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
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.
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
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
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
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).
1. Australia - ATO Cautions on Multinational Profit
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
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
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
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
On 10 May 2016 in Mauritius, representatives of the governments of India and Mauritius signed an agreement which provided the amendment of the provisions of the double tax treaty agreement that was signed between the two countries on 1983.
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