A new spring and a changing tax world. This Spring edition of the Bulletin features a host of important developments. India, Hong Kong, Malaysia and Singapore each issued their budgets for 2018 with tax proposals aimed at capturing the e-commerce business.
India proposes to do so by deeming foreign e-commerce businesses to have a permanent establishment if they do business with customers in the country. Taiwan and Thailand are also proposing new tax provisions in this area. China came out with a new public notice about Beneficial Ownership, replacing the previous one, which came out in 2009. Hong Kong and Thailand are going to introduce transfer pricing law in the course of 2018. The provisions will have retroactive effect to the start of this year. Singapore changed its transfer pricing guidelines by including a penalty if taxpayers fail to comply with the arm’s length principle when they have business dealings with related parties, regardless of whether the income is taxable in Singapore. Korea and the Philippines have enacted the tax reform proposals reported in the previous edition of this Bulletin. Indonesia changed its tax reporting obligations and has started the renegotiation of its tax treaty with Singapore. China has, besides reducing its value-added tax rates, issued a helpful circular about the interpretation of certain provisions in its tax treaties, and we would like to draw your attention especially to the comments made in relation to the permanent establishment provision. Hong Kong has relaxed the tax deductibility rules for intellectual property rights purchases and has introduced a lower, step-up, profits tax rate, matching Singapore’s step-up rate of 8.3%.