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 September and 30 September 2012.
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Tax area concerned |
Relevant Date / Case reference |
Description of measures and publication link
(Considerations in italic where necessary) |
| Asia Pacific |
| Other |
Tax facts |
September 2012 |
KPMG’s September 2012 report of tax developments in the ASPAC region concerning financial institutions
Read more |
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| Cambodia |
| Tax legislation adopted and regulatory update |
Tax on immovable property |
30 September 2012 |
The tax return and payment of the tax on immovable property is due by 30 September of each year.
Read more |
| Other |
Tax facts |
2012 |
KPMG in Cambodia published a report on rules for investments in Cambodia including an overview of the tax system, tax incentives etc.
Read more |
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| China |
| Tax legislation adopted and regulatory update |
Energy and natural resources industry |
September 2012 |
A September 2012 KPMG report providing in table format a summary of guidance related to the energy and natural resources industry as issued in the first part of 2012 by various Ministries.
Read more |
| Other |
VAT |
September 2012 |
KPMG China report: ‘VAT reforms in China: What it means for multinational companies.’ Also included are some VAT topic presentations prepared by KPMG China.
Read more |
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| India |
| Tax legislation adopted and regulatory update |
Corporate income tax |
September 2012 |
The ‘expert committee’ that reviewed the proposed GAAR guidelines, submitted its report. In this report, recommendations are made for amendments in the Income-tax Act, for guidelines to be prescribed under Income-tax Rules, 1962, and for clarifications and illustrations to be issued through circular(s).
Read more |
| Withholding tax |
September 2012 |
India’s Central Board of Direct Taxes issued guidance intended to reduce the compliance burden and other procedural issues related to requests for a lower withholding tax on interest on borrowings made in a foreign currency.
Read more |
| Proposed legislation |
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The Department of Industrial Policy and Promotion Ministry of Commerce issued a series of separate notices announcing proposals which would allow a foreign direct investment in multi-brand retail, aviation, power exchanges, and broadcasting sectors.
Read more |
| Administrative and case law |
Treaties |
Dishnet Wireless Ltd. |
India’s Authority for Advance Rulings found that payments made for acquisition of undersea and territorial telecommunication cable capacity is taxable in India as “royalty” income both under provisions of the Income-tax Act, 1961, and under the India-Saudi Arabia income tax treaty.
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| Infosys Technologies Ltd. |
India’s Authority for Advance Ruling found (1) that ‘fees for technical services’ paid by the taxpayer/applicant to its Australian subsidiary were not taxable in India and (2) that such services did not make available technical knowledge to the Australian subsidiary and, therefore, cannot be treated as fees for technical services under the India-Australia income tax treaty.
Read more |
| Schellenberg Wittmer. |
India’s Authority for Advance Rulings found that legal fees―received by a Swiss partnership/law firm in connection with adjudication of a dispute arising in relation to a project in India between two Indian parties―were taxable in India under the Income-tax Act, 1961.
Read more |
| Nokia Networks OY. |
The Delhi High Court held that computer software embedded in equipment is not taxable under the India-Finland income tax treaty. The title to the goods passed outside India, and therefore, the sale of equipment took place outside India.
Read more |
| Corporate income tax |
Netapp B.V. |
The Delhi High Court held that once an income tax return is filed, it is construed as a ‘question’ pending before income tax authority; therefore, the Authority for Advance Rulings cannot accept a subsequent application for an advance ruling.
Read more |
| Smifs Securities Ltd. |
The Supreme Court of India held that goodwill was an asset under Explanation 3(b) to Section 32(1) of the Income-tax Act, 1961, and therefore, is eligible for depreciation.
Read more |
| Orient Green Power Pte Ltd. |
The Authority for Advance Rulings declined to give a ruling on taxability of a gift of shares in an Indian company by a foreign company, with the AAR citing a lack of evidence to conclude on the genuineness and validity of the transaction.
Read more |
| Ind Global Corporate Finance Pvt. Ltd. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that a non-compete fee is not a deductible expenditure because it is capital in nature; however, it is an intangible asset eligible for depreciation (amortization).
Read more |
| Vodafone Essar Gujarat Ltd. |
The Gujarat High Court overturned a judgment of India’s Company Court, which had rejected a ‘scheme of arrangement’ for demerger of passive infrastructure assets into a new entity.
