The past three months have seen many tax developments in Southeast Asia, Japan, Korea, China and India. Just to pick a few, China (finally) issued its circular on the conditions for dividend withholding tax deferral if the foreign shareholder(s) reinvest the funds in China. China has now clarified the requirements for claiming the super-deduction for qualifying R&D and it amended its withholding tax rules applicable to foreign investors, especially with respect to shares in Chinese companies.
The Hong Kong IRD has clarified the conditions and application of the recently introduced aircraft leasing tax concessions for lessors and managers, and Hong Kong has now promulgated its membership of the Multilateral Convention on Mutual Administrative Assistance In Tax Matters, which is important especially for its ability to adopt and implement the BEPS provisions in the MLI treaty which it signed back in June last year. India’s supreme court issued an important decision on whether outsourcing services constitute a permanent establishment in the country and the Indian tax authorities issued various clarifications including one relating to indirect transfers by foreign investors of shares of Indian companies. Indonesia issued new final tax rules on land and building rental and clarified certain aspects of the debt to equity ratio in the income tax law.
Japan issued tax reform proposals for 2018 and Korea’s supreme court issued a decision on permanent establishment issues related to foreign private equity fund investments in Korea. Malaysia issued its budget proposals for 2018 and Malaysia’s tax authority made a u-turn on the withholding tax liability on offshore services by issuing an Exemption Order, which bodes well for foreign consultants and engineering companies doing work for Malaysian businesses.
In the Philippines, the senate issued its version of the 2018 tax reform bill. Singapore implemented the possibility for foreign companies to become a Singapore law incorporated company provided certain conditions are satisfied. Taiwan saw many changes, including on controlled foreign companies (CFC) and on transfer pricing obligations. These are just a number of many more topics discussed in this edition of the Asia Tax Bulletin.