Malaysia GST, Thailand Foreign Labor Regulation, and Myanmar FDI – ASEAN Regulatory Brief

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Malaysia: GST exempted for supplies directly related to exported goods

Malaysia’s finance ministry recently issued an order exempting suppliers from the need to charge Goods and Services Tax (GST) on certain goods and services directly connected to exports. The GST relief, which came into effect from July 1, 2017, will apply to four broad categories of services and supplies directly connected to exports and export processing. These include handling or storage services related to goods for export; services provided by a company with licensed manufacturing warehouse status or a business operating in a free zone; research and development (R&D) services related to goods for export; and tools or machines which are highly specialized in nature and used for the manufacture of goods in Malaysia for export.

To qualify for the GST waiver, the recipient of the goods and services must be an overseas customer of foreign nationality, who is resident abroad at the time of receiving the goods and services, and who does not own a business entity in Malaysia. Certain categories of the aforementioned goods will require the approval of Malaysia’s Director General of Customs to avail of the GST waiver. Further, the goods for which the supplies are made must be exported within a period of 60 days from the date of the completion of the services.

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Thailand: New decree regulating foreign workers deferred for six months

The Thai government has deferred until January 1, 2018 the implementation of a recently introduced decree that seeks to regulate foreign workers in the country. The decree, which was first issued on June 23, 2017 introduced fines ranging from Thai Baht 400,000 (US$11740) to Thai Baht 800,000 (US$23480) for companies employing undocumented foreign workers. Employers now have until December 31, 2017 to register and secure work permits for their undocumented foreign staff.

The abrupt introduction of the new decree had caused an exodus of an estimated 60,000, mainly Myanmarese, undocumented workers from Thailand after employers laid off their undocumented work force. This led to disruption to business activity in several industries, including the manufacturing and seafood processing sectors. The government has stated that the new rules are intended to regulate the country’s foreign labor market in line with the country’s international commitments to combat human trafficking. 

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Myanmar: Ten promoted sectors to receive preferential treatment for FDI

The Myanmar Investment Commission (MIC) has invited foreign investors to invest in ten priority sectors. These priority investment sectors are export promotion industries; import substituting industries; logistics; healthcare; education services; affordable housing projects; development of industrial estates; power; livestock and fishery products; and agriculture and its related services, including value-added agricultural products.

Both domestic and foreign investors investing in the ten promoted sectors will receive preferential treatment and assistance from the MIC as well as state governments and official agencies. With the country’s new investment law in place, regional and state investment commissions are now permitted to approve investment proposals of up to US$5 million without having to seek prior MIC approval.

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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.

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