Asia Pacific Holding Company Analysis 2018 - ICLC
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Asia Pacific Holding Company Analysis 2018
Dear Nexia member, Following the success of the 2017 Asia Pacific Holding Company Analysis, we are pleased to present the Asia Pacific Holding Company Analysis, as at August, 2018. We gratefully acknowledge the contributions made by the following Nexia members (in alphabetical order per country): Australia: Nexia Sydney (SRogers@nexiasydney.com.au) Myanmar: Nexia TS Pte. Ltd. (edwinleow@nexiats.com.sg) Cambodia: Nexia TS Pte. Ltd. (edwinleow@nexiats.com.sg) Nepal: BRS Neupane & Co. (anup@brs.com.np) China: Nexia TS Shanghai Co., Ltd (scott@nexiats.com.cn) New Zealand: Nexia New Zealand (rcullen@nexiachch.co.nz, Hong Kong: Nexia Charles Mar Fan & Co. (brenda@charles-marfan.com) mmedlicott@nexiachch.co.nz) India: SKP Group (maulik.doshi@skparekh.com) Philippines: Maceda Valencia & Co (ftagao@mvco.com.ph) Indonesia: KAP Kanaka Puradiredja Suhartono (rochmat@kanaka.co.id) Singapore: Nexia TS Pte. Ltd. (edwinleow@nexiats.com.sg) Japan: Gyosei & Co (m-muramatsu@gyosei-grp.or.jp) Taiwan: Trans-Asia & Co., CPAs (service@tacpa.com.tw) Korea: Nexia Samduk (vitalset@hotmail.com) Thailand: Thai Advisory Office Co. Ltd (khanitk@thaiadvisory.com) Malaysia: Nexia SSY (jasonsia@nexiassy.com) Vietnam: NEXIA STT (phi.le@nexia.vn) Every effort has been taken to ensure that the information provided in this Asia Pacific Holding Company Analysis is up to date. In order to expand the reach of the analysis in the said edition, we have invited and followed up with various other countries from AP Region whose updates were not there in previous edition. Now, we have updated version of AP Holding Company Analysis from Philippines, Taiwan and Nepal. Please note, this analysis is meant as a practical tool for an initial comparison of relevant tax aspects of some holding company regimes. It should not be used as a substitute for obtaining professional tax advice. Neither the authors, Chaturvedi & Shah nor Nexia International can accept any responsibility for any loss sustained by any person relying on the information provided and failing to seek appropriate tax advice. 28 August 2018 Krupal Kanakia Partner – Taxation, Chaturvedi & Shah, Chartered Accountants, India © Nexia International 2018 Asia Pacific Holding Company Analysis - 2018 | 1
Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
1 Treatment of Dividend Income
How is Dividend Income treated for tax (a) Local-sourced Myanmar operates (a) Local-sourced Foreign-sourced Foreign-sourced (a) Local-sourced
purposes – in particular, is the dividend dividend is not a one-tier dividend is not dividend income dividend income dividend is
income either taxable. corporate tax taxable1. received in received in taxable at 21%
system, under Foreign- Malaysia is not Thailand is not tax rate
(a) exempt from tax under a which dividends sourced taxable. taxable under
“participation exemption” or received from a dividend certain
Company or other income circumstances1
association of received in
persons are exempt Cambodia is
(b) taxable with credit for foreign tax (b) Foreign-sourced from income tax in subject to tax (b) Foreign-
credits dividend income the hands of on profit. sourced
received in shareholders. Foreign tax dividend
Singapore is not credit is income
taxable under allowed for received is
certain deduction from subject to tax
circumstances 1 the tax on on profit.
profit. Foreign tax
credit is
allowed for
deduction from
the tax on
profits.
2 Minimum Participation for Dividend
income
Minimum participation holding level (%) N/A N/A N/A N/A 25% N/A
required to be satisfied
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 2Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
3 Treatment of Capital Gains Income Gains derived Capital gains are There is no Capital Gains from Gains derived (a) The capital
from disposal of taxable at 10% for separate capital disposal of share is from disposal of gain results from
How is Capital Gains Income treated for ordinary shares both resident and gains tax. Any gain not subject to tax shares shall be investing in local
tax purposes – in particular, is the made during the non-resident tax on the sale of fixed except gains from subject to currency is tax
capital gain either period 1 June payers. Capital assets/shares is disposal of corporate income exempt.
2012 to 31 May gains for tax subject to the tax property or shares tax in Thailand.
(a) exempt from tax under a 2022 are not payers in certain on profits at a rate in real property
“participation exemption” or taxable if the specifi industries of 20% on the companies will be
company has held may be subject to higher of the subject to Real
(b) taxable with credit for foreign tax at least 20% of the capital gains tax at contract price or Property Gains (b) Foreign tax
credits ordinary shares higher rates. No the market value. Tax (“RPGT”) credit may be
for at least 24 capital gains tax The proceeds also based on specific claimed if
months will be levied if the are subject to rates and tenure supporting
continuously just total value of the alternative of property documents are
prior to the sale, exchange or minimum tax of ownership. available
disposal. All other transfer of capital 1% of total
gains are to be assets within a turnover.
subjected to year does not
determination of exceed 10 million Foreign tax credit
whether such MMK. may be claimed if
gains are of a supporting
capital or income Where foreign documents are
nature. Gains taxes are suffered, available
determined to be foreign tax credits
of an income may be available
nature are under a tax treaty.
taxable.Where
foreign taxes are
suffered, foreign
tax credits may be
available under a
tax treaty.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 3Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
4 Minimum Participation for Capital
Gains
N/A N/A N/A N/A N/A N/A
Minimum participation holding level (%)
required to be satisfied
5 Minimum “ownership” period
requirements
What are the minimum “ownership” For certainty of N/A N/A (a) N/A (a) Refer to item 1 N/A
period non-taxation of above
capital gains to be
Requirements in respect of: applicable, the
minimum 20%
(a) Dividend income ordinary
shareholdings
(b) Capital gains derived from the must beheld for at (b) Refer to Note N/A N/A
participating holding? least 24 months MY1 for RPGT
continuously just rates.
prior to the
disposal.
