Tax & Business Update

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1 & Business Update Boardroom Corporate Services (KL) Sdn Bhd (Company No X) Lot 6.05, Level 6, KPMG Tower 8 First Avenue, Bandar Utama Petaling Jaya, Selangor Darul Ehsan, T: (603) F: (603) Issue 3 of 2012 Publisher : Boardroom Corporate Services (KL) Sdn Bhd (Company No X) KDN Publication Licence No. : PP17647/01/2013(031569) Strictly for internal circulation to clients and associates The 2013 Budget Driving ing Transformation Towards a Developed Nation - will be tabled in Parliament on 28 September Hong Kong Updates Merging of Corporate Social Responsibility ( CSR ) and Corporate Governance ( CG ) into Environmental, Social and Governance ( ESG ) Boardroom Corporate Services (KL) Sdn Bhd would be conducting a seminar on 10 October 2012 to cover the highlights and implications. Do keep k a date with us. In this issue Updates on the current corporate tax filing deadline for companies with Dec 31 year ends Are you Goods and Services ( GST ) Ready? Ministry of Finance ( MOF ) launches GST Readiness Survey while TRP releases Registration Procedures as well as Guide on Invoice and Record Keeping Update on compliance with CP 58 payments to agents; dealers and distributors New Guidelines & Public Rulings Updates on the current corporate tax filing deadline for companies with Dec 31 year ends Submission Deadline Income Filing deadline Return Forms Forms C, R, C1, Last day of 7th months TA, TC and TR from the close of the accounting period For Dec 31, 2011 by 31 July 2012 for year ends conventional filing by 15 Aug 2012 for those using E -filing Grace Period for Submission As usual, the Inland Revenue Board ( IRB ) has provided a grace period for the submission of income tax return forms in the current tax filing programme but for this year, the grace period is varied to favour electronic filing. This, especially 1

2 for those with Dec year ends, is as follows:- A grace period of 15 consecutive days is granted for submission through electronic filing A grace period of 3 working days is granted for submission made by post No grace period granted for submission made by hand The income tax return forms submitted to the IRB after the due date but within the stipulated grace period shall be deemed to be received within the due date. The above grace period for submission is also applicable to the payment of balance of tax due under Section 103(1) of the Income Act, 1967 (ITA). payers are therefore encouraged to resort to electronic filing ( E-Filing ), if it is obvious that you cannot file your regular returns on time in order to meet the deadline to avoid significant late filing penalties. The corporate E-filing portal is open now and taxpayers can now lodge their electronic filings. Application for Extension of Time Where due to extenuating reasons, the tax returns cannot be filed on time, taxpayers can attempt to seek an extension of time from the Director General via their IRB s Pengarah Bahagian Dasar & Operasi. Application for extension of time for the submission of the income tax return form and the payment of balance of tax due can be made to the IRB with the condition that the application is received by the IRB at least 15 days before the due date for the submission. Whether approval will be granted is based on the merits of each case. Are you GST Ready for a late 2013/2014 implementation? Launch of GST Readiness Survey by the Ministry of Finance (MOF) in April 2012 & Release of draft Guides Recent flurry of statements on GST by various Ministers as well as the Review Panel (TRP) has once again brought forth the question of when GST would be implemented in and whether businesses are now ready for its implementation. In the most recent statement in April, the TRP had indicated that it is considering implementing GST from the end of 2013 with an implementation period of between months. Working backwards, it is possible that such an announcement can occur anytime soon, if a grace period of 15 months is to be given. Depending on the timing of the elections, the announcement could well occur when tabling the 2013 Budget. However, announcements on when GST is to be implemented does not need to be made only during the Budget Speech and can occur anytime. 2

