EU Provides Update On Ongoing Free Trade Talks

The European Parliament has provided an update on the trade agreements under negotiation by the EU.

Parliament’s International Trade Committee on January 24 voted in favor of the Comprehensive Economic Trade Agreement (CETA) with Canada. Parliament as a whole is expected to vote on the deal in next month’s plenary session.

In an update, Parliament said that CETA “is far from the only deal the EU is working with.” It explained that negotiations have been concluded in a number of cases, with talks finalized with Ecuador, Singapore, Vietnam, West Africa, and the East African Community. These agreements have yet to enter into force.

In Asia, negotiations with Malaysia are “about halfway, but most difficult issues remain to be resolved.” Four negotiation rounds have been held with both Thailand and Myanmar, but no new rounds have been scheduled in either case. A negotiation round with Indonesia is taking place currently, and the next round with the Philippines will take place in February. There is a possibility that the agreement with Japan could be concluded in early 2017, Parliament said.

A second negotiation round for an agreement with Mexico will be held in early April, and separate talks will take place in Buenos Aires in March.

The update noted that the proposed Transatlantic Trade and Investment Partnership with the US has “proved very controversial due to concerns over product standards and the resolution of investment disputes.” It explained that there have been 15 rounds of negotiations since July 2013, with the latest round taking place in October 2016.

January 1, 2020 / No Comments /

Singapore’s Budget Should Refine Tax Incentives: Deloitte

Deloitte has said Singapore should improve tax incentives to support start-ups and ensure Singapore remains a competitive domicile for multinationals in the upcoming Budget.

Low Hwee Chua, Partner and Head of Tax Services at Deloitte Singapore and Southeast Asia, said: “As start-ups may not be profitable in the initial years, but instead would likely require funding, Deloitte Singapore suggests fine-tuning certain schemes to incentivize start-up investors, allow the continuation of tax losses incurred by start-ups, and enhance the loss carry-back regime. On the technology front, we are proposing tax incentives to support businesses in digitization and automation of their businesses, such as granting enhanced tax deductions for evolutionary innovative activities that strictly may not be considered as R&D, consultancy fees incurred for digitization projects, and software development activities.”

Noting the recent focus by tax authorities worldwide on international tax issues, Low said: “With the twin challenges of keeping our tax regime competitive and addressing the implications arising from the BEPS Project, a balance must be achieved between keeping Singapore’s tax system simple whilst ensuring that it remains coherent and acceptable in the international tax arena. Singapore should continue to monitor its tax incentives framework to ensure it adheres to the minimum standards that have been established, and may also wish to consider publishing more detailed guidelines on the criteria required to obtain certain tax incentives, as transparency is a key tenet of the BEPS Action 5 recommendations on harmful tax practices.”

In addition, Deloitte said: “Singapore will need to ensure the adoption of consistent transfer pricing approaches with its key trading partners and investor countries to reduce the potential risk of increased disputes between tax authorities pursuant to new transfer-pricing approaches put forth in the BEPS proposals.”

Deloitte also pointed out increasing competition for multinationals’ business. Deloitte said: “Singapore’s status as the region’s economic and financial hub is hard won and the country is constantly refreshing her value proposition to stay ahead of the curve. Likewise, Singapore needs to ensure that her suite of industry-specific tax incentives evolves in tandem with business developments.”

“For instance, both Singapore and Hong Kong are choice locations for multinationals to locate their treasury centers in Asia. Singapore’s finance and treasury centre (FTC) incentive has been instrumental in influencing companies to locate their treasury centers in Singapore, but this may be changing with Hong Kong introducing new tax measures in a drive to attract regional treasury centers.”

“Likewise, Malaysia and Thailand have introduced tax incentives for treasury centers and headquarter activities and in time may emerge as alternatives to both Singapore and Hong Kong. Deloitte Singapore is not only calling for the FTC incentive to be extended beyond March 31, 2016, but also for improvements to be made to keep the incentive relevant and useful with developments in treasury and financial activities globally,” said Michael Velten, Partner and Head of Financial Services Tax at Deloitte Singapore and Southeast Asia.

December 28, 2019 / No Comments /

Hong Kong, ASEAN Nations Sign Free Trade Deal

Hong Kong has signed a new free trade agreement (FTA) with the Association of Southeast Asian Nations (ASEAN), which is expected to become effective from January 2019.

Following 10 rounds of talks over three years starting in July 2014, negotiations were concluded in September 2017 and the final agreements were signed in Manila on November 12 during the 31st annual ASEAN Summit.

The FTA consists of 14 chapters. It includes provisions to eliminate or reduce tariffs (tax barriers to trade), liberalize market access, and promote confidence in trade.

