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 August and 31 August 2012.
| |
Tax area concerned |
Relevant Date / Case reference |
Description of measures and publication link
(Considerations in italic where necessary) |
| Bangladesh |
| Other |
Corporate income tax/VAT |
2012 |
KPMG in Bangladesh has prepared an overview of the Bangladesh tax system.
Read more |
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| China |
| Tax legislation adopted and regulatory update |
VAT |
1 August 2012 |
China’s tax authorities issued guidance announcing the implementation dates for expanding the VAT pilot program (currently in force in Shanghai) to 10 other locations.
Read more |
VAT/
Consumption tax |
25 May 2012 |
China’s tax authorities have amended the VAT and consumption tax refund (exemption) policies for exported goods and services.
Read more |
| Service Industry Zone |
27 June 2012 |
China approved to facilitate the development of a special service industry zone in western Shenzhen. Certain tax benefits are available for qualifying entities which operate in the new Qianhai Shenzhen-Hong Kong Modern Services Industry Cooperation Zone.
Read more |
| Other |
1 July 2013 |
A new law will control the administration of the entry and exit of individuals from China. The new rules will be effective beginning 1 July 2013.
Read more |
| 27 July 2012 |
China Securities Regulatory Commission issued guidance that revises the general regulation governing the qualified foreign institutional investment program, to permit foreign investment in PRC listed securities.
Read more |
| Financial Services |
August 2012 |
China released the Financial Regulation Alert for banking, insurance, securities and futures which contains the major laws and regulations recently issued.
Read more |
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| India |
| Tax legislation adopted and regulatory update |
Corporate income tax |
31 August 2012 |
The filing deadline for tax returns that were due 31 July 2012 in respect of Financial Year 2011-12 for certain taxpayers (e.g. non-company taxpayers and taxpayers who are not required to have their books of accounts audited) has been extended to 31 August 2012.
Read more |
| 1 July 2012 |
With the introduction of the Negative List Regime in July 2012, commission paid to non-executive directors for their services is now taxed. The Indian government issued guidance implementing the reverse charge mechanism on services provided by company directors.
Read more |
| 1 August 2012 |
India released guidance which clarifies that expenditures on the provision of ‘freebies’ offered by the pharmaceutical and allied healthcare industry are in violation of the tax regulations and, as such, are not allowable expenses.
Read more |
| Administrative and case law |
Treaties |
Abu Dhabi Commercial Bank Ltd. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that changes made by a Protocol to the India-UAE income tax treaty do not apply retroactively.
Read more |
| Moody’s Analytics Inc. Read |
India’s Authority for Advance Rulings held that capital gains on a Mauritian company’s sales of shares (1) of an Indian company to Cypriot company and (2) of a U.S. company to another U.S. company are not taxable in India under the India Mauritius income tax treaty because the legal ownership, as well as control and management, rest with the Mauritian company.
Read more |
| Credit Suisse (Singapore) Ltd. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that gains arising on the cancellation of a foreign exchange forward contract are treated as ‘capital gains’ under the India-Singapore income tax treaty, and not 'income from other sources'.
Read more |
| Apollo Hospital Enterprises Ltd. |
The Chennai Bench of the Income-tax Appellate Tribunal held that an Indian taxpayer’s capital gains arising from the sale of shares of a Sri Lankan company were not taxable in India under the India-Sri Lanka income tax treaty because the term ‘may be taxed’ excluded the power of India to tax such capital gains.
Read more |
| Corporate income tax |
EID Parry (India) Ltd. |
The Madras High Court held that unabsorbed depreciation in the hands of a merged company should be added to the ‘written down value’ of the asset acquired via the merger.
Read more |
| Pinstorm Technologies Pvt. Ltd. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that a payment made to a foreign company for the services rendered in uploading and displaying a banner advertisement on its portal was not in the nature of fees for technical services or a royalty.
Read more |
| Spray Engineering Devices Ltd. |
The Chandigarh Bench of the Income-tax Appellate Tribunal held that a taxpayer who took over the business of two partnerships, is not a ‘reconstruction of business’. Accordingly, the taxpayer was entitled to the specific benefits for the unexpired period of the partnerships.
Read more |
| John Wyeth & Brother Ltd. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that a laboratory expenditure incurred by the taxpayer’s head office for research and development and allocated to its Indian branch, is fully allowable because it did not include any executive or general administration expenditure.
Read more |
| Spectrum Geo Ltd. |
India’s Authority for Advance Rulings concluded that fees paid by one foreign company for seismic data-processing services provided to another foreign company are not taxable as ‘fees for technical services’.
Read more |
| Indo Rama Textile Ltd. |
The Delhi High Court concluded that transfer of all assets of a company is not necessary to comply with the demerger rules, as long as non-transfer does not impact the continuity of the business.
Read more |
| American Express Bank. |
The Mumbai Bench of the Income-tax Appellate Tribunal held an expenditure exclusively incurred by the head office for the Indian branch is deductible. However, an expenditure related to earning exempt income is not deductible even if that income is earned on securities held as ‘stock in trade’.
Read more |
| ACIT vs Shri Deepak S Bheda |
India’s tax laws permit an exemption from tax for investments of net sale consideration arising from the transfer of a long-term capital asset, when invested in the acquisition of a residence, within a stipulated period of time. An exemption is also allowed with respect to the investment of the gain in the purchase of certain eligible bonds.