6 “Active Business” Test on
underlying participation
Does the underlying subsidiary require N/A N/A N/A No No N/A
to be an active operating company or
can the subsidiary be, itself, a passive
holding company?
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 4Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018
7 “Subject to tax” Test on underlying
participation
Does the subsidiary require to be
subject to taxation in its jurisdiction of
registration? N/A N/A N/A No Yes N/A
If so, what is the minimum acceptable
level of taxation (% rate) in the
jurisdiction of the holding company for
the purposes of this test?
8 Corporate Rate of Taxation
17% 2 25% 20%2 Year of
Corporate tax rate in jurisdiction Assessment 20% 20% since 2018
(“YA”) 2009 to (before 2017 is
2015 – 25%2 17%)
YA 2016 and
onwards – 24%2
9 Withholding Tax - Dividend
(Outgoing)
NIL NIL 14% (a) Nil 10% 21%
(a) Non-Treaty rate on Dividends
N/A N/A 10% (b) N/A 10% 5% - 15%
(b) Treaty – range of withholding taxes
10 Withholding Tax - Dividends
(Incoming)
0% -15% 0% -10% 0% -10% Tax Exempt 10% - 20% No withholding
General range of withholding taxes on tax
dividends in the foreign source
jurisdiction in terms of treaty network.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 5Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
11 Withholding Tax - Liquidation of
Holding Co. A 14% withholding Generally, no If the distributed
tax may be withholding tax for assets amount ≦
imposed on a
Is a withholding tax imposed on the final distribution of Original Investing
dividend
distribution of assets of the holding distribution or a assets. amount: Tax
company in liquidation? transfer of shares exempted.
to a non-resident Withholding tax
during liquidation, may be applied to If the distributed
No No where the the shareholders assets amount >
No
distribution/transf of the holding Original Investing
er arises from an company if there amount:Treated
equity or a capital are gains arising as dividend and is
conversion from
from the subject to
retained earnings,
which was not liquidation. witholding tax
subject to (refer to Q9)
withholding tax on
dividend
distributions.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 6Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
12 Interest Deductions & Thin Such interest Interest expense Interest expense is Earning Stripping Yes, it can be
CapitalisationRules - Debt : Equity expenses are is generally generally Rules (“ESR”) is expended of the No
Ratios generally deductible if it is deductible. company in
introduced with
deductible against incurred in direct
However, it is effect from 1 computation of
dividend income, relation to the
(a) Interest Deductions as well as against generation of any limited to the January 2019 to net profit if it is
Are Interest Expenses incurred on loans any gains from the taxable income. amount of interest replace Thin expense for
(received to finance the acquisition of disposal of the For local sourced income plus 50% Capitalisation generating the
the foreign participation) deductible foreign loans, interest of the net profits Rules that was profit and related
against dividend income: capital gains or participation expense is (excuding interest initially planned to to the business of
other income of the holding company? which are restricted to income and be implemented the company in
determined to be maximum expense). Also, the on 31 December Thailand.
of an income interest rate interest rates for 2017. Under ESR,
nature and determined by
loans from third the interest There is no thin
subjected to tax Central Bank of
accordingly Myanmar. For parties and related deduction on capitalisation rule
foreign sourced parties are loans between applied in
loans the interest restricted to 120% related companies Thailand.
expense is and 100% of the within the same
claimable only for market interest group will be
loans approved by rates respectively. limited to a ratio
the Myanmar as determined by a
Investment
country’s tax
Commission and
Central Bank of authority ranging
Myanmar. from 10% to 30%
of a company’s
Earning Before
Interest and Taxes
(“EBIT”) or the
Earning Before
Interest, tax,
Depreciation, and
Amortisation
(“EBITDA”).
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 7Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
(b) Debt : Equity Ratios N/A
No No No No No
Are there restrictions on the level of
non-equity capital financing of the
holding company in the form of
prescribed Debt: Equity ratios?
Debt : Equity ratio: N/A N/A N/A N/A N/A
13 Controlled Foreign Corporation
(“CFC”) &“anti-abuse” regulations
(a) CFC Regulations No No No No No a. On July 12,
Are CFC regulations applied? 2016, the
amendments
Are the regulations applied only to a were passed by
prescribed “black list” of jurisdictions or the Legislative
with reference to the effective rate of Yuan, but the
tax imposed in the overseas effective date
jurisdiction? has not yet been
determined.
(b) Other “anti-abuse” regulations General anti- No No General anti- Arm’s length b. About the
Are “anti-abuse” provisions applied in avoidance rules avoidance rules requirement for General Anti-
regard to the EU Parent-Subsidiary and arm’s length and arm’s length related party Avoidance Rules
requirement for requirement for transactions in Taiwan
related party related party
transactions transactions The Taiwan
government
amended Article
43-3 & 4 of the
Income Tax Act
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 8Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
at July 12, 2016
that,
If a domestic
profit-seeking
enterprise and
its affiliates hold
more than 50%
of the shares or
capital of a CFC
(Controlled
Foreign
Company) which
is set up in low
tax country
(area), or have
significant
influence on the
CFC, the
shareholders of
the domestic
profit-seeking
enterprises are
required to
report CFC
profits based on
their
shareholding
percentage &
holding period in
the CFC as
investment
income tax in
their annual
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 9Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
business income
tax return.
Tax loss can be
deducted from
its profit within
10 years.
A profit-seeking
enterprise
established
under the laws
of a foreign
country, but
having PEM
(place of
effective
management)
within the
territory of
Taiwan, is
considered as
domestic
enterprise.
14 Binding Advance Tax Rulings (pre-
transaction) Yes There are no There are no Yes, the company
Are Advance Tax Rulings available pre- specific specific provisions may apply for Yes Yes
transaction? provisions relating to advance Advance Tax
relating to tax rulings. Rulings to the
advance tax Inland Revenue
rulings. Board of Malaysia.
