Asia is going through a rapid period of change, posing a number of challenges and opportunities for multinational companies operating in the region, who should ensure they are fully aware of these developments and the impact they will have on international tax strategies and commercial objectives.
To help multinationals deal with developing tax systems, Taxand, the world’s largest organisation of independent tax advisors to multinational businesses, has put together top ten key pointers for multinational companies operating in Asia.
Top ten key pointers for multinationals operating in Asia:
1) Multinationals can start to take advantage of the increase in the number of tax treaties across Asia. For example, Hong Kong has recently grown the number of treaties it has agreed from 5 to 14.
2) Developing enhanced relationships with the tax authorities is important, particularly where the authorities are facing pressure to protect the country’s tax base
3) In South-East Asia, rapid development of tax systems increases requirements for comprehensive documentation that can withstand audit scrutiny.
4) Multinationals should carefully assess how Asian countries treat Intellectual Property from a tax perspective to ensure they are up to speed with any new regulations that may impact strategic plans
5) Impact of the Foreign Account Tax Compliance Act (FATCA) introduced by the USA: Keep up to date with new regulations; determine what payments will need to be made; develop a plan of action and review current accounting systems to determine relevant enhancements
6) Impact of the General Anti Avoidance Rule (GAAR) in India: Understand your level of uncertainty and exposure; use Advance Authority Rulings (AAR) to help you plan more effectively and prepare teams both internally and externally to deal effectively with GAAR when it comes into force
7) Impact of Goods and Services Tax (GST) in India and Malaysia: Prepare for GST in advance to help reduce the impact and ensure as smooth a transition to the new system as possible
8) Keep up to date with the development of Transfer Pricing and Advance Pricing Arrangements (APAs) – determine how APAs can be used to add certainty to your tax planning
9) Carefully consider your approach to dispute resolution: establish long term relationships with the tax authorities; look for effective and speedy resolutions and base these resolutions on facts rather than arbitrary findings
10) Keep up to date with changes in tax technology and the benefits it can bring to save time through automation, providing greater accuracy and more reliable accounting systems
“The tax issues facing multinationals worldwide were recently analysed in Taxand’s Global Survey ‘Taxand the CFO’. Key insights and analysis were shared in the panel sessions at the ITR event and the latest pressing tax challenges affecting CFOs and businesses were discussed and possible strategies were outlined,” says Mukesh Butani, Head of Taxand Asia.
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