Tax & Accounting

Indonesia Eases Tax Holiday Policy for New FDI Projects

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ASEAN Regulatory BriefBy Dezan Shira & Associates

In a bid to attract more investment to support the country’s economic growth, Indonesia recently issued a new regulation granting a 100 percent Corporate Income Tax (CIT) cut to new FDI-backed businesses.

Further, the new regulation grants tax holidays to new investors in any of the 17 pioneer industries including transportation, telecommunications, robotic components, oil and gas refinery, train engines, medical devices, pharmaceutical raw materials, power plant machinery, and processing of metals and agricultural products among others. Pioneer industries are those that create added value, introduce advanced technology and have strategic value for the national economy. Previously, the provision was available to only eight such industries.

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Cambodia’s DTAs with Singapore and Thailand Come into Effect

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By Dezan Shira & Associates
Editor: Vasundhara Rastogi

On January 1, 2018, Cambodia’s two Double Tax Agreements (DTAs) – with Singapore and Thailand – came into effect. The DTA with Singapore – Cambodia’s first income tax treaty – was signed on March 20, 2017, whereas the DTA with Thailand was signed on September 7, 2017.  The two DTAs aim to clarify taxation rights on all forms of income arising from cross-border economic activities between the signatory jurisdictions in respect of tax on profit, including withholding tax, additional profit tax on dividend distribution and capital gains tax; and tax on salary while minimizing double taxation. The agreements also provide for reduction or exemption of tax on certain types of income, lowering barriers to cross-border investment and encouraging bilateral trade.  

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The Philippines’ New Tax Reform Package Approved

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By Dezan Shira & Associates
Editor: Vasundhara Rastogi

On December 19, 2017, the Philippines’ much awaited tax reform package or Tax Reform for Acceleration and Inclusion (TRAIN) was signed into law, paving the way for a simpler and fairer tax regime in the country. The revised law provides for personal income tax cuts and revises several other decade-old tax provisions that will have important implications for taxpayers and businesses in the Philippines.

In this article, we highlight the key changes introduced in the new Act.

Tax exemptions
  • Personal Income Tax exemption for lowest earners

TRAIN exempts those earning an annual income of up to ₱250,000 (US$4,975) from Personal Income Tax (PIT), and raises the tax exemption for 13th-month pay and other bonuses to ₱90,000 (US$1,791). In addition, it lowers income tax rates for those earning up to ₱8 million (US$159,200).  After 2022, the income tax rates will further be reduced for all taxpayers, except those earning an annual income above ₱8 million. 

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Thailand’s New Personal Income Tax Structure Comes Into Effect

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By Dezan Shira & Associates
Editor: Alexander Chipman Koty

Thailand’s updated personal income tax (PIT) structure officially came into effect on January 1, 2017, with the aim to ease tax burdens and boost disposable income. The revision, Revenue Code Amendment Act (No 44) BE 2560, was gazetted on January 27, officially instituting the changes. The new rates apply for all income collected as of January 1 for filing in 2018. The revised income tax scheme was initially approved by the Thai Royal Cabinet on April 19, 2016.

The new structure revises the income tax bands subject to 30 percent and 35 percent tax, and increases deductibles, and doubles allowances. The lower income tax bands and their respective rates remain unchanged. The revision also raises the minimum thresholds for mandatory tax filing.

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Philippines’ Finance Secretary Recommends 7 Percent Corporate Income Tax Cut

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By: Dezan Shira & Associates

The Philippines’ Finance Secretary, Carlo Dominguez, has recommended a corporate income tax rate of 25 percent, reduced from the current 32 percent.

The proposal would be implemented as part of the Government’s Comprehensive Tax Reform Program (CTRP). Dominguez made the announcement at the 5th Manila Times Business Forum in Davao last Friday. 

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Evaluating Cambodia’s Tax Reform

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By Dezan Shira & Associates
Editor: Alexander Chipman Koty

Cambodia’s updated Law on Financial Management for 2017 reflects the government’s ongoing efforts to revamp the country’s tax system and bring more businesses operating in the informal sector into the formal tax regime by offering incentives for small taxpayers. The amended laws, which came into effect on January 1, offer lower tax rates for small and medium sized enterprises and tax exemptions for firms that uphold quality accounting. The new rules continue a tax reform initiative that began in 2013 to increase the government’s tax revenue collection capabilities and better regulate Cambodia’s significant informal economy. Successful implementation will better equip foreign investors to compete with domestic firms in the informal sector that are able to offer lower rates for their services by avoiding tax obligations.

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Understanding Taxation of 13th Month Pay and Christmas Bonuses in the Philippines

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By Dezan Shira & Associates
Editor: Harry Handley

Philippine pesosWith the Christmas season and year-end fast approaching, annual issues surrounding 13th month pay and Christmas bonuses in the Philippines raise their head once again. One key topic that often prompts questions is the distinction between 13th month pay and Christmas bonuses, also known as a year-end bonuses, and the tax rules surrounding them. Though the two systems of bonus payments are distinct, they can interact to create diverse tax outcomes. Effectively optimizing bonus structures not only reduces employers’ overall tax burden, but also fosters an environment in which employees are rewarded for their labor and given incentives for strong productivity.

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Malaysia Airport Tax Hikes Scheduled for 2017

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By: Dezan Shira & Associates

Malaysia is set to implement a series of tax increases for both domestic and international bound flights starting in 2017. Although undergoing finalization, it has been confirmed that all tax increases have been approved by Malaysia’s legislature. With rates confirmed, criticism and outcry from the nation’s aviation industry has been growing as many worry about the ramifications for domestic carriers as well as Malaysia’s position as a regional aviation hub. 

Professional Service_CB icons_2015RELATED: Tax Compliance Services from Dezan Shira & Associates
New Aviation Rates

Set to be implemented from January 1st, 2017, the following flat rates will be applied to individual tickets dependent upon their destination. 

  • RM11 (US$2.66) for domestic flights
  • RM35 (US$8.47) for flights to ASEAN countries
  • RM73 (US$17.66) for international flights

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Philippine Tax Amnesty Proposed in a Bid to Increase Revenue Collection

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By: Dezan Shira & Associates

A Philippine tax amnesty program has been proposed by senate minority leader Ralph Recto in an effort to increase state collections and mitigate reduced revenues that are projected to come in the wake of planned corporate tax reductions. Announced formally on the 20th of September, changes will now be considered by the national assembly prior to their implementation. If passed, the amnesty will take effect 15 days from this date and be available for six months from this date.

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Indirect Taxation Across ASEAN

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By: Dezan Shira & Associates

Among a myriad of factors which determine competitiveness within ASEAN member states, rates of taxation are a particularly salient judge of character for the treatment of foreign investment. In recent years, corporate income tax (CIT) has become the standard bearer for tax benchmarking, however, foreign investors will be faced with a variety of different taxes in the event that capital is committed. For those importing and exporting, indirect taxation, including value added taxation (VAT) and goods and services tax (GST) are significant forms of tax that should not be disregarded. 

In essence, an indirect tax adds to the price of a purchasable product or a payable service, thereby increasing the cost of that product or service and causing consumers to indirectly pay its rate of taxation. Indirect taxes thus differ from other forms of taxation, such as corporate income and individual income tax; both of which require a business or an individual to pay the applicable amount directly to a government.

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