Are these rulings granted only in
respect of specific situations? Yes Yes Yes Yes
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 10Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
15 Other taxes
(a) Capital Duty (a) 0% (a) 0% (a) 0% (a) MYR1,000 – (a) No (a) N/A
MYR70,000 3
(b) Transfer Tax on shares (b) 0.2% (b) 0.3% (b) 0.1% (b) MYR1 or (b) Stamp duty at (b) 3%
MYR3 for 0.1% of sale
every value or paid
MYR1,000 or up capital
fraction part whichever is
of MYR1,000 4 the greater
(c) Annual Net Worth / Patrimonial Tax (c) 0% (c) 0% (c) 0% (c) N/A (c) No (c) Extra 5% tax
on undistributed
surplus earnings
(d) Trade Tax (d) 7% 3 (d) 5%1 (d) 10%3 (d) 6% or 0%5 (d) No VAT for (d) 5% VAT
transfer of
shares
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 11Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
16 Double Tax Treaty Network
(a) Number of treaties in operation (a) 84 (a) 8 (a) 2 (a) 72 signed (a) 61 countries (a) 32
(Comprehensi (Comprehen (Comprehens Double Comprehensive &
ve), 8 sive), &2 ive),&2 Taxation 13 Limited till end
(Limited) &5 (Signed, not (Signed, not Agreement, 2 of 2017
(Signed, not ratified) ratified) limited
ratified) agreements,
1 Income Tax
Exemption
Order.
(b) Is the holding company type (b) Generally no (b) No (b) No (b) Generally no. (b) Generally no (b) No
excluded from any of the treaties?
(c) Do any of the treaties include “anti- (c) Yes (c) Yes (c) No (c) There are no (c) Yes (some (c) No
treaty shopping” provisions and/or specific anti- countries e.g. USA
detailed “beneficial ownership” tests? treaty –Thailand Tax
shopping Treaty)
provisions.
However, the
general anti-
avoidance
provisions can
be used.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 12Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
17 Exchange Controls
No Citizens, Payments for Generally no – a Exchange control No
Are Exchange Controls restrictions foreigners commercial resident is freely is applied in
applied in respect of the holding and companies in transactions may permitted to make general pursuant
company type? Myanmar must be made freely payments to a to the Exchange
obtain permission between residents non-resident for Control Act
from the Foreign and non- the settlement of
Exchange residents, domestic and
Management provided they are international trade
Department in all made through an in goods and
of their practical authorized bank. services.
dealings with Funds transfer
foreign exchange exceeding USD
in connection with 10,000 must be
borrowing foreign declared to the
exchange from National Nank of
abroad and Cambodia before
repaying the the transfer.
principal and
interest thereof,
making any
payment to
persons abroad,
opening accounts
in foreign banks
abroad and the
remittance of
profits.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 13Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
18 Base Erosion Profit Shifting
What kind of tests have been Introduction of : There are no There are no (a) Income Tax Introduction of 1.Transfer Pricing
introduced as a result of BEPS? specific provisions specific provisions (Transfer Pricing) transfer pricing
(a) relating to BEPS. relating to BEPS. Rules 2012 and documentation 2. Country by
Contemporaneou Section 140A of requirements for Country report
s transfer pricing the Income Tax related party
documentation Act 1967 are transactions 3. Master File
requirements for applicable on
related party controlled
transactions transactions.
exceeding
specified (b) Income Tax
thresholds; (Country-by-
(b) Prescribed Country
reporting Reporting) Rules
requirements for 2016 came into
such transactions operation on 1
which exceed the January 2017. The
threshold; and Rules appy to a
(c) Country by multinational
Country Reporting corporation group
(CbCR) for certain which meet with
Singapore-based certain conditions.
multinationals
meeting certain
conditions.
(d) To adopt the
Principal Purpose
Test in
Singapore’s tax
treaties.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 14Country (notes code) Singapore (SG) Myanmar (MM) Cambodia(KH) Malaysia (MY) Thailand (TH) Taiwan (TW)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
Asymmetrical
application of
simplified
limitation of
benefits rules will
not be allowed.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 15Country (notes code) Australia (AUS) Indonesia (ID) Hong Kong (HK) Japan (JN) China (CN)
Relevant criteria / Date last update 2018 2018 2018 2018 2018
1 Treatment of Dividend Income
Foreign-sourced Dividend income Exempt from Tax 95% of foreign- Foreign or domestic-
How is Dividend Income treated for tax dividend income received in Indonesia sourced dividend sourced dividend
purposes – in particular, is the dividend received in Australia is is taxable under the income, which is not a income received in
income either not taxable under following deductible dividend at China is included as
certain circumstances circumstance: the paying company revenue and
(a) exempt from tax under a “participation - Individual : 10% corporation, shall be is subject to EIT at
exemption” or final tax from excluded from taxable 25%. Foreign paid tax
gross amount income in Japan credit is allowed.
- Corporate :
1. Ownership of
less than
25%, subject
to corporate
tax;
2. Ownership of
at least 25%
is not subject
to tax;
(b) taxable with credit for foreign tax b Foreign-
credits sourcced
Dividend income
received in
Indonesia is
taxable. If the
dividend suffers
foreign
witholding tax,
then foreign tax
credits are
available.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 16Country (notes code) Australia (AUS) Indonesia (ID) Hong Kong (HK) Japan (JN) China (CN)
Relevant criteria / Date last update 2018 2018 2018 2018 2018
2 Minimum Participation for Dividend
income 10% N/A No such Regulation At least 25%, but can 20% if applying for
Minimum participation holding level (%) be reduced to lower % foreign tax credit
required to be satisfied with a tax treaty.
