Welcome to issue 39  of Weekly Alert covering technical development in taxation around the globe.
TAX – HONG KONG
1. Hong Kong & Korea Tax Treaty in Force
The agreement for the avoidance of double taxation and prevention of fiscal evasion in relation to taxes on income between Hong Kong and Korea, which was first signed in July 2014, came into effect on 27 September 2016. The agreement will be applied in Hong Kong for any year of assessment beginning on or after 1 April 2017.
2. Notify IRD Promptly of Change of Address
On 6 October 2016, the Inland Revenue Department ("IRD") released a notice to remind taxpayers to report any change of address within one month of the date of change. The notification can be sent by post, fax or through eTAX account.
Notify IRD Promptly of Change of Address
TAX – PRC
1. Circular on Optimizing the Administration of Tax Refunds
(Exemptions) for Export Goods of Foreign Trade Integrated Services
The State Administration of Taxable ("SAT") has issued the "Circular on Optimizing the Administration of Tax Refunds (Exemptions) for Export Goods of Foreign Trade Integrated Services Enterprises" which took effect from 1 October 2016.
The Circular provides guidance to SAT offices on categorizing integrated services enterprises in efficient and effective manner. Depending on the foreign trade integrated services enterprises' administration category, the SAT offices will complete their export tax refunds (exemptions) procedures under the following timeframes:
|I||Within 5 working days|
|II||Within 10 working days|
|III||Within 15 working days|
|IV||Within 20 working days|
2. Notice on Adjustments of Cosmetics Consumption Tax
On 30 September 2016, the Ministry of Finance and the SAT jointly issued the "Notice on Adjustments of Cosmetics Consumption Tax Policy" in order to promote reasonable consumption.
According to the Notice, consumption tax on ordinary beauty and cosmetics products is abolished whereas 15% consumption tax is charged on "high-end cosmetics products" including high-end beauty products, beauty enhancement products, premium skin care products, and box set cosmetics. "High-end cosmetics products" are defined as cosmetics products with production/import value (excluding value added tax) above 10 RMB / mL (g) or 15 RMB / piece (sheet).
The Notice took effect from 1 October 2016.
TAX – INTERNATIONAL
1. Australia - ATO Cautions on Multinational Profit Shifting
The Australian Taxation Office ("ATO") has released two new taxpayer alerts with focus on multinational profit shifting. The two alerts are TA 2016/10 "Cross–Border Round Robin Financing Arrangements" and TA 2016/11 "Restructures in response to the Multinational Anti Avoidance Law (MAAL) involving foreign partnerships".
TA 2016/10: Cross–Border Round Robin Financing Arrangements
The alert warns multinational companies engage in cross-border round robin financing arrangements, in which an Australia entity provides funding to its overseas related entity, but the funding eventually flow back in a manner which allegedly claims Australia tax deductions while no corresponding Australian assessable income is being generated.
TA 2016/11: Restructures in Response to the Multinational Anti Avoidance Law ("MAAL") involving Foreign Partnerships
The alert cautions a new scheme that attempts to avoid the MAAL, which came into effect on 1 January 2016. The scheme involves interposing an entity described as a partnership between the foreign entity originally making supplies to Australian customers and the Australian customers in order to avoid the implementation of MAAL.
Deputy Commissioner Jeremy Hirschhorn made a statement in conjunction of the tax alerts release that ATO is fully aware of the ways taxpayers may be tempted to use to avoid tax. For those companies which have already entered into a transaction covered by the tax alerts, the Deputy Commissioner advised the companies should approach ATO to discuss how to resolve their taxation position, rather than wait to be identified through compliance activities.
ATO Cautions on Multinational Profit
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.