |
Case law has been published with respect to the following subjects:
| • |
Renovations on employer-provided accommodations not separately taxable to employee |
| • |
Income from collating, supplying information is business income, and not taxable absent a permanent establishment in India |
| • |
FII’s income from derivative transactions is capital gains, not business income |
| • |
Interest on amounts borrowed for overseas investment not subject to tax withholding in India |
| • |
No tax withholding on overseas allowance paid to seconded employees. |
Read more |
| Proposed legislation |
Customs |
January 2013 |
India’s government issued a circular that, if enacted as legislation, would amend the time period for initiating recovery proceedings on excise, customs, and service tax matters that may be pending before various appellate forums.
Read more |
| Tax legislation adopted and regulatory update |
Corporate income tax |
1 April 2016 |
The Indian GAAR provisions will be effective 1 April 2016.
Read more |
| January 2013 |
India’s Director General of Income-tax issued a notice extending the time period for filing ITR-V forms relating to income tax returns filed electronically.
Read more |
| Incentives |
January 2013 |
An expert committee formed by the Indian government, published a report addressing issues encountered by India’s IT sector concerning tax benefits available with respect to exports of computer software.
Read more |
| Stock Options |
January 2013 |
India’s Securities and Exchange Board issued a circular to amend the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines.
Read more |
| Other |
Direct/Indirect tax |
2012 |
KPMG in India published a report which provides summaries of key direct tax and indirect tax-related developments of 2012.
Read more |
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| Japan |
| Tax legislation adopted and regulatory update |
Treaties |
January 2013 |
Representatives of the governments of Japan and the United States signed a new Protocol to the Japan-United States income tax treaty.
Read more |
| Proposed legislation |
Tax Reform |
2013 |
KPMG in Japan published an overview of the 2013 Tax Reform Proposals.
Read more |
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| Korea |
| Administrative and case law
|
VAT/Security transaction tax/Corporate income tax |
January 2013 |
KPMG in Korea prepared a report that examines recent tax court cases and tax rulings that address:
| • |
Whether VAT is chargeable for ’free use’ of real property after bearing the costs of remodeling that real property |
| • |
Whether Korea’s security transaction tax is chargeable when stock securities are transferred during an ’absorbing merger’ |
| • |
Whether a VAT exemption is available for research service fees incurred relating to a seminar’s opening |
| • |
Whether a bank deposit is eligible for a bad debt provision for tax purposes. |
Read more |
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| Oman |
| Other |
Budget |
2013 |
KPMG in Oman published an overview with the analysis of Oman’s 2013 Budget.
Read more |
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| Singapore |
| Tax legislation adopted and regulatory update |
Corporate income tax |
January 2013 |
Singapore’s Inland Revenue Authority issued guidance concerning the tax treatment of insurance policies purchased by employers for their employees.
Read more |
| Administrative and case law |
Corporate income tax |
AQQ v. Comptroller of Income Tax (2012) MSTC 70-017 |
The Singapore High Court held that a taxpayer’s financing arrangement came within the scope of the anti-avoidance provisions under section 33 of the income tax law (as in effect before 1988).
Read more |
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| Thailand |
| Tax legislation adopted and regulatory update |
Personal income tax |
January 2013 |
Changes to the tax law in late 2012 concern Thailand’s individual (personal) income tax rules for returns filed by married couples.
Read more |
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| Vietnam |
| Tax legislation adopted and regulatory update |
Corporate income tax/VAT |
January 2013 |
Recent issued guidance provides tax solutions for taxpayers to consider in addressing difficulties in production and business activities, and for resolving bad debt issues.
Read more |
| January 2013 |
Guidance from Vietnam’s tax authorities addresses tax incentives (VAT and corporate income tax) concerning certain investment projects.
Read more |
| Personal income tax |
January 2013 |
Vietnam tax authorities issued an official letter providing guidance on 2012 individual (personal) income tax ’finalization’.
Read more |
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