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Asia Transfer Pricing 8Th Edition TAX REFERENCE LIBRARY NO 109 Asia Transfer Pricing 8th edition In association with Asia Transfer Pricing 3 Introduction: The times they are a-changin’ 39 New Zealand: Inland Revenue's business By Tony Gorgas, KPMG’s Asia Pacific regional transformation gathers pace leader for Global Transfer Pricing Services. Kim Jarrett, a partner at KPMG New Zealand, looks at Inland Revenue’s Business 6 Asia-Pacific overview: Asia-Pacific countries Transformation project which has wide-reaching are enthusiastically adopting CbCR implications for businesses and other taxpayers. By Tony Gorgas, KPMG’s Asia Pacific regional leader and Damian Preshaw, a KPMG consultant. 42 Philippines: Waiting Again for the BIR Maria Carmela M. Peralta, a partner at KPMG 13 Australia: When it rains it pours! Philippines, looks at developments since the Frank Putrino, a partner at KPMG Australia, release of transfer pricing regulations in 2013 and and Damian Preshaw, a KPMG consultant, look examines the Strategic Plan for 2016 – 2020. at developments in transfer pricing since 2012 and examine Australia’s plans for further changes. 44 Singapore: TP cannot be ignored … any more Geoffrey K. Soh, a partner at KPMG in 18 China: A rapidly changing environment Singapore and Felicia Chia, a director, examine Cheng Chi, a partner at KPMG China, exam- Singapore’s dynamic and evolving tax environ- ines the speed at which the Chinese State ment including new TP updates in January 2016. Administration of Taxation set out its plans for BEPS implementation and its view of BEPS. 48 South Korea: BEPS and transfer pricing in Korea Gil Won Kang, Seung Mok (William) Baek and 21 Hong Kong: TP is elevated to a new level Sang Hoon Kim, partners at KPMG in South John Kondos and Lu Chen, partners at KPMG Korea, look at BEPS Action13, the potential in Hong Kong, look at the rapidly evolving controversies surrounding it, APAs and the transfer pricing landscape. Simplified APA Programme. 24 India: A fresh new look at TP in India 51 Sri Lanka: Moving toward enforcement Rahul Mitra, Karishma Phatarphekar, and Shamila Jayasekara, a partner at KPMG in Sri Rajan Sachdev, partners at KPMG in India, Lanka, examines the local tax environment, examine India’s steps for creating a taxpayer BEPS, APAs and audits. friendly environment and making the country a preferred destination for investments. 53 Taiwan: Insights into transfer pricing in Taiwan and recent tax developments 28 Indonesia: Will BEPS be a major game changer? Sherry Chang, a partner at KPMG in Taiwan, Iwan Hoo, a partner at KPMG in Indonesia, and Karl W Chan, a director, discuss the Panama examines significant changes in the tax land- Papers, BEPS, transfer pricing audits and recent scape and in transfer pricing practices. amendments to transfer pricing guidelines. Unless otherwise stated, 31 Japan: Significant changes in Japan's transfer 57 Thailand: The game has changed … all information in this pricing landscape Benjamas Kullakattimas and Abhisit report is based on the Jun Tanaka and Nobuhiro Tsunoda, partners at Pinmaneekul, partners at KPMG in tax regulations for the KPMG in Japan, and Yosuke Suzaki, a senior Thailand, discuss the local tax environment countries reviewed as manager, examine Japanese transfer pricing and including transfer pricing audits. updated on or after changes in tax audits and taxation. May 1 2016, or from 60 Vietnam: At a turning point for BEPS-related KPMG member firm 35 Malaysia: Get ready for the next wave! tax reforms professionals’ experience Bob Kee and Mei Seen Chang, executive directors Thuy Duong Hoang, a partner at KPMG working with tax clients of KPMG in Malaysia, look at transfer pricing Vietnam, provides an update on transfer pric- and tax authorities in enforcement, business restructuring and BEPS, in ing management, audits, APAs and offers a their local countries. this comprehensive examination of Malaysia. view of BEPS. WWW.INTERNATIONALTAXREVIEW.COM 1 8 Bouverie Street London EC4Y 8AX UK Tel: +44 20 7779 8308 Fax: +44 20 7779 8500 Managing editor Caroline Byrne [email protected] Editor Anjana Haines [email protected] Deputy editor Joe Stanley-Smith [email protected] Reporter Amelia Schwanke [email protected] Deputy editor, TPWeek.com Joelle Jefferis [email protected] Production editor João Fernandes [email protected] Publisher Oliver Watkins [email protected] Associate publisher Andrew Tappin [email protected] Online associate publisher Megan Poundall [email protected] Senior marketing executive Sophie Vipond [email protected] Graduate marketing trainee Anna Sheehan [email protected] Subscriptions manager Nick Burroughs [email protected] CEO, Legal Media Group Matthias Paul © Euromoney