3 Treatment of Capital Gains Income A gain derived from Capital gains are Exempt from Tax Capital gains derived Capital gains in China
the disposal of shares generally assessable from disposal of any are treated as
How is Capital Gains Income treated for in a foreign company together with type of shares are company revenue
tax purposes – in particular, is the capital is reduced where that ordinary income and taxable regardless of subject to EIT of 25%.
gain either foreign company has subject to tax at the participation %, but a
underlying active standard corporate foreign tax on the If holding at least 20%
(a) exempt from tax under a business assets. To tax rate. Where capital gains shall be of a foreign company,
“participation qualify for the foreign taxes are allowed as a credit foreign tax credit may
exemption” or reduction the suffered, foreign tax against Japanese apply. Foreign tax
Australian company credits are available. corporation taxes, to credit eligible for up to
(b) taxable with credit for foreign tax must have held a Proceeds from the extent of those 3 tiers of holding.
credits voting interest of 10% disposal of shares appropriate to the
or more in the foreign listed on the gains
company for a Indonesian stock
continuous period of exchange are not
12 months or more. subject to normal
The gain is reduced by corporate income tax
the % of active but subject to a final
business assets to the witholding tax of
total assets held by 0.1% from the gross
the foreign sales proceeds. An
company.2 additional tax of 0.5%
applied to the share
value of founder
shares at the time an
initial public offering
takes place.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 17Country (notes code) Australia (AUS) Indonesia (ID) Hong Kong (HK) Japan (JN) China (CN)
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4 Minimum Participation for Capital Gains
Minimum participation holding level (%) Refer to item 3 above N/A No such Requirement N/A See item 3 above
required to be satisfied
5 Minimum “ownership” period
requirements
What are the minimum “ownership” period (a) Nil N/A No such Requirement (a) At least 6 months N/A
Requirements in respect of: ending on the
(c) Dividend income date of
determination on
entitlement to
the dividend
(d) Capital gains derived from the 12 months (b) N/A
participating holding?
6 “Active Business” Test on underlying
participation
Does the underlying subsidiary require to No N/A No such Requirement No Can be a holding
be an active operating company or can the company
subsidiary be, itself, a passive holding
company?
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 18Country (notes code) Australia (AUS) Indonesia (ID) Hong Kong (HK) Japan (JN) China (CN)
Relevant criteria / Date last update 2018 2018 2018 2018 2018
7 “Subject to tax” Test on underlying
participation
Does the subsidiary require to be subject No Subsidiary and No such Requirement No No
to taxation in its jurisdiction of Holding Company are
registration? different legal entity
and have their
If so, what is the minimum acceptable level respective tax
of taxation (% rate) in the jurisdiction of obligation based on
the holding company for the purposes of country in which it is
this test situated.
8 Corporate Rate of Taxation
Corporate tax rate in jurisdiction 27.5% 25% 8.25% for first HK$ 2 Effective tax rate is 25%
million. Profits above 30.86% (30.62% for
that at 16.5% the tax period
(Restricted to only beginning on and
one enterprise after 1 April,2018)
nominated among
connected entities)
9 Withholding Tax - Dividend (Outgoing)
(a) Non-Treaty rate on Dividends 30% (a) 20% Zero (a) 20.42% a) 10%
(b) Treaty – range of withholding taxes 0% to 15% (b) 5% - 20% Zero (b) 0% - 20% b) 5 – 15%
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 19Country (notes code) Australia (AUS) Indonesia (ID) Hong Kong (HK) Japan (JN) China (CN)
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10 Withholding Tax - Dividends
(Incoming)
General range of withholding taxes on 0% -15% 5% - 20% 0% - 10% 0% - 20% See item 1 above
dividends in the foreign source jurisdiction
in terms of treaty network.
11 Withholding Tax - Liquidation of
Holding Co. Yes, but only to the No None Yes, to the extent of For holding
extent the distribution deemed dividend companies registered
Is a withholding tax imposed on the final represents after tax portion in China and
distribution of assets of the holding unfranked profits. undergoing
company in liquidation? liquidation,
withholding tax (at
treaty rate) will apply
to any gains the
foreign investors may
realize.
12 Interest Deductions & Thin Interest expense is (a) Interest expense Interest expense used Yes Interest may be
Capitalisation deductible against are generally to finance capital deductible if debt:
Rules - Debt : Equity Ratios dividend income and deductible investment is not equity is not
other foreign income against income. deductible. exceeded and
(a) Interest Deductions or gains provided the Income from capital interest rates are
Are Interest Expenses incurred on loans company meets the investment is not proven to have been
(received to finance the acquisition of the thin capitalisation taxable determined at arm’s
foreign participation) deductible against threshhold tests, length.
dividend income: capital gains or other which are subject to a
income of the holding company? de minimus
exclusion.5
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(b) Debt : Equity Ratios Yes6 (b) Yes No restriction Yes (Thin Yes
Are there restrictions on the level of Capitalization Rule
non-equity capital financing of the For the purpose of and
holding company in the form of calculating the EarningsStripping
prescribed Debt: Equity ratios? Income tax is Rule1)
determined the
amount of debt to
equity ratio is
Debt : Equity ratio: 4: 1 N/A 3 to 1 debt-to-equity Ratio depends on
ratio for the Thin registered capital and
Capitalization Rule, total investment.
but N/A for the
Earnings Stripping Allowed non-equity
Rule2 investment ranges
from 50% to 70% of
the total investment.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 21Country (notes code) Australia (AUS) Indonesia (ID) Hong Kong (HK) Japan (JN) China (CN)
Relevant criteria / Date last update 2018 2018 2018 2018 2018
13 Controlled Foreign Corporation
(“CFC”) & “anti-abuse” regulations
(a) CFC Regulations Yes (a) Yes No such regulation (a) Yes, CFC (a) yes, applicable
Are CFC regulations applied? regulations shall where tax rate in
be applied with the foreign
Are the regulations applied only to a No The regulations are reference to the jurisdiction is 0%
prescribed “black list” of jurisdictions or applied to all effective tax rate - 50% of China’s
with reference to the effective rate of tax jurisdiction imposed in the tax rate.
imposed in the overseas jurisdiction? foreign
jurisdiction.
