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 October and 31 October 2012.
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Tax area concerned |
Relevant date / Case reference |
Description of measures and publication link
(Considerations in italic where necessary) |
| Australia |
| Administrative and case law |
Goods and services tax |
2 October 2012 |
The Australian High Court overturned a lower court decision which had found that goods and services tax (GST) is not payable by an airline on unclaimed flights (i.e. when the fare is paid but the passenger does not travel).
Read more
In the New Zealand context, this decision may have particular relevance for certain supplies by New Zealand businesses to non-residents.
Read more |
| Other |
Minerals resource rent tax |
October 2012 |
KPMG Australia published a report that describes Australia’s minerals resource rent tax (MRRT) compliance and reporting obligations.
Read more |
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| Hong Kong |
| Tax legislation adopted and regulatory update |
Stamp duty |
October 2012 |
Hong Kong’s Financial Secretary on 26 October 2012 launched a further round of measures aimed at stabilizing Hong Kong’s residential property market. Under the new guidance, the rate of the ‘special stamp duty’ is to be increased and the restriction period is to be extended.
Read more |
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| India |
| Administrative and case law |
Corporate income tax |
Chemosyn Ltd. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that the consideration received by the taxpayer in the form of constructed area is not taxable on account of subsequent events/developments by applying the doctrine of real income.
Read more |
| Adidas Sourcing Ltd. |
The Delhi Bench of the Income-tax Appellate Tribunal held that ‘buying agency services’ provided by the taxpayer to an Indian entity are not ‘fees for technical services’ under the Income-tax Act, 1961.
Read more |
| Birla Global Asset Finance Co. Ltd. |
The Bombay High Court held that ‘business and commercial brand equity’ is an intangible asset that is eligible for amortization (depreciation).
Read more |
| Electronics Corporation of India Ltd. |
The Hyderabad Bench of Income-tax Appellate Tribunal held that once the Department of Scientific and Industrial Research (DSIR) of the Ministry of Science and Technology, has certified the quantum of an eligible R&D expenditure for purposes of the weighted deduction, the income tax authorities cannot also decide the same issue.
Read more |
| National Petroleum Construction Co. |
The Delhi Bench of Income-tax Appellate Tribunal held that a composite contract for fabrication and installation of onshore and offshore oil facilities can be divided into offshore supplies and onshore activities. Also, the tribunal found that income from the offshore supplies was not taxable in India because the activities prior to installation and commissioning (i.e. offshore supplies) were carried out and completed outside India and were not relating to a PE in India.
Read more |
| Champion Commercial Co. Ltd. and DLF Ltd. |
The Kolkata tribunal rules in matters of allocation of expenditure to tax exempt and taxable income.
Read more |
| Advantage Securities Ltd. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that because the taxpayer did not retain shares with the intention of earning dividend income and that such income was incidental to the taxpayer’s business of selling shares, expenditure incurred on borrowings made for the purchase of the trading shares could not be disallowed.
Read more |
| Siddhivinayak Homes. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that a deduction is not available when the area of the combined flats exceeds the maximum prescribed limit, regardless of separate sale agreements entered into by the taxpayer.
Read more |
| Treaties |
Zuari Agro Chemicals Ltd. |
The Bombay High Court held that fees paid for services provided through deputation of technical experts are in the nature of ‘fees for technical services’ under the India-Japan income tax treaty.
Read more |
| eBay International AG. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that the user fee paid to a foreign company for operating an India-specific website providing an online auction is not to be treated as ‘fees for technical services’ under the India-Switzerland income tax treaty.
Read more |
| TexTech International Private Ltd. |
The Chennai Bench of the Income-tax Appellate Tribunal held that marketing, turnkey, e-publishing, and quality assurance services provided by a foreign company did not ‘make available’ technical knowledge, skills, etc. Therefore, charges paid for such services cannot be treated as ‘fees for technical services’ under the India-United States income tax treaty.
