Asia Tax Bulletin - Winter 2019/20

This edition of the Asia Tax Bulletin is filled with many tax developments, especially in the ASEAN countries and China. China issued a draft of a new VAT law and a Consumption tax law and issued clarifications on the recently amended individual income tax law.

Indonesia came out with draft proposals for a radical reform of the way individuals are taxed, which will give exciting opportunities to individuals resident in Indonesia. It also came out with tax measures to tax foreign digital companies.

Japan introduced an increase of its consumption tax and Korea launched a task force to monitor taxation of digital companies. Malaysia is also now going to tax foreign digital businesses as of 2020. Malaysia issued its annual government budget in October 2019.

The Philippines Board of Internal Revenue issued transfer pricing audit guidelines and Taiwan proposes a reduction of the retained earnings tax provided that substantial investments are made in Taiwan by the Taiwanese business. Finally, as regards Vietnamese taxation, the Hanoi tax department issued clarifications on a host of matters which are highlighted in this edition.

CHINA (PRC)

Draft Value Added Tax Law Released for Public Consultation

The Ministry of Finance (MoF) and the State Taxation Administration (SAT) released the draft Value Added Tax (VAT) Law (the draft VAT Law), which is now open to public consultation. Any comments should be submitted to the MoF before 26 December 2019. The draft VAT Law contains nine chapters and 47 articles. The main content is set out below.

TAXPAYERS AND WITHHOLDING AGENTS

Taxpayers are entities or individuals that are engaged in taxable transactions that do not exceed the tax threshold of CNY 300,000 per quarter. Recipients of imported goods are VAT taxpayers. Entities and individuals engaged in taxable transactions that do not exceed the above tax threshold are not considered VAT taxpayers; however, they may opt to register as VAT taxpayers to pay VAT. In the case of taxable transactions carried out within the territory of China by foreign entities or individuals, the purchaser will be withholding agent. VAT TAX RATES AND VAT COLLECTION RATE

The draft VAT Law provides the following rates: 13% for the supply of goods, processing, repairs and repairs services, leasing services of tangible movable property and imported goods; 9% for the supply of transportation services, postal services, basic telecommunications, construction, leasing services of real...