Trading Limited, 2016. The copyright of all editorial matter appearing in this Review is reserved by the publisher. No matter contained herein may be reproduced, duplicated or copied by any means without the prior consent of the holder of the copyright, requests for which should be addressed to the publisher. Although Euromoney Trading Limited has made every effort to ensure the accuracy of this publication, neither it nor any contributor can accept any legal responsibility whatsoever for consequences that may arise from errors or omissions, or any opinions or advice given. This publication is not a substitute for professional advice on specific transactions. Directors John Botts (Chairman), Andrew Rashbass (CEO), Sir Patrick Sergeant, The Viscount Rothermere, Colin Jones, Martin Morgan, David Pritchard, Andrew Ballingal, Tristan Hillgarth International Tax Review is published 10 times a year by Euromoney Trading Limited. This publication is not included in the CLA license. Copying without permission of the publisher is prohibited ISSN 0958-7594 Customer services: +44 20 7779 8610 UK subscription hotline: +44 20 7779 8999 US subscription hotline: +1 800 437 9997 2 WWW.INTERNATIONALTAXREVIEW.COM INTRODUCTION The times they are a-changin’ he title to a famous Bob Dylan song written more than 50 years ago By Tony Gorgas, is quite apt with respect to capturing what is happening in the Asia T Pacific (ASPAC) region in relation to the taxation of multinational KPMG’s Asia Pacific enterprises (MNEs), particularly in the area of transfer pricing, and to the efforts of tax administrations to enforce the ever increasing rules and reg- regional leader for ulations in this area. Historically, few ASPAC countries have been members of the OECD. Global Transfer Pricing The most recent ASPAC country to be admitted as a member was Korea in 1996. More recently, however, with changes to the global geo-political Services. landscape and the advent of the G20 as the pre-eminent forum for global economic cooperation, large ASPAC economies such as China, India and Indonesia have played a more active role with respect to how the taxable profits of MNEs should be determined and how to counter multinational tax avoidance. With the issue of the OECD’s February 2013 report titled ‘Addressing Base Erosion and Profit Shifting’, followed not long after by the OECD’s ‘Action Plan on Base Erosion and Profit Shifting’ (BEPS Action Plan), and the subsequent endorsement of the OECD’s work by the G20, has come increasing realisation that multinational tax avoidance is a global issue that requires global solutions. As a consequence, the number of non-OECD and non-G20 countries participating in the OECD/G20’s BEPS project has been increasing, including a number of non-OECD/non-G20 coun- tries in the ASPAC region. This is shown in Table 1. The increasing participation by non-OECD and non-G20 ASPAC countries in the technical work of the OECD/G20’s BEPS project and by their tax administrations in international fora and in adopting mechanisms for exchanging information to enable them to more efficiently and effec- tively address multinational tax avoidance, is having far-reaching impacts in the ASPAC region. These impacts are rapidly and radically changing the transfer pricing landscape with potentially significant implications for MNEs operating in the ASPAC region. The OECD/G20 BEPS project will significantly impact MNEs operating in ASPAC countries According to the OECD, international tax rules have revealed weaknesses that create opportunities for BEPS and estimates that the global loss of income tax could be between $100 to $240 billion annually. The losses arise from a vari- ety of causes, including aggressive tax planning by some MNEs, the interac- tion of domestic tax rules, lack of transparency and coordination between tax WWW.INTERNATIONALTAXREVIEW.COM 3 INTRODUCTION Table 1 Signed Multilateral Participating in Participation in ASPAC countries Competent Authority OECD member G20 member Forum on Tax OECD’s BEPS-related included in survey Agreement on Administration (FTA) technical work1 exchange of CbCR2 OECD Established G20 Established FTA Established BEPS project January 2016 1961 1999 2002 launched 2013 Australia 33333 China 3333 Hong Kong 3 India 3333 Indonesia 333 Japan 33333 Korea 3333 Malaysia 333 New Zealand 3333 Philippines 3 Singapore 33 Sri Lanka Taiwan Thailand Vietnam 3 1 Source: Background brief: Inclusive Framework for BEPS Implementation, OECD, March 2016. 2 Australia, Japan and Malaysia signed on January 27 2016. China, India and Indonesia signed on May 12 2016. administrations, limited country enforcement resources and As clearly shown in the country updates included in this
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