(b) Other “anti-abuse” regulations General anti- (b) General anti- (b) General anti- (b) China has
Are “anti-abuse” provisions applied in avoidance rules and avoidance rules avoidance rules extensive GAAR
regard to the EU Parent-Subsidiary arm’s length and arm’s length and arm’s length regulations and
requirement for requirements for requirement for TP rules.
related party related party related party
transactions transactions. transactions
14 Binding Advance Tax Rulings (pre-
transaction)
Are Advance Tax Rulings available pre- Yes Yes Yes Yes In general, China tax
transaction? bureaus offer no
binding advance tax
Are these rulings granted only in respect of Yes Yes Yes An advance Tax ruling rulings, although
specific situations? is granted only in Advanced Pricing
respect of a transfer Arrangements are
price in a related party gaining acceptance.
transaction
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 22Country (notes code) Australia (AUS) Indonesia (ID) Hong Kong (HK) Japan (JN) China (CN)
Relevant criteria / Date last update 2018 2018 2018 2018 2018
15 Other taxes
(a) Capital Duty (a) 0% (a) No (a) 0.1% maximum (a) None N/A
HK$30,000
(b) Transfer Tax on shares (b) 0% - 0.6% (b) 5% (b) 0.1% (b) None
(c) Annual Net Worth / Patrimonial Tax (c) 0% (c) No (c) None (c) None
(d) Trade Tax (d) 10% GST (d) No (d) None (d) None
16 Double Tax Treaty Network
(a) Number of treaties in operation (a) 44 (a) 65 (a) 32 (a) 57 100 comprehensive
(Comprehensive), (comprehensive) (Comprehensive) treaties plus an
9 (Limited) & 2 for 68 agreement with Hong
(signed not nations/areas, 11 Kong. Holding
ratified) (Exchange of companies not
Information excluded. Treaties
Only) for 11 contain beneficial
nations/areas (as owner definitions, but
of 5/1/18) details of beneficial
(b) Is the holding company type excluded (b) Generally no (b) Generally no (b) Generally no (b) No ownership tests are
from any of the treaties? generally not
contained in the
(c) Do any of the treaties include “anti- (b) Yes (c) Yes (c) Yes (c) Yes treaties.
treaty shopping” provisions and/or
detailed “beneficial ownership” tests?
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 23Country (notes code) Australia (AUS) Indonesia (ID) Hong Kong (HK) Japan (JN) China (CN)
Relevant criteria / Date last update 2018 2018 2018 2018 2018
17 Exchange Controls The Indonesian
exchange control
Are Exchange Controls restrictions applied No regulations No No No
in respect of the holding company type? mentioned in Finance
Minister Regulation
No. 39/PMK.03/2017
regarding Information
exchange procedures
based on international
agreements.
18 Base Erosion Profit Shifting Introduction of OECD BEPS Action 13 None No such Test China has extensive
contemporaneous has been TP documentation
What kind of tests have been introduced transfer pricing implemented starting and related party
as a result of BEPS? documentation on fiscal year 2016. transaction
requirements for Local file, Master file requirements, GAAR
related party and country by regulations and other
transactions country reporting regulations related to
exceeding specific guidlines for trasnsfer tax adjustment policy.
thresholds8 pricing have been
prescribed. Updated TP
regulations call for
Country-by-Country
reporting.
Contemporaneous TP
documentation now
includes a Master File
and a Local file as per
BEPS
recommendations.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 24New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
1 Treatment of Dividend Income Foreign-sourced Dividend income Participation Foreign-sourced Foreign-sourced Foreign-sourced
How is Dividend Income treated dividend income arising from exemption system dividend income dividend income dividend income
for tax purposes – in particular, is received in Koea is foreign is not prevalent in received in New received in the received in Nepal is
the dividend income either taxable (no investments is India. Zealand is not Philippines is taxable and can
particiapation taxed in taxable under taxable at 30%. claim foreign tax
(a) exempt from tax under a exemption) but accordance with Dividend income certain Withholding tax at credit for any tax
“participation foreign tax credits DTAs, otherwise, earned by Indian circumstances – source could be paid in foreign
exemption” or are available it is taxable with company from (note 1) claimed as tax country.
subject to credit for foreign foreign subsidiary credit against PH Dividend income
limitations 1 tax credits (in which Indian income tax received by a
Company holds at person from the
(b) taxable with credit for foreign tax least 26% of shares held on
credits shares) shall be companies or a
taxable at the rate partnership firm is
of 15%*. In other taxable as a final
case, it is taxable withholding basis.
at a corporate tax
rate.
However, foreign
tax credit (FTC)
shall be available
against such
dividend foreign
income, subject to
relevant tax treaty
and domestic FTC
rules.
*Plus applicable
surcharge and
cess
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 25New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
2 Minimum Participation for
Dividend income
Minimum participation holding level N/A2 N/A In order to claim 10% N/A N/A
(%) required to be satisfied the beneficial tax
rate of 15% (plus
applicable
surcharge and
cess) on foreign
dividend income,
26% share in
foreign company
is required.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 26New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
3 Treatment of Capital Gains Capital gains on Capital gains from There is no Generally capital Gains derived from Capital gains
Income the disposal of disposal of shares participation gains on the disposal of shares of derived from
shares of a or invested capital exemption system disposal of shares stock of domestic disposal of shares
How is Capital Gains Income treated subsidiary are is taxable at the in India. are exempt from corporations which is taxable in Nepal.
for tax purposes – in particular, is the taxable at the rate of 20%. income tax. Some are not listed in the (Note 1)
capital gain either relevant corporate Capital gains exceptions do PH stock exchange
tax rate. Capital derived from apply, such as land are subject to
(a) exempt from tax under a gains on the disposal of shares rich companies capital gains tax of
“participation exemption” or shares of a Korean of foreign (residential land) 5% on the net
company derived company is where shares are amount of capital
(b) taxable with credit for foreign tax by a non-resident taxable in India as sold within a gains of individual
credits seller without a long term or defined period. Filipino citizens,
Korean PE are short-term gains resident aliens, and
subject to tax of depending upon domestic
the lower of 11% period of holding corporation; 5% for
of share proceeds of foreign the the first P100,
or 22% of realized company shares. 000 and 10% on the
gains. excess of the
Further, foreign amount of net
tax credit would capital gain for
be available on resident foreign
such capital gain corporation and non
income subject to resident foreign
relevant tax treaty corporation. For
and domestic FTC listed shares, tax is
rules. 6/10 of 1% of gross
selling price. Gains
derived from
disposal of shares in
foreign
corporations are
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 27New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
subject to tax at
30%.
