ASEAN Regulatory Brief: GST and Income Tax Exemptions, FTA, Tightening Inheritance and Gift Tax Regulations
In this ASEAN Regulatory Brief, we look at some of the important regulatory changes taking place in Malaysia, Indonesia, the Philippines, and Thailand during the month of July.
- List of GST-exempt items could be expanded
The Malaysian government has announced that it may expand the number of items that are not subject to the country’s goods and services tax (GST). According to Deputy Finance Minister Datuk Ahmad Maslan, the budget committee is currently analyzing the economic impacts of expanding the list. As of now, around 900 items are exempt from GST, these include bread, coffee, tea, fruits, essential services, and certain types of fuel. Future items that may be included in the list include prayer items and quails.
Under the GST-exemption process, a zero tax rate is imposed on consumers, whereas businesses throughout the supply chain (except retailers) are able to claim back input tax that has arisen during the production process.
- More individuals to be exempt from income tax
In an attempt to spur economic growth and increase the purchasing power of the public, beginning this July, the Indonesian government will raise the threshold at which individuals must pay income tax. The government expects the tax exemption to increase the country’s economic growth by 0.1 percent.
Those individuals earning an annual income of rupiah 36 million (~US2,700) will now be exempt from the country’s income tax. The previous level for the tax exemption was set at individuals earning rupiah 24.3 million.
The new exemptions will cover income tax paid since the beginning of 2015. The rupiah 36 million threshold is for unmarried taxpayers, those who are married, and are filing joint tax returns, will be eligible for a rupiah 50 million threshold.
- Possible FTA between the Philippines and Canada
The Philippines and Canada have entered into exploratory discussions as to whether the two countries should sign a free trade agreement (FTA). A tentative deadline of 2016 has been set for the end of negotiations.
Canada sees the Philippines as being a key gateway into the ASEAN region – the Philippines is Canada’s sixth largest trading partner in Southeast Asia. With a market of over 100 million consumers, a GDP of around US$315 billion, and one of the fastest growth rates in Asia, the Philippines is an increasingly attractive trade destination for countries such as Canada.
- Thailand cracks down on inheritance and gift tax evaders
Thailand’s government has announced that anyone attempting to pass on their assets via off-market transfers before the country’s new inheritance and gift tax can be implemented will find themselves subject to the maximum personal income tax rate of 35 percent. The move comes as Thailand begins the implementation of its new tax, which has resulted in many affluent people attempting to transfer their assets to their heirs before the tax takes effect.
Under the new regime, taxable assets will include residences, land, vehicles, bonds, equities and deposits in financial institutions. Bequests from deceased donors that are over 100 million baht will be subject to a 10 percent tax, however, if the recipients are parents or children, they will be only be liable for a five percent tax. Spouses will be exempt from any tax. If the donors are still alive, then the recipients are subject to a five percent tax on bequests over 20 million baht; spouses are again exempt.
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 firstname.lastname@example.org or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
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.
- Previous Article July 2015 ASEAN Regional Meetings
- Next Article Malaysia Continues to Streamline its Goods and Services Tax