While half the world is working from home as a result of the global pandemic that has taken over normal life in a matter of weeks, it is probably only right that this edition of the Asia Tax Bulletin includes a separate ‘Coronavirus Measures’ section for each of the jurisdictions covered. Besides that, the first three months of a new year meant budget time for a few of the jurisdictions here, specifically Hong Kong, India and Singapore, which even came out with a supplementary budget announcement five weeks after its regular one, as the coronavirus was developing at a much faster pace than initially expected. It contained additional relief measures in an attempt to stem the depressing economic impact.
Two points to note about the Indian budget are that (i) It abolished its dividend distribution tax and replaced it with a dividend withholding tax, which will be welcomed by foreign investors, and (ii) It expanded the scope of the Equalisation Levy to cover most digital and online transactions.
In further news, Japan’s parliament has passed tax reform proposals into law, while Indonesia is looking to pass a tax reform through parliament to make it more attractive to foreign investors and has also signed a new tax treaty with Singapore, which will, once it is ratified by both countries, make Singapore a favourable jurisdiction for Indonesian private equity and investment fund investments, as it contains an exemption from Indonesian capital gains tax of the sale of shares of Indonesian companies. In the same vein, Singapore promulgated detailed legislation surrounding the long awaited Variable Capital Company (VCC) on 15 January 2020, bringing it into effect as per that date. Given its attractive legal and tax features, the VCC is expected to give the Cayman Islands a run for its money as the preferred jurisdiction for Asian investment funds going forward.
On a final point, Thailand has introduced new tax incentives for investments in Special Economic Zones.