3 In recent announcements, indications that the Government is committed to announce related measures such as a reduction in individual and corporate tax rates were made. The Ministry will also offer GST training programmes to trade and professional associations and subsidized costs in related areas. If implemented, it would have widespread implications as most businesses would be affected by this tax in view of its wide scope. It once again begs the question of when businesses should begin the process of getting their systems and processes GST compliant. GST is a tax on final consumption of goods and services. GST is imposed at every stage of production and distribution until the final goods is sold to the final consumer. The MOF continues to assess businesses readiness towards the implementation of the GST and have recently launched yet another survey and has further invited suggestions on how the Government can further assist businesses in getting ready to implement GST. Meanwhile the Royal n Customs have recently further released two draft Guides:- 1. GST Registration Guide information on requirement and procedure for registration; 2. GST Guide on Invoice and Record Keeping to assist businesses on invoicing and record keeping requirements Additional information can be obtained from the dedicated Customs GST portal: or you may contact any of our executives from our GST team. Update on compliance with CP 58 payments to agents; dealers and distributors For compliance with the new reporting requirements covering payments (monetary and non-monetary incentive payments) to agents, dealers or distributors, please note that the n Inland Revenue Board has issued the following clarification: 1. The CP58 reporting requirement will not be applied in respect of payments made from 1 January 2011 to 31 December 2011 if the payer companies have issued to their agents, dealers or distributors an annual statement recording the monetary and non-monetary incentive payments made to them. Recipients of incentive payments are required to report these in their tax returns even though they have not received a copy of the Form CP58 from payer companies. 2. For payments made from 1 January 2012 onwards, as an administrative concession, the CP58 reporting requirement is only required for monetary and nonmonetary incentive payments which 3

4 exceed RM5,000 per annum. 3. For non-monetary incentives, the amount to be disclosed should be based on the actual cost incurred by the payer companies. New Public Rulings and Guidelines Issued Recently Several Public Rulings and Technical Guideline were issued recently by the IRB. These included: Public Rulings issued: 1. ation of Clubs, Associates or Similar Institutions (PR 5/2012) 2. Qualifying criteria for tax deductions for loss of cash due to theft and embezzlement by employees and qualifying criteria (PR 4/2012) 3. Procedure with respect to Appeals Against an Assessment (PR 3/2012) 4. Treaty Relief for Foreign Nationals working in ( PR 2/2012) 5. Treatment of Compensation for Loss of Employment (PR 1/2012) Technical Guidelines issued: Guidelines on the tax treatment of: 1. Income Recognition for property developers under the 10/90 home financing arrangements under a build and sell concept 2. Management fees received by Developers; Joint Management Boards (JMBs); and Management Corporations 3. Procedures on securing and Stamp Duty exemptions for expenditure incurred to secure green building index accreditation 4. Qualifying criteria for deductions of expenditure on quality and halal certification under Section 34(6)(m) and (34(6)(ma) respectively. Further details on these are available in the IRB website. Singapore Updates No significant updates for Singapore this quarter. Hong Kong Updates Favorable news to eliminate double taxation in China for Hong Kong and Macao tax residents The State Administration of ation (SAT) issued the Public Notice [2012] No.16 on 26 April 2012 to address the double taxation issue in China for Hong Kong and Macao tax resident employees, which is effective from 1 June

5 The Notice attempts to mitigate the issue of double taxation for Hong Kong and Macao tax resident employees by:- residents using a formula based on days physical presence in Mainland China during a 12 month period Introduction of two time apportionment formulae to determine the PRC Individual Income ( IIT ) A more reasonable way of counting workdays in China Introduction of time apportionment of annual bonus The notice applies to Hong Kong and Macao tax residents only, if they are either:- Employed in Hong Kong or Macao and travel to Mainland China to exercise employment duties; or Employed in Hong Kong/Macao and Mainland China concurrently and exercise employment duties in Mainland China. Those who wish to apply for the favourable tax treatment stipulated in the Notice are required to notify the relevant tax bureaus in accordance with Guoshuifa [2009] No.124. The key messages in the Notice are summarized as below:- A. Introduction of two time apportionment formulae to determine the PRC Individual Income for Hong Kong or Macao B. A more reasonable way of counting workdays in China The Notice sets out that Hong Kong and Macao tax residents only required to count the number of days they are physically present in Mainland China in order to determine the IIT in Mainland China. The day of arrival and the day of departure from Mainland China are both counted as half a day. Same day multiple-return trips are also treated as half a day. C. Introduction of time apportionment of annual bonus According to the Chinese IIT law, no time apportionment on a day-inday-out basis is allowed for annual bonus. Therefore, the portion of the bonus that is attributable to calendar month(s) can only be excluded from IIT only when the Hong Kong and Macao tax residents does not spend any workday in China in that complete calendar month(s). With the introduction of the Notice, PRC IIT re annual bonus will be calculated and apportioned based on the days of physical presence in Mainland China. 5