Read more |
| Siemens Aktiengesellschaft. |
The Bombay High Court affirmed a decision of the Income-tax Appellate Tribunal which found that under Article 12 of the India-Germany income tax treaty, an assessment of royalty or fees for technical services is to be made in the year in which the amounts are received (and not otherwise).
Read more |
| J. Ray McDerrmott Eastern Hemisphere Ltd. |
The Mumbai Bench of the Income-tax Appellate Tribunal held that the taxpayer does not have a permanent establishment (PE) in India under the India-Mauritius income tax treaty because the duration of each contract entered into by the taxpayer is less than 9 months.
Read more |
| Tax legislation adopted and regulatory update |
Pension |
October 2012 |
India has modified the rules concerning when ‘international workers’ (expatriates) can make withdrawals from provident funds (pension plans).
Read more |
| Corporate income tax |
Vodafone case |
The Prime Minister of India formed an ‘expert committee’ to undertake stakeholder consultations and finalize guidelines including with respect to the implications of amendments relating to the taxation of overseas transfer of assets when the underlying asset is located in India.
Read more |
| October 2012 |
The Reserve Bank of India issued guidance clarifying that in situations when non-residents (including non-resident Indians) proposing to make investments in an Indian company in compliance with the provisions of the Companies Act, 1956, by way of subscription to a ‘memorandum of association’, such investments may be made at face value.
Read more |
| Other |
Tax facts |
October 2012 |
KPMG in India published a report that provides summaries of recent tax and regulatory developments.
Read more |
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| Indonesia |
| Tax legislation adopted and regulatory update |
VAT |
October 2012 |
The current standard VAT rate is 10%, but the tax law allows the government to alter the rate of VAT to a minimum of 5% and a maximum of 15%. The rate of VAT currently imposed on exports is 0%.
Read more |
| Other |
Insurance sector |
October 2012 |
KPMG in Indonesia published
An Overview of Indonesia’s Insurance Sector Tax Environment. |
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| Japan |
| Other |
Tax facts |
October 2012 |
KPMG in Japan published a booklet that is intended to provide a general overview of the tax system in Japan.
Read more |
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| Malaysia |
| Proposed legislation |
Budget |
2013 |
Malaysia’s prime minister tabled the 2013 budget. Tax measures include a.o. a 100% investment allowance.
Read more |
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| New Zealand |
| Tax legislation adopted and regulatory update |
Lease inducement tax |
April 2013 |
New Zealand’s Revenue Minister announced ‘refinements’ to proposed changes to the taxation of lease inducements for commercial property.
Read more |
| Proposed legislation |
Salary tax |
October 2013 |
New Zealand’s government announced that proposals to tax salary trade-offs will be narrowed. The proposed rules now target only Auckland and Wellington central business district car parks and vouchers issued by charities—rather than all explicit and implicit salary sacrifice benefits as originally proposed.
Read more |
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| Saudi Arabia |
| Tax legislation adopted and regulatory update |
Incentives |
October 2013 |
Certain conditions must now be satisfied to qualify for the capital incentives.
Read more |
| Reporting requirements |
October 2013 |
Saudi Arabia now requires that Arabic be used as the primary language in all commercial and business dealings, including utility bills, advertising, contracts, and insurance certifications.
Read more |
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| Singapore |
| Administrative and case law |
Property tax |
Glengary Pte Ltd. v. Chief Assessor, (2012) MSTC ¶70- 015 |
Singapore’s High Court held, in a case concerning property tax, that the annual assessment of land under development must take into consideration amounts representing committed sales of units to be constructed on the land.
Read more |
| Tax legislation adopted and regulatory update |
Gift tax |
1 October 2012 |
The Singapore rules concerning the taxation of certain gifts have been simplified, effective October 2012.
Read more |
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| Taiwan |
| Tax legislation adopted and regulatory update |
Corporate income tax |
Period 1 January 2012 |
A new decree provides for an exemption from corporate income tax on amounts relating to exhibitions (trade shows) for amounts paid for the lease of space, construction of exhibition space, insurance, freight, or goods transportation, and equipment used in exhibitions in the period 1 January 2012 to 30 June 2012.
Read more |
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