Legal & Regulatory
By Dezan Shira & Associates
Singapore’s parliament on March 10, 2017 passed significant amendments to its Companies Act and Limited Liability Partnerships (LLP) Act. Among the key changes are measures aimed at making ownership and control of business entities more transparent in the city-state and reduce opportunities for the misuse of corporate entities for illicit purposes. The measures are also aimed at bringing Singapore in line with international good practices, and uphold the city-state’s sound reputation as a globally trusted financial hub. Among other significant changes introduced by the amended acts are (a) increased record keeping requirements and (b) introduction of an inward re-domiciliation regime allowing foreign corporate entities to transfer their corporate registration to Singapore.
Singapore – Ghana sign Double Taxation Avoidance Agreement
Singapore and Ghana have signed a Double Taxation Avoidance Agreement (DTA) on March 31, 2017. The agreement aims to reduce double taxation and tax disputes by clarifying the taxation rights on all types of income flows arising from cross-border business between the two countries. The DTA aims to reduce trade and investment barriers and increase trade flows between the two countries.
The agreement stipulates that withholding taxes on dividends, interest, and royalties will not exceed seven percent, while withholding taxes on services will be capped at 10 percent. All rates will come into effect on or after January 1, following the year when the DTA comes into force. The DTA will come into force after its ratifications by the two countries.
Malaysia – EU trade to grow by 20-30 percent
Malaysian and EU authorities expect the proposed Malaysia-European Union (EU) Free Trade Agreement (FTA) will increase trade volumes from 10 percent to 20-30 percent. The growth is based on EU’s existing FTA with South Korea, which grew by 35 percent in the last five years. Both South Korea and Malaysia have similar EU trade volumes. Both parties are pushing to implement the agreement by the end of 2017. The countries met at the ASEAN Regional Seminar on Transit and Transshipment along with eight ASEAN member states.
Malaysia’s trade with EU has moved away from being a participant country to sharing best practices, especially in the area of export control after they implemented the Strategic Trade Act (STA) 2010. The act is an export control law that encourages exports of strategic items. Both parties also focused on trade laws, transit and transshipment regulations, regional cooperation, and challenges in building strategic trade controls. EU is Malaysia’s third largest trading partner, with the last three years witnessing a positive trade balance and a growing number of EU companies investing in Malaysia.
Singapore: Government proposes new cybercrime laws
The Singapore government will include four major amendments to the Computer Misuse and Cybersecurity Act in view of growing cyber threats. Once the Bill is implemented, it will criminalize trading of personal information such as credit card details, medical information, and banking information, even if no hacking was involved to gain such information. Buying or selling of hacking tools and software with criminal intent will also be considered an offence. Overseas committed offences will also fall under the ambit of the amended Act. Any act that causes illness, injury or death, and disruptions to essential services, national security, and Singapore’s foreign relations will be considered an offence.
According to a new section in the bill, multiple unauthorized access to one computer for a period of 12 months or less will be treated as a single offence. Treating multiple unauthorized acts as a single offence will lead to a heavier penalty. The maximum penalty under the Computer Misuse and Cybersecurity Act varies from US$5,000 fine and two years’ imprisonment, to a US$100,000 fine and 20 years’ imprisonment depending on the crime. Last amended in 2013, the government plans to introduce a new Cybersecurity Act in the middle of 2017 after public consultations.
By: Dezan Shira & Associates
An Introduction to Doing Business in ASEAN 2017, the latest publication from Dezan Shira & Associates, is out now and available for complimentary download through the Asia Briefing Publication Store.
What happens in and around ASEAN is one of the key factors increasingly impacting upon China and India trade flows, as well as the rest of Asia. While the ASEAN trade bloc has been in existence since 1967, it has really shown its importance in trade and commercial business flows since the rise of China over the past three decades, and through its response to China’s changing domestic demographics. Those changes – an aging and increasingly consumer demanding China – have been skillfully adapted by ASEAN to place the future of global manufacturing, and where it takes place, firmly within its own orbit.
Simply put, free trade agreements that came into effect with China and India in 2010 changed the face of Asian trade and production, and are continuing to do so. For example, bilateral trade figures between China and ASEAN’s Big Five of Indonesia, Malaysia, Philippines, Singapore, and Thailand have multiplied by factors of 500 percent since the agreement was signed. With the smaller ASEAN nations of Cambodia, Laos, Myanmar and Vietnam coming into line with their own compliance of ASEAN customs duty reductions at the end of 2015, the entire bloc offers close to zero import-export tariffs for much of emerging Asia, including the giant markets of China and India, possessing some 500 million middle class consumers between them. ASEAN therefore represents a massive trade bloc possessing free trade agreements of global strategic importance. The question of accessing ASEAN for the benefit of North American, European and other global purchasing and manufacturing executives is a key function of this report.
An Introduction to Doing Business in ASEAN introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment and taxation. We also include the latest development news in our “Important Updates” section for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each. Additional research and commentary on ASEAN’s relationships with China, India and Australia is also provided.