Withholding tax at
source could be
claimed as tax credit
against PH income
tax.
4 Minimum Participation for
Capital Gains
Minimum participation holding level N/A N/A N/A 10% N/A N/A
(%) required to be satisfied
5 Minimum “ownership” period
requirements N/A N/A (a) Dividend N/A N/A (a) Dividend
Income – N/A Income – N/A
What are the minimum “ownership”
period Requirements in respect of:
(e) Dividend income (b) Capital Gains – (b) No such
Given that there is provision of
(f) Capital gains derived from the no participation minimum
participating holding? exemption, under ownership
Indian tax law, period except
there is no Land and
minimum building
ownership criteria.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 28New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
However, period
of holding would
be important for
nature of Capital
gain. The Capital
gain on sale of
foreign company
share would be
considered as
Short Term, if
period of holding
is less than 2 years
and it would Long
Term Capital
Gains, if period of
holding is More
than 2 years.
Rate of Capital
gain tax would
differ for short
term and long-
term capital gain.
6 “Active Business” Test on
underlying participation
Does the underlying subsidiary No N/A Subsidiary of N/A It can be a passive N/A
require to be an active operating Indian company holding company.
company or can the subsidiary be, can be a passive
itself, a passive holding company? holding company.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 29New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
However, if the
‘’Place of Effective
Management
(POEM)” of a
foreign company
is considered in
India, such
company would be
considered as tax
resident of India
and global income
of such company
would be taxable
in India.
7 “Subject to tax” Test on
underlying participation No No The subsidiary is No No The subsidiary is
treated as a treated as a
Does the subsidiary require to be separate legal separate legal
subject to taxation in its jurisdiction entity distinct entity distinct
of registration? from the Holding from the Holding
N/A Company and Company &
If so, what is the minimum accordingly accordingly
acceptable level of taxation (% rate) subjected to local subjected to local
in the jurisdiction of the holding laws of the laws of the
company for the purposes of this country in which it country in which it
test? is situated. is situated.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 30New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
8 Corporate Rate of Taxation 24.2%3 20% Indian Company – 28% 30% [Banks, financial
25%* in case institution &
Corporate tax rate in jurisdiction turnover / gross general business -
receipts up to INR 30%)
2500 Million in FY
2016-17 Cooperatives -
and In other cases 20%
30%*
Foreign Company Others– 25%
– 40%*
*Plus surcharge &
cess, if applicable
9 Withholding Tax - Dividend
(Outgoing)
(a) Non-Treaty rate on Dividends 22% N/A NIL1 30% 15% - 30%2 5%
(b) Treaty – range of withholding 0% - 27.5%4 N/A 0% - 15% 5% to 25% final 5% - 15%
taxes withholding tax
10 Withholding Tax - Dividends
(Incoming)
General range of withholding taxes 0% - 20% 0% -15% 5% -25% 0% - 15% 5% -25% 0-25
on dividends in the foreign source
jurisdiction in terms of treaty
network.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 31New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
11 Withholding Tax - Liquidation of
Holding Co.
Is a withholding tax imposed on the Yes5 No No2 Yes, when capital 0% - 30%3 No
final distribution of assets of the gains are paid to a (Note 2)
holding company in liquidation? non-resident
corporate
shareholder,
and/or to the
extent the
distribution is
unimputed.
Shareholders
owning less than
10% holdings also
pay withholding
tax on dividends.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 32New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
Such interest
12 Interest Deductions & Thin Interest expenses No Yes Interest expenses expenses are not Yes
Capitalisation are generally are deductible generally de-
Rules - Debt : Equity Ratios deductible against against taxable ductible against
dividend income, dividend income
(a) Interest Deductions dividend income
as well as against and other taxable
Are Interest Expenses incurred on any gains or other foreign income or because such
loans (received to finance the income of the gains, provided dividend is passive
acquisition of the foreign holding company. the company income and the
participation) deductible against meets the thin interest expense
dividend income: capital gains or capitalisation is not incurred in
other income of the holding threshhold tests the carrying of
company? and the rate is business. If the
calculated with interest is capita-
reference to
(b) Debt : Equity Ratios lized as part of the
transfer pricing
Are there restrictions on the level of No. However, principles. cost of acquisition
non-equity capital financing of the interest paid in of the foreign
holding company in the form of excess of 30% investment, then
prescribed Debt: Yes6 The restriction is Earning before Yes2 it would be de-
Equity ratios? mentioned in the interest, taxes, ductible in de- N/A
draft amended depreciation and termining the
Debt : Equity ratio: 200% (600% for law but it is still in amortisation capital gain
financial controversial. (EBITDA) of Indian subject to the
institutions) company for 30% normal cor-
(as provided in borrowings from 60% porate tax rate.