Read more |
| Ashok Pratap. |
The Mumbai bench of the Income-tax Appellate Tribunal held that an amount received by beneficiaries of a trust on dissolution of the trust is not received by the beneficiaries ‘without consideration’ and thus is not subject to tax as income from other sources.
Read more |
| C.A.T. Geondata GmbH |
A party that merely gathers seismic data for a mining contractor has not itself undertaken a mining project but has rendered technical services or services ‘in connection with’ the mining activity undertaken by the contractor. The fees for technical services received for rendering services in connection with prospecting for or extraction/production of mineral oil are not subject to tax pursuant to the tax relief under section 44BB.
Read more |
| Withholding tax |
Smit A Khowsalya Bal & Ors vs UOI |
The mandatory withholding provision in the absence of a Permanent Account Number is not applicable when applied to persons whose income is less than the taxable limit.
Read more |
| Global E-Business Operations Pvt. Ltd. |
The Bangalore Bench of the Income-tax Appellate Tribunal held that a reimbursement of an expenditure in relation to employee relocation, employee awards, etc. incurred on behalf of the taxpayer by overseas companies, did not contain any element of ‘income’ and thus, the taxpayer was not required to withhold tax while making such payments.
Read more |
| Accounting |
Sony India |
Accounting Standard-14 (AS-14) applies only to amalgamations and not to demergers.
Read more |
| Other |
Columbia Sportswear Co. |
The Supreme Court concluded that a challenge to a ruling of the Authority for Advance Rulings must be filed with the High Court—not the Supreme Court.
Read more |
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| Japan |
| Tax legislation adopted and regulatory update |
Tax incentives |
July 2012 |
Multinationals that establish a Japanese subsidiary to conduct their R&D or supervisory business in Japan may benefit from newly introduced incentives
Read more |
| Consumption tax |
1 April 2014 |
The rate of the consumption tax will be increased:
| • |
The current 5% rate of consumption tax will apply until 31 March 2014. |
| • |
The rate will increase to 8% beginning 1 April 2014 through 30 September 2015. |
| • |
The rate will then increase to 10% beginning 1 October 2015. |
Read more |
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| Kazakhstan |
| Tax legislation adopted and regulatory update |
CIT/VAT/
Administrative |
August 2012 |
Changes and Amendments to Legislative Acts on Cross-Country Pipelines and Taxation and Changes and Amendments to Legislative Acts on Combating Money Laundering.
Read more |
|
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| New Zealand |
| Proposed legislation |
Corporate income tax |
26 July 2012 |
New Zealand proposes to make lease inducement payments taxable for lease arrangements entered into on or after 26 July 2012. The proposal would require spreading both the income (receipt) and expense, if deductible, over the term of the lease or until the first rent review period.
Read more |
| Tax legislation adopted and regulatory update |
Reporting requirements |
31 July 2012 |
New measures will replace those under New Zealand’s current Financial Reporting Act with changes to the financial reporting requirements for entities operating in New Zealand.
Read more |
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| Pakistan |
| Tax legislation adopted and regulatory update |
Corporate income tax |
2012 |
The Finance Act 2012 has been issued.
Read more |
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| Singapore |
| Treaties |
DTT |
31 August 2012 |
A Protocol amending the income tax treaty between Singapore and Canada entered into force on 31 August 2012.
Read more |
| Tax legislation adopted and regulatory update |
Tax risk management |
August 2012 |
In relation to tax compliance by companies, the Inland Revenue Authority of Singapore has adopted a strategic compliance framework that seeks enhanced cooperation and voluntary disclosure by companies.
Read more |
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| Sri Lanka |
| Tax legislation adopted and regulatory update |
Corporate income tax |
1 April 2011 |
New income tax provisions are introduced in Sri Lanka, including investment relief for business expansion; proposed tax rate reductions with respect to income from certain listed activities (e.g. construction, commercial banking, research and development activities, health care services), and proposed reductions of income tax rates.
Read more |
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| Taiwan |
| Tax legislation adopted and regulatory update |
Corporate income tax |
1 January 2013 |
New rules concerning the taxation of capital gains realized with respect to the sale of securities or futures trades will be effective 1 January 2013.
Read more |
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| Thailand |
| Tax legislation adopted and regulatory update |
Corporate income tax |
24 July 2012 |
Exemptions from corporate income tax and individual (personal) income tax are introduced on benefits derived from a merger and ‘entire business transfer’ consisting of a swap of shares in the merged/amalgamated company (or transferee of the entire business transfer).
Read more |
| VAT |
1 October 2012 |
The Thai cabinet approved a two year extension of the reduced rate of VAT from 10% to 7%. The reduced VAT rate of 7% will apply beginning 1 October 2012 through 30 September 2014.
Read more |
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| Vietnam |
| Tax legislation adopted and regulatory update |
Reporting requirements |
9 August 2012 |
The Vietnamese central government has requested information from city and provincial governments concerning foreigners working in Vietnam. The aim is to access compliance with rules concerning the management and administration of foreign workers in Vietnam.
Read more |
| Corporate income tax |
10 September 2012 |
New corporate income tax changes are effective 10 September 2012, and are applicable for tax year 2012 and later.
Read more |
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