- An introduction to ASEAN
- Country profiles
- Case studies: ASEAN as a platform for Asian growth
Our practice, Dezan Shira & Associates, has taken giant steps into the ASEAN market through the establishment of offices throughout the region, in addition to the creation of a unique alliance of firms. That, coupled with our existing long experience of handling foreign investment into China and India, puts us in a unique position of truly understanding how Asia works and how to maximize its free trade benefits.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
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Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in ASEAN 2017
An Introduction to Doing Business in ASEAN 2017 introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment, and taxation. We also include the latest development news for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each.
Human Resources in ASEAN
In this issue of ASEAN Briefing, we discuss the prevailing structure of ASEAN’s labor markets and outline key considerations regarding wages and compliance at all levels of the value chain. We highlight comparative sentiment on labor markets within the region, showcase differences in cost and compliance between markets, and provide insight on the state of statutory social insurance obligations throughout the bloc.
Philippines: Regulation holds banks responsible for late tax payments
The Department of Finance (DOF) on February 15 announced a new rule under the Bureau of Revenue (BIR) which will penalize banks and not taxpayers for late or unremitted tax payments made through credit, debit or prepaid cards. The regulations amends the Revenue Regulation (RR) No. 3-2016 which made taxpayers liable if their authorized agent bank (AAB) failed to pay the BIR their tax payment on time.
The regulation is mainly to benefit self-employed and small business owners who line up for several hours at BIR to pay taxes. As per the new rules, taxes paid by cards will be deemed already paid on the date and time shown on the confirmation receipt issued by AAB. The AAB will then be liable for any delays in depositing to the BIR. The DOF is also pursuing other tax reforms such as lowering personal income tax while raising excise tax and reducing value added tax (VAT)
Myanmar: Hefty Fines for flouting building regulations
From April 1, building owners in Mandalay will face hefty fines if their buildings violate government regulations or have been constructed without a valid permit. As per the Mandalay City Development Committee (MCDC) building rules section 10 (a), (b), (c), the new fine rates for buildings constructed beyond the permit stipulations or without approval are US$10.89 (K15,000) per square foot for reinforced concrete buildings and US$7.26 (K10,000) per square foot for brick nogging buildings. The penalty for business and contract buildings will be US$10.89 (K15,000) per square foot, while for other buildings it will be US$5.81 (K8,000) per square foot.
Earlier, builders violating the norms could easily pay a small fine and continue flouting guidelines. The MCDC hopes that the new fines will force builders to construct in accordance with the regulations. In some cases, the fines can be higher than the value of the building depending on the violation. The MCDC also stipulated that buildings for business use should include parking lots, fire extinguishers, and automated fire extinguishing systems.
An Introduction to Doing Business in Singapore 2017, the latest publication from Dezan Shira & Associates, is out now and available for complimentary download through the Asia Briefing Publication Store.
As the Association of Southeast Asian Nations (ASEAN) continues upon its path towards closer economic integration in 2017, Singapore’s role as the de facto financial and commercial capital of Southeast Asia will be unassailable. Having already established its competitive niche as a destination for establishing regional headquarters, branch offices and holding companies in Asia, Singapore’s legal and tax regimes continue to be among the most business-friendly in the world.
Offering foreign investors access to a highly skilled workforce, English-speaking business environment, immense logistics and transportation capacities, and over 70 double taxation avoidance agreements (DTAs), Singapore has firmly established its role as the gateway to ASEAN, China, India, and the whole of emerging Asia for foreign investors.
Philippines: Central bank tightens rules on money lending
In a move to fight money laundering, the Philippines’ central bank Bangko Sentral ng Pilipinas (BSP) tightened rules on money service businesses (MSBs). MSBs include remittance and transfer companies (RTCs), money changers, and foreign exchange dealers. As per the new rules, large payouts of more than US$10,036 (PHP 500,000) or its foreign currency equivalent in any single transaction with customers will only be allowed via check or direct credit to deposit accounts. Money changers and foreign exchange dealers will be allowed to sell foreign currency in an amount not exceeding US$10,000 and not exceeding US$50,000 per month per customer. Exemption will only be given once an application is made to the BSP depending on the nature of the business.
RTCs and MSBs will also need to notify the BSP when they commence operations as well as for new accreditation of remittance of sub-agents. The new rules will limit MSBs’ ability to transact in cash while also placing a cap on the amount of foreign currency that can be sold to money changers. The development comes after anti-money laundering investigators said that around US$81 million stolen from a Bangladesh central bank was transferred by a Philippines remittance company.
By Dezan Shira & Associates
Editor: Harry Handley
Following Thailand’s 2014 coup, there were suggestions that the incoming military-led government would implement protectionist policies that would restrict investment into the country by foreign firms. However, in the years that followed there was a significant shift in the outlook of Thailand’s leaders. Barriers were lowered and restrictions reduced in a number of industries; this resulted in over US$9 billion of inward foreign direct investment (FDI) in 2015.
Research from the Economist Intelligence Unit suggests that Thailand will continue to encourage inward investment over the next few years in order to push the economy towards high income status. This is highlighted by recent amendments made (and further amendments scheduled for 2017) to the Foreign Business Act – the predominant legislation governing foreign investment in Thailand. This article will outline the key points of the Foreign Business Act, including the recent update, and what this means for potential entrants.