ASEAN Regulatory Brief: Singapore-Ghana DTA, Philippines Tax Amnesty, and ASEAN Banking Sector Integration
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.
Philippines to implement tax amnesty program
Following in the footsteps of Indonesia, Philippines is planning to implement a tax amnesty program to increase government revenues and apprehend tax evaders. Indonesia’s tax amnesty program provided tax incentives and immunity from prosecution for tax evaders and led to over 745,000 taxpayers declaring US$ 330 billion in offshore assets. Unlike Indonesia, where tax evaders had offshore assets, Philippines face the issue of taxpayers not paying taxes as prescribed by the law. The government is planning to implement the scheme through an executive order from the President.
Currently, the Department of Finance (DOF) is aiming to implement the Comprehensive Tax Reform Program to change the taxation system and improve revenues. The program will include amnesty schemes for property tax, estate tax, regular tax, and other taxation cases. The government believes, before they adopt a tax amnesty program, they would need to intensify their efforts against tax evaders to highlight the government’s seriousness in enforcing the tax laws. The government has already started targeting large-scale tax evaders in the country, with a recent case filed for US$ 201 million (P10 billion pesos) of tax evasion.
Malaysia, Thailand, and Philippines central banks sign agreement
The three central banks Bank Negara Malaysia (BNM), Bank of Thailand (BoT), and Bangko Sentral ng Pilipinas (BSP), have initiated the process of integration of the banking systems of their three respective countries.
Philippines and Malaysia signed the Declaration of Conclusion of Negotiations (DCN) for the entry of Qualified ASEAN Banks (QABs) between the two economies. This allows QABs or ASEAN-headquartered banks, and banks with major ownership by ASEAN nationals to establish their presence in each other’s territory and function as domestic banks. The agreement is a step closer in achieving the ASEAN Banking Integration Framework (ABIF), which encourages each ASEAN-5 country to implement at least one bilateral agreement with another ASEAN-5 member by 2018 and other members by 2020. The ASEAN-5 includes Indonesia, Malaysia, Philippines, Singapore, and Thailand.
Philippines and Thailand signed the Letter of Intent (LOI) to initiate bilateral talks. Trade and investment between both countries have increased in the recent years and banking integration aims to increase trade opportunities. Thailand also signed a Memorandum of Understanding (MoU) with Malaysia for increased banking supervision and financial cooperation. Both parties believe that the role of cross-border banking activities has increased in the financial system. The MoU focuses on cross-border and on-site supervision, consumer protection, financial inclusion, financial literacy, and combating financial crime.
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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.
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