Asia Pacific: Tax update for financial institutions (February 2016)
Implementation of the base erosion and profit shifting (BEPS) project initiatives is gathering speed, as governments in the Asia Pacific region introduce amendments to increase disclosure and transparency. This is likely to continue to be a key theme for 2016. Other trends reveal certain governments are looking to improve their efficiency of the tax collection system through greater use of technology.

Among other tax developments in the Asia Pacific region affecting financial institutions are the following items:
  • Australia: Developments on the common reporting standard (CRS) and enhanced third-party reporting and data matching; update on the Attribution Management Investment Trust (AMIT) regime

  • China: Tax policy for Mainland-Hong Kong mutual recognition of funds arrangement; R&D “super deduction” update

  • Hong Kong: Legislation for implementing CRS / AEOI, consultation

  • India: Minimum alternate tax not applicable to foreign companies with no permanent establishment (PE) in India; clarifying the taxation of income from off-shore rupee-denominated bonds

  • Indonesia: New thin capitalization rules

  • Japan: 2016 tax reform updates; new income tax treaties with Germany and Taiwan

  • Korea: Amendment of education tax law to change quarterly payments to annual payment; proposed decrease in the capital gains tax rate on trading financial derivatives

  • Malaysia: Finance Act 2015, the 2016 budget proposals, and income tax (deduction for expenditure on issuance of Sukuk) rules 2015

  • Mauritius: Value added tax (VAT) and tax rulings; exchange of information between Mauritius and Austria; implementation of CRS postponed

  • New Zealand: Tax legislation proposed for residential land withholding tax and to apply goods and services tax (GST) on remote services; proposal to reduce tax cost to shareholders announced; new PAYE, GST and tax framework proposals announced

  • Philippines: Philippines and the United States signed intergovernmental agreement (IGA) under FATCA regime

  • Singapore: GST remission on expenses for “prescribed funds” managed by prescribed fund managers in Singapore

  • Taiwan: Repeal of the capital gains tax regime; income taxation treaty signed with Japan

  • Thailand: Reduced corporate income tax rate of 20% becomes permanent; new income tax treaty between Thailand and India; more tax audits expected in the year ahead

  • Vietnam: State Bank of Vietnam to tighten management of foreign currency transactions, and to broaden the scope of using foreign currencies in Vietnam; new regulation on providing foreign currency loans from 2016
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