Baker & McKenzie: Asia Pacific Tax Newsletter - May 2012

India

Case Summaries
By Ranjeet Mahtani and Divya Jeswant, Economic Law Practice
 

Recent case decisions on tax in India have decreed the following:

·     Compensation received for waiver of right to acquire shares against capital advances is taxable.

·     The existence of a foreign company's server within India creates a permanent establishment.

·     Closely-linked transactions should be viewed as a single transaction to determine an arm's length price.

·     Additional fees for secondment of employees to associated enterprises is unjustified where business model aims to improve assessee's business.

·     Constitutional validity of taxing 'deemed construction services' upheld

·     Broadband services not liable to vat as sale of 'artificially created light energy.'

·     Sale of goods to a party in the continental shelf is not taxable.

·     Extended definition of 'sale' for VAT purposes would not apply in the context of service tax.

·     Constitutionality of reverse charge mechanism upheld

New Circular Discusses Service Tax on Construction Models

February 2012
By Ranjeet Mahtani and Divya Jeswant, Economic Law Practice
 

A new circular by the Central Board of Excise & Customs has decreed that, for the joint development model in which the landowner and builder operate in collaboration, the services provided by the joint venture entity to both joint venture partners would have to be evaluated for taxability.

Malaysia

Singapore

2012 Budget has Tax Implications for Multinational Companies and Wealth Management Industry

February 2012
By Edmund Leow, Dawn Quek and Allen Tan

Singapore's 2012 budget marks key changes for multi-national companies and the wealth management industry, including more certainty on the tax treatment for disposal of shares, enhanced Productivity and Innovation Credit, and a Goods and Services Tax exemption for supply of investment-grade gold and precious metals.

Additional Buyer's Stamp Duty Introduced
January 2012
By Edmund Leow and Dawn Quek

Additional Buyer's Stamp Duty was established for purchases of Singapore residential property made on or after 8 December 2011 by foreigners, Singapore Citizens and Permanent Residents under specific scenarios.

Income Tax Board of Review Decrees Comptroller of Income Tax's Discretion Not Absolute
February 2012
By Edmund Leow, Allen Tan, James Choo and Justin Tan

The Income Tax Board of Review of Singapore has demonstrated in its decision in AVD vs. CIT the possibility of successfully challenging the Comptroller of Income Tax in the exercise of his discretion if he did not fairly consider a taxpayer's application. 

Singapore to Include Tax Offenses as Predicate Offense for Anti-Money Laundering Rules
February 2012
By Edmund Leow and Dawn Quek

The Monetary Authority of Singapore is mulling a legislative change to include tax offenses as a predicate offense for Anti-Money Laundering rules, following the recommendation of the Financial Action Task Force.

Taiwan

Supreme Court Rules on Deductibility of Transfer Pricing Adjustments
March 2012
By Dennis Lee and Michael Wong

The Supreme Administrative Court recently handed down a verdict in a case involving transfer pricing adjustments, marking the first case in Taiwan in which the court has ruled on such issues since Taiwan's transfer pricing regulations were promulgated in 2004.

Taiwan May Reintroduce Capital Gains Tax

April 2012
By Dennis Lee and Michael Wong

After 24 years, Taiwan's Ministry of Finance has proposed to reintroduce capital gains tax on profits from securities and futures transactions.

Thailand

Corporate Tax Rate Cut will Affect Small and Medium Enterprises Differently than Larger Companies
April 2012
By Chinawat Assavapokee and Chanida Leelanuntakul

The Thai Government has passed two Royal Decrees that reduce the corporate income tax rate, with varying benefits for SMEs and companies.

New SME Turnover Test Now in Effect: Uncertainty Looms for Businesses Calculating Annual Income
April 2012
By Chinawat Assavapokee and Chanida Leelanuntakul

In a recently-implemented revised turnover test, some companies currently enjoying Small and Medium Enterprise status may cease to qualify as an SME under the new SME tax scheme.

Vietnam

New Decree Lists Exceptions to Value Added Tax
March 2012
By Fred Burke and Nguyen Thanh Vinh

A new decree by the Vietnamese government has identified cases where value added tax need not be declared and paid. 

New Decree on Enterprise Income Tax Released
March 2012
By Fred Burke and Nguyen Thanh Vinh

A new decree has provided guidelines on tax-exemptions in income from the transfer of CERs, adjusted withholding tax rates and eligibility to enterprise income tax incentives.

Amendments to Tax Administration Law Proposed
April 2012
By Fred Burke and Nguyen Thanh Vinh

Vietnam may see more streamlined tax administrative procedures and more efficient tax administration with the Ministry of Finance's proposed amendments to the Law on Tax Administration.