the amended tax foreign associated Moreover, interest
law) enterprises is not incurred on loans
From 2016: 4:1 tax-deductible from related par-
From 2019: 3:1 expense. ties may not be
However, such deductible under
excess interest certain conditions
can be carried See note 4
forward for set-off
upto eight years. N/A
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 33New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
13 Controlled Foreign
Corporation ( “CFC”) & “anti-
abuse” regulations Yes7 No No Yes No Yes
(a) CFC Regulations (however, some
Are CFC regulations applied? echo of the CFC
rules found in
Are the regulations applied only to a With reference to POEM Rules) No No
prescribed “black list” of the effecive tax
jurisdictions or with reference to rate of the
the effective rate of tax imposed in overseas
the overseas jurisdiction? jurisdiction
(b) Other “anti-abuse” regulations General anti- General anti- General Anti- General anti- General anti-
Are “anti-abuse” provisions applied avoidance rules avoidance rules Avoidance Rules avoidance rules avoidance rules General and
in regard to the EU Parent- and arm’s length and arm’s length (GAAR) are and arm’s length and arm’s length Specific Anti-
Subsidiary requirement for requirement for applicable, as anti- requirement for requirement for Avoidance Rules is
related party related party abuse rule. related party related party applicable in
transactions transactions transactions transactions Nepal. Arm’s
length
requirement for
related party
transactions
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 34New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
14 Binding Advance Tax Rulings
(pre-transaction) Yes on transfer
pricing arrange- Yes
Are Advance Tax Rulings available Yes Yes Yes Yes ment; otherwise,
pre-transaction? requests for ruling
based on
hypothetical cases
are not
entertained
Are these rulings granted only in Yes Yes Yes Yes Yes Yes
espect of specific situations?
15 Other taxes
(a) Capital Duty (a) 0.48% (a) N/A (a) N/A (a) 0% (a) 1% (a) N/A
(b) Transfer Tax on shares (b) Refer to item 3 (b) 20% on net (b) Stamp duty (b) 0% (b) 0.75% (b) Treated as
above gain of 0.25% is disposal of
payable on share/assets
transfer of
Indian
Company
share
(c) Annual Net Worth / Patrimonial (c) 0% (c) N/A (c) NA (c) 0% (c) 0% (c) N/A
Tax
(d) Trade Tax (d) 10%8 (d) Generally 10% (d) Note 3 (d) 15% (Note 3) (d) 12% 1 (d) 13% (note 3)
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 35New Zealand
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Philippines (PH) Nepal (NP)
(NZ)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
16 Double Tax Treaty Network
(a) Number of treaties in operation (a) 92 (a) 68 (a) 86 treaties in (a) 57 (a) 41 (a) 10 Countries
operation
(b) Is the holding company type (b) Generally no (b) No (b) Generally no (b) Generally No (b) No (b) Generally,
excluded from any of the treaties? No
(c) Do any of the treaties include (c) Yes (c) Yes (c) Yes (c) Yes (c) No (c) Yes
“anti-treaty shopping” provisions
and/or detailed “beneficial
ownership” tests?
17 Exchange Controls No N/A Yes No Outward Foreign exchange
investments by control is
Are Exchange Controls restrictions PH holding regulated by
applied in respect of the holding company up to Foreign
company type? US$60 million per Investment and
year does not Technology
require prior Transfer Act 1992
approval by and Foreign
Bangko Sentral ng Exchange
Pilipinas (BSP) (Regulation) Act
1962. It governs
If it exceeds limit the cross-border
require BSP transactions
approval involving
movement of
foreign exchange
into and out of
Nepal.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 36New Zealand Philippines
Country (notes code) Korea (KOR) Vietnam (VN) India (IN) Nepal (NP)
(NZ) (PH)
Relevant criteria / Date last update 2018 2018 2018 2018 2018 2018
18 Base Erosion Profit Shifting
Introduction of Annual transfer Concept of Introduction of Introduction of There is no
What kind of tests have been contemporaneo pricing Significant contemporaneou transfer pricing specific
introduced as a result of BEPS? us transfer documentation Economic Presence s transfer pricing documentation introduction of
pricing for related party (SEP) has been documentation requirements for contemporaneous
documentation transactions is introduced in requirements for related party transfer pricing
requirements for required domestic law from related party transactions documentation
related party FY 2019-20 transactions requirements for
transactions onwards. Further, in exceeding related party
exceeding line with Action Plan specific transactions,
specific 1, equalisation levy thresholds. however
thresholds is introduced in government can
domestic law. investigate any
time since it is
Action Plan 4 required to
regarding Limitation disclose related
on Interest party transaction
deduction is being of any amount in
implemented. financial
statement.
Action Plan 13 has
bee been
implemented.
Country-by-
Country Reporting
Master File
guidelines fore
Transfer Pricing
have been
prescribed.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 37NOTES TO ASIA PACIFIC HOLDING COMPANY ANALYSIS
SG SINGAPORE (SG)
SG1
Foreign-sourced dividend income earned and received in Singapore by a Singapore tax resident company which satisfy following
conditions are tax exempt in Singapore:
i. In the year the dividends are received in Singapore, the headline (highest) corporate tax rate of the foreign jurisdiction from which
the dividend is received is at least 15%; and
ii. The dividends received in Singapore must have been subjected to tax in the foreign jurisdiction from which the dividend is received
(i.e. either withholding tax and/or underlying tax is paid or payable); and
iii. The Singapore tax authorities are satisfied that the tax exemption would be beneficial to the person resident in Singapore
SG2 Partial tax exemption scheme
Effective from Year of Assessment 2008, a partial tax exemption is given to companies on normal chargeable income* (excluding Singapore franked
dividends) of up to S$300,000 as follows:
Exempt amount
First S$ 10,000 @ 75% = S$ 7,500
Next S$290,000 @ 50% = S$145,000
Total S$300,000 S$152,500
* Normal chargeable income refers to income to be taxed at the prevailing corporate tax rate.
Tax exemption scheme for new companies
Full tax exemption on the first S$100,000 of chargeable income and 50% tax exemption on the next S$200,000 of chargeable income is available for a
start-up company incorporated and tax resident in Singapore which has its total share capital beneficially held directly by no more than 20
shareholders:
(a) where all the shareholders are individuals throughout the basis period; or
(b) at least one shareholder is an individual holding at least 10% of the total number of issued ordinary shares.
The full tax exemption is available for the first 3 consecutive Years of Assessment.
This exemption scheme is not applicable to the following companies set up from 26 February 2013:
(i) Investment holding companies that derive only passive incomes such as dividend and interest income; and
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 38(ii) Companies whose principal activity is that of developing properties for sale, investment or both.
