ASEAN Regulatory Brief: Airport Services, GST, Fuel Subsidies, and Tax Incentives

In this ASEAN Regulatory Brief, we look at some of the important regulatory changes taking place in Thailand, Malaysia, the Philippines, and Indonesia during the months of May and June.

Thailand:

• Thailand’s Pattaya gets new airport service

Thailand has announced plans to build a third commercial airport near Bangkok, at U-Tapao, to cater for its booming tourism industry and especially those heading for the beaches and nightlife of Pattaya.  Thai Transport Minister Air Chief Marshall Prajin Juntong announced the facility will take over an existing military airport and will be built to attain a capacity of three million passengers per annum by 2017.

Thailand’s tourism industry has been booming. In April, 2.28 million foreign tourists visited the country, coming mainly from China and Malaysia, an increase of 18.3 percent over 2014.  The World Bank forecasts an increase of up to 3.5 percent in Thailand’s GDP in 2015.

Malaysia:

• Malaysia releases updated GST guide for advertising services

The new guide clarifies GST treatment for advertising services provided by media owners, production houses and advertising agencies including media agencies, creative agencies and full range advertising agencies.

 RELATED: Malaysia GST Implementation on April 1, 2015

Specifically, the supply of an advertising service will attract GST unless it qualifies for zero-rating. This will only apply if the supplier has a business or fixed establishment in Malaysia. In order to qualify for the zero-rating, suppliers must meet the following two conditions:

• The advertisement is intended to be substantially promulgated outside Malaysia.
• Such advertisement services shall exclude any services comprising only the promulgation of an advertisement by means of the transmission, remission or reception of signs, signals, writing, images, sounds or information of any kind by wire cable, radio, optical or other electromagnetic systems.

The Philippines:

• Philippine business groups push for change to Tax Incentives Bill

Business groups in the Philippines have raised a number of problems with the country’s Tax Incentives Management and Transparency Act.

Chief among the issues raised by the groups were the unclear requirements relating to the method of electronic filing of income tax returns. Additionally, the groups are also pushing for lower penalties (from P1,000-P50,000) resulting from the failure to submit applications for incentive claims within six months.

 RELATED: Dezan Shira & Associates’ Tax and Compliance Services

Further areas of concern included:

• The publication and monitoring of tax incentives information
• Conduct of cost-benefit analysis
• Final determination of incentive eligibility (which is intended to clarify the role of the BIR vis-à-vis BOI/IPA)

Indonesia:

• Indonesia revokes premium fuel oil subsidy

In order to harmonize oil prices and inflation, Indonesia has revoked its subsidy for premium oil. However, the country will provide a subsidy for diesel fuel. According to the country’s Minister of Finance, Bambang P.S. Brodjonegoro, “The government continues making efforts to control national inflation, so that in the future, inflation development will not be too sensitive towards oil fuel price changes.”

Thailand:

• Thailand to provide tax incentives for international HQs and international trading centers

Thailand will soon begin providing tax incentives to Thai companies that are operating as an international headquarters (IHQ) or international trading centers (ITC).

In order to be defined as an IHQ or ITC, the Thai company must be providing:

• Management, technical, and support services
• Treasury center services to its associated enterprises or branch offices either overseas or in Thailand

Companies that qualify for the incentives will receive the following:

• A corporate income tax (CIT) exemption on the qualified income from an overseas associated enterprise and sales income from out-out transactions
• A reduced 10 percent CIT on the qualified income from an associated enterprise in Thailand for 15 accounting years.

Tax, Accounting, and Audit in Vietnam 2014-2015
The first edition of Tax, Accounting, and Audit in Vietnam, published in 2014, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who need to be able to navigate the complex tax and accounting landscape in Vietnam in order to effectively manage and strategically plan their Vietnam operations.

An Introduction to Tax Treaties Throughout Asia
In this issue of Asia Briefing Magazine, we take a look at the various types of trade and tax treaties that exist between Asian nations. These include bilateral investment treaties, double tax treaties and free trade agreements – all of which directly affect businesses operating in Asia.

The 2015 Asia Tax Comparator
In this issue, we compare and contrast the most relevant tax laws applicable for businesses with a presence in Asia. We analyze the different tax rates of 13 jurisdictions in the region, including India, China, Hong Kong, and the 10 member states of ASEAN. We also take a look at some of the most important compliance issues that businesses should be aware of, and conclude by discussing some of the most important tax and finance concerns companies will face when entering Asia.

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