Read more |
| Ahmedabad Stamp Vendors Association. |
The Supreme Court of India held that that the tax under section 194H of the Income-tax Act, 1961, is not to be withheld on the vendor’s discount because it was not a commission or brokerage fee.
Read more |
| Credit Suisse (International) Holding AG. |
India’s Authority for Advance Ruling (AAR) ruled in favor of the taxpayer/applicant with respect to the capital gains tax liability on the vesting of shares of an Indian company held by the amalgamating foreign company from the amalgamation with a second foreign company.
Read more |
| Control & Switchgear Contractors Ltd. |
An Indian taxpayer received a payment from a foreign joint venture partner for matters relating to the exit of the Joint Venture. The Delhi Bench of the Income-tax Appellate Tribunal held that the payment received was to be treated as business income.
Read more |
| Mahindra - BT Investment Company (Mauritius) Ltd. |
India’s Authority for Advance Ruling ruled that it is not required to issue a ruling with respect to transactions intended to circumvent SEBI guidelines that were issued in the public interest.
Read more |
| Sonata Information Technology Ltd. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that a recent statutory amendment to the royalty-related provisions under section 9(1)(vi) of the Income-tax Act, 1961, is not relevant because a corresponding amendment was not also made to the withholding tax rules under section 40(a)(ia).
Read more |
| Karanvir Singh Gossal. |
The Supreme Court of India held that the levy of interest on assessments is mandatory, but that interest can be waived pursuant to a notice of the Central Board of Direct Taxes.
Read more |
| TEI Technologies P. Ltd. |
The Delhi High Court held that the tax relief benefits available under section 10A of the Income-tax Act, 1961, allow for an exemption and therefore, in computing the amount of the section 10A benefit for an export processing zone (EPZ) unit, the current year’s loss and carried forward loss of a non-EPZ unit are not to be set off against the profits of the EPZ unit.
Read more |
| Biraj Investment Pvt. Ltd. |
The Gujarat High Court held that the sale of pledged shares at a loss, to a group company that sets-off the gain arising from transfer of other shares during the same year, is not a “colorable transaction” created for tax avoidance.
Read more |
| Service tax |
Mitchell Drilling International Pty. Ltd. |
The Delhi Bench of the Income-tax Appellate Tribunal held that the amount of service tax paid by the taxpayer is not part of the amount used in computing deemed profits in connection with business of exploration of mineral oils under Section 44BB of the Income-tax Act, 1961.
Read more |
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| Japan |
| Tax legislation adopted and regulatory update |
Corporate income tax |
1 April 2012 |
The Japanese earnings stripping rules concept introduced with the 2012 tax reform will apply for fiscal years beginning on or after 1 April 2013.
Read more |
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| Korea |
| Treaties |
DTT |
July 2012 |
The Korea-Switzerland income tax treaty entered into force late July 2012. The treaty includes a tax information exchanges article and provides for reduced withholding taxes on interest, dividends and royalties.
Read more |
| Administrative and case law |
VAT |
Beopgyubuga
2012-253, 2012.06.28 |
If a service provider receives shares from a debtor as a reimbursement of uncollected receivables, the ‘non-converted amount’ would not be available as tax deduction in respect of bad debt.
Read more |
| Corporate income tax |
Kookjesewon -325, 07/06/2012 |
In the case, a US LP transfers unlisted shares in a Korean corporation, such income (when paid to the taxpayer through a US LLC) would be classified as dividend income.
Read more |
| Penalties |
Choshim 2012 Seo
1142, 07/20/2012 |
In the case, a taxpayer who does not file tax returns within the due date is required to pay a penalty amount equal to 20/100 of tax calculated in accordance with the relevant tax law.
Read more |
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| New Zealand |
| Proposed legislation |
Corporate income tax |
September 2012 |
The New Zealand government introduced a bill that would tighten the deductibility rules for “mixed-use assets” (i.e., assets used for both private and income-earning purposes).
Read more |
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| Vietnam |
| Tax legislation adopted and regulatory update |
Personal income tax |
September 2012 |
Vietnam’s General Department of Taxation issued guidance to municipal and provincial tax authorities providing that maternity leave is not taxable income subject to individual (personal) income tax.
Read more |
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