Corporate Tax Rebate
Companies are granted a 40% Corporate Tax Rebate (capped at S$15,000) for Year of Assessment 2018 and 20% Corporate Tax Rebate (capped at
S$10,000) for Year of Assessment 2019 (for income derived in the financial years ended in 2017 and 2018 respectively).
SG3
Singapore has a Goods and Service Tax (GST) which is a broad based consumption tax and is currently charged at 7%.
SG4 Typically, foreign-owned investment-holding companies (defined as companies where 50% or more of its shares are held by foreign
companies/shareholders) with purely passive sources of income and receiving only foreign-sourced income are not eligible for a Certificate of Residence
(COR) in the eyes of the Singapore tax authorities. As a practice,however, the Singapore tax authorities may grant a COR if the company is able to satisfy
them that:
1. The control and management of the company is in Singapore; and
2. The company has valid reasons for setting up an office in Singapore.
To satisfy these conditions, the company would need to demonstrate that decisions on strategic matters are made in Singapore for example by
demonstrating that their board of directors' meetings are held in Singapore. Apart from this, the company must also:
a. Have related companies in Singapore that are tax residents or that have business activities in Singapore; or
b. Receive support or administrative services from a related company in Singapore; or
c. Have at least 1 director based in Singapore who holds an executive position and is not a nominee director; or
d. Have at least one key employee (e.g. CEO, CFO, COO) based in Singapore.
MM MYANMAR (MM)
MM1 Myanmar has a Commercial Tax (CT) which is a turnover tax on goods and services produced or rendered in Myanmar. CT ranges from 0% to 120%.
However, the general rate is 5%.
Myanmar also levies taxes in the form of Excise duty on alcoholic drinks and Special Commodities tax on special goods such as cigarettes, tobacco
leaves, beer, wine, gem stones, certain cars, fuel etc.
KH CAMBODIA (KH)
KH1 If a Company distributes dividends from retained earnings that have not been subject to tax in Cambodia, the distributing dividends company is subject
to the additional profit tax on dividend distributions at a 20% rate.
KH2 The tax rate on profits ranges from 0% to 30%, based on the business activity. The standard rate is 20%. Enterprises operating in certain industries,
such as oil and natural gas production or exploitation of natural resources including timber, ore, gold and precious stones, are taxable at a 30% rate.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 39KH3 Cambodia has turnover tax in the form of VAT which is levied on taxable supplies which includes a wide range of goods and services supplied in
Cambodia and on the importation of goods.
Cambodia also levies Specific tax on certain merchandise and services at the rates ranging from 3% to 45%. This is a form of excise tax levied on
certain locally manufactured goods and services as well as certain imports for eg. air tickets, telephone services, entertainment services, beer,
automobiles etc.
MY MALAYSIA (MY)
MY1 The rates of RPGT is as follows (w.e.f. 1 January 2014):
Date of disposal Rate
Disposal within 2 years after the date of acquisition 30%
Disposal in the 3rd year after date of acquisition 30%
Disposal in the 4th year after date of acquisition 20%
Disposal in the 5 year after date of acquisition
th 15%
Disposal in the 6th year after date of acquisition or 5%
thereafter
MY2 Preferential Small and Medium Enterprise (SME) tax rate for resident companies incorporated in Malaysia with ordinary paid-up share capital of MYR2.5
million or less at the beginning of the basis period is as follows:
Chargeable Year of Assessment
income
2009 to 2015 2016 2017 and
onwards
First 20% 19% 18%
MYR500,000
On subsequent 25% 24% 24%
chargeable
income
Preferential tax rates not applicable if more than:
(a) 50% of the paid-up capital in respect of ordinary shares of the company is directly or indirectly owned by a related company;
(b) 50% of the paid-up capital in respect of ordinary shares of the related company is directly or indirectly owned by the first mentioned company;
or
(c) 50% of the paid-up capital in respect of ordinary shares of the first mentioned company and the related company is directly or indirectly owned
by another company.
© Nexia International 2018 Asia Pacific Holding Company Analysis 2018 | 40‘Related company’ is defined as a company which has a paid up capital exceeding MYR2.5 million in respect of ordinary shares at the beginning of the
basis period for a year of assessment.
The reduction in the income tax rate based on the percentage of increase in chargeable income as compared to the immediate preceding year of
assessment be given to the entities if fulfil the criteria. The reduction of the income tax rate for YA 2017 and YA 2018 is as follows:
Percentage of increase in Percentage Reduced income tax
chargeable income as point reduction rate on increase in
compared to the immediate on income tax chargeable income
preceding year of assessment rate (%)
Less than 5% NIL 24
5% – 9.99% 1 23
10% – 14.99% 2 22
15% – 19.99% 3 21
20% and above 4 20
MY3 Fees to be paid to the Registrar by a company having a share capital which based on its nominal share capital.
MY4 Stamp duty on transfer of shares will be computed based on price or value thereof on the date of transfer whichever is the greater. Stamp duty on sales
of any stock, shares or marketable securities is MYR3 for every MYR1,000 or fraction part of MYR1,000.
If the instrument is using contract note (through stock broker), the stamp duty relating to the sale of shares, stock or marketable securities is MYR1 for
every MYR1,000 or fractional of MYR1,000.
MY5 Goods and Services Tax (“GST”), a broad based consumption tax, is currently chargeable at 6%. However, some supplies are zero rated or exempt.
Effective 1 June 2018, the GST rate of 6% is changed to 0% and GST (Zero-Rated Supply) Order 2014 is revoked with effect from 1 June 2018.
TH THAILAND (TH)
TH1 There shall be exempted from income tax of the Revenue Code to a limited company or a public limited company setting up under Thai law on
assessable income being dividend received from a juristic company or partnership setting up under the foreign law; provided under the rules,
procedures, and conditions as follows:
a. A limited company or a public limited company shall hold not less than 25 percent of shares with voting rights of the juristic company or partnership
who pays dividends for the period of not less than six months from the date of acquiring such shares until the date of receiving dividends, and
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