Provisions include:

A commitment from Singapore to bind all its customs duties on goods imported from Hong Kong at zero percent;
A commitment from Brunei, Malaysia, the Philippines, and Thailand to eliminate customs duties of around 85 percent of their tariff lines within 10 years and reduce customs duties of about another 10 percent of their tariff lines within 14 years;
A commitment from Indonesia and Vietnam to eliminate customs duties of about 75 percent of their tariff lines within 10 years and reduce customs duties of about another 10 percent of their tariff lines within 14 years; and
A commitment from Cambodia, Laos and Myanmar will eliminate customs duties of about 65 percent of their tariff lines within 15 years and reduce customs duties of about another 20 percent of their tariff lines within 20 years.

Trade between Hong Kong and ASEAN was valued at USD93.3bn in 2016, according to ASEAN data, a 1.3 percent increase from USD92.1bn in 2015. Total foreign direct investment flows from Hong Kong to ASEAN amounted to USD9.9bn in 2016, a 141 percent increase from the previous year. As of 2016, ASEAN was Hong Kong’s second-largest partner in merchandise trade.

The FTA is the sixth agreement between ASEAN and external partners, after deals with China, Korea, Japan, India, and Australia-New Zealand.

December 26, 2019 / No Comments /

Australia Seeking To Expand FTA Network

The Australian Government has said that it intends to extend its network of free trade agreements (FTAs), as part of its new foreign policy agenda.

The Government has published its Foreign Policy White Paper, the first comprehensive review of Australia’s international engagements for 14 years.

One of the objectives set out by the Government is that by 2020 Australia will have FTAs with countries that account for 80 percent of its trade. The current level of coverage is 64 percent.

The White Paper explained that the Government’s immediate priority is concluding the Indonesia-Australia Comprehensive Economic Partnership. The Government will also negotiate an FTA with the EU, and intends to negotiate a trade deal with the UK once it has left the EU.

“These prospective FTAs will advance our commercial interests, especially in investment, services, and agriculture,” it said.

The White Paper stated that the Government will initiate a comprehensive review of the ASEAN-Australia-New Zealand FTA, and will upgrade the FTAs with Singapore, Thailand, and Malaysia.

FTA negotiations with Hong Kong, India, and the Pacific Alliance continue, and ratification of a new FTA with Peru is expected in 2018. The Government will also push for the resumption of FTA negotiations with the Gulf Cooperation Council.

Australia will continue to work with the 10 other countries interested in implementing the Trans-Pacific Partnership, following the US’s withdrawal. The White Paper said that, even without the US, “the agreement would support economic growth, create new export opportunities, set high-standard rules, and contribute to global trade liberalization.”

The White Paper said: “Australia has been at the forefront of developing modern, comprehensive FTAs. These aim to maximize tariff reductions for Australian exporters, open up services markets, and set rules to enhance trade and investment and reduce regulatory risk. Through these agreements we encourage approaches that support economic growth and trade and investment liberalization more broadly.”

December 26, 2019 / No Comments /

Philippines Commits To 25 Percent Corporate Tax Rate

The Philippines Department of Finance has said the country will look to install a 25 percent corporate income tax rate on a broader base as part of the second phase of its tax reform process.

Finance Undersecretary Karl Kendrick Chua explained that, presently, the country levies a 30 percent tax rate but it is applied across a narrow base, due to authorities granting tax breaks and concessions too extensively.

The Philippines imposes the highest corporate income tax (CIT) rate among Association of Southeast Asian Nations (ASEAN) but is among those at the bottom in terms of collection efficiency. “The Philippines,” he said, “currently imposes a CIT rate of 30 percent but with a tax collection efficiency of only 12.3 percent, while Thailand’s CIT rate is only 20 percent but it collects almost triple[…]”

“So clearly, we have the classic problem of a high rate but narrow base. That is why the efficiency is problematic,” Chua said.

Chua said the second stage of the Government’s tax reform progress will look to rationalize incentives to ensure these are “performance-based, targeted, time-bound, and transparent.”

December 25, 2019 / No Comments /

Philippines Senate Approves Double Taxation Treaties

On February 19 the Philippines Senate adopted three resolutions ratifying agreements for the avoidance of double taxation with Mexico, Thailand, and Sri Lanka.

The original double taxation avoidance agreement (DTTA) was signed with Mexico on November 15, 2017. The agreement with Thailand was signed on June 21, 2013, while the agreement with Sri Lanka was signed on December 11, 2000.

The agreements are intended to promote international trade and investment “by allocating taxing jurisdiction between the Contracting States to eliminate or mitigate double taxation on income,” according to Senator Loren Lagarda.

“The DTTAs also aim to create a competitive advantage for each country’s residents by removing or reducing source taxation, encourage investors and promote the inbound transfer of technology and skills,” Legarda added.

December 25, 2019 / No Comments /

Spindler & Partner LLP grows treasury capabilities

Former RBS treasury expert to head Spindler & Partner LLP’s new Treasury and Investment team

Corporate, private client and fund company Spindler & Partner LLP has appointed a treasury manager to lead its recently launched Treasury and Investment Services team. The new division, which has been created by streamlining a number of existing asset management services, will deliver efficiencies by centralising Spindler & Partner LLP’s internal banking services function.

January 29, 2015 / No Comments / 2