ASEAN Regulatory Brief: Philippines’ New Tax Treaties, FDI Changes for Myanmar, and Ride Hailing Apps in Indonesia
In this edition of ASEAN Regulatory Brief, ASEAN Briefing takes a closer look at new tax treaties negotiated by the Philippines, changes to Myanmar’s foreign investment laws, and ride hailing services in Indonesia.
Philippines: Senate approves tax treaties with Germany, Italy and Turkey
The Philippines Senate approved double tax avoidance treaties with Germany, Italy and Turkey on 14 December. The new treaties aim to avoid instances of double income taxation on a single income – which were a barrier to trade and investment. The treaties cover income generated from personal services, dividends, interest, royalties, immovable property, pensions and remuneration from government services. The Philippine authorities also stated that the agreements will better enforce domestic laws, reduce tax evasion, promote technology transfer and make sure that Philippine tax laws are compliant with international standards.
Germany is Philippines’ top trade partner followed by Italy and Turkey. The authorities stated that in the case of Italy the treaty will help remove Philippines from a blacklist of tax havens, which has deterred investment. The Philippines has entered into tax treaties with 42 countries this year.
Myanmar: Reforms planned for foreign investors
Robert Pé, legal advisor to recently elected Aung San Suu Kyi’s National League for Democracy (NLD) government, stated that further reforms to attract investors can be expected in the coming months. Pé further stated that while the military government has taken steps to attract foreign businesses, it was still difficult to do business. Regulations and permits are required for almost everything, while land ownership remains problem. This has made it easy for public servants to ask for bribes. In addition, labor laws remain weak and it remains to be seen if the government will develop laws in accordance with international standards.
The NLD will have to set priorities in the next few months if it has to plan reforms. The NLD’s economic committee has also stated that it will not plan abrupt changes, but rather find ways to alleviate corruption. US companies are closely watching NLD’s economic policies and developments before making big investments in the country. The NLD wants to attract more foreign direct investment of U.S. $8 billion from U.S. $1.4 billion two years ago. While it is yet to be seen how the government will implement reforms, business enterprises remain optimistic.
Indonesia reverses ban on ride-hailing transport operators
Indonesia’s transport ministry reversed a ban on online ride-hailing transport operators such as Uber, GrabTaxi and Go-Jek on 18 December, barely 24 hours after it banned them stating that such operators do not fulfill requirements of being public transport operators. The authorities reversed the ban after stiff opposition from social media and President Joko Widodo. The transport minister further stated that while there is a law that states two-wheeled vehicles cannot operate as public transport vehicles, there is a huge gap for reliable public transportation.
The initial ban was surprising given that earlier this month, Jakarta’s transportation agency allowed transport operators such as Uber and GrabTaxi to operate in Jakarta. The latest development underlines the unpredictable nature of regulations in Indonesia. Recently, the government proposed labor laws which were unfavorable for expats and foreign businesses. However, the government rescinded the laws after opposition from the business community.
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