6 Merging of Corporate Social Responsibility ( CSR ) and Corporate Governance ( CG ) into Environmental, Social and Governance ( ESG ) It is stated in Recommendation 1.4 of the n Code on Corporate Governance 2012 ( MCCG 2012 ) that the board should ensure that the company s strategies promote sustainability. Under the Commentary for this Recommendation of the Code, the board should formalise the company s strategies on promoting sustainability. Attention should be given to ESG aspects of business which underpin sustainability. Balancing ESG aspects with the interests of various stakeholders is essential to enhancing investor perception and public trust. On a global basis, investors and listed corporations are recognising the importance of ESG. Public-listed companies ( PLCs ) should take ESG into consideration in their business strategies/plans to ensure sustainability. investment research into ESG and ethical performance of companies informed that as of 31 December 2009, there was approximately 9.5 billion invested in the United Kingdom s green and ethical retail funds. This was an increase from 2.4 billion just 10 years ago. The fact that sustainability pays was confirmed by a recent Harvard Business School report released in November After spending 18 years studying 180 companies, it noted that the 90 firms that adopted environmentally and socially responsible policies significantly outperformed their less forward-thinking peers. Every dollar invested in a portfolio of sustainable companies in 1993 grew to US$22.60 by 2011, beating the rise to US$15.40 for a portfolio of companies less focused on sustainability. Hence, Recommendation 1.4 of MCCG 2012 is indeed timely. However, effective adoption/implementation of this Recommendation by n PLCs is to be observed. In 2010, Vigeo ( a leading European ESG rating agency released a report recognising the growing market trend in Socially Responsible Investing ( SRI ) with the number of European SRI funds jumping 29% to 879. Assets Under Management also recorded a 41% growth to reach 75 billion. EIRIS ( another leading global provider of independent 6

7 Boardroom Corporate Services (KL) Sdn Bhd (Company No X) Lot 6.05, Level 6, KPMG Tower 8 First Avenue, Bandar Utama Petaling Jaya, Selangor Darul Ehsan, T: (603) F: (603) Due Dates for Filings 2012 By 31 3 July By 31 Aug By 30 Sept By 31 Oct CP 204 (FYE) - Income estimates Aug year end Sept year end Oct year end Nov year end 6th Month Revisions (FYE) Jan year end Feb year end Mar year end Apr year end 9th Month Revisions (FYE) Oct year end Nov year end Dec year end Jan year end Return Forms C & R (FYE) Dec year end Jan year end Feb year end Mar year end ooo00000ooo Cautionary Note This summary of tax and business updates has been prepared to keep you informed of recent developments in the tax environment and practice; amendment to tax and corporate laws and regulations in and elsewhere that may have significance to n businesses. While we take reasonable care to ensure that the information given is correct, the information contained herein is general in nature and is not intended to address the circumstances of any particular individual or entity. The information contained in this document should therefore not be taken as a substitute for detailed advice nor relied upon as a basis for formulating business decisions. Do not act upon such information without professional advice. Materials published may only be reproduced with our consent. 7

8 About Boardroom Boardroom Corporate Services is one of Asia s leading providers of accounting, corporate secretarial, human resource and payroll, internal audit and risk management, share registration, taxation and director s training services. With an established network of direct offices and regional partners in Asia Pacific and Europe, we are well-positioned to support your growing business needs in these regions. Kindly let us know should you wish to outsource your tax, secretarial, accounting, payroll, share registration, employment pass, liquidation, poll scrutineering or any other related services. We would be pleased to be of assistance to you. For more information, please visit us at or contact any one of our following personnel at their DIDs. Name Ms. Samantha Tai Managing Director Country Contact (DID) Address (603) samantha.tai@boardroomlimited.com Ms. Liew Irene Executive Director Ms. Tan Ai Ning Assoc. Director Ms. Lau May Chee Head Ms. Cheang Siow Voon Assoc. Director Mr. Alex Lee Senior Manager Corp. Sec. Corp. Sec. Business Solutions Share Reg. Marketing & Sales (603) irene.liew@boardroomlimited.com (603) aining.tan@boardroomlimited.com (603) maychee.lau@boardroomlimited.com (603) siowvoon.cheang@boardroomlimited.com (603) alex.lee@boardroomlimited.com Name Mr. William Chua Head of Mr. Kenneth Lim Advisor Mr. Clements Joseph Senior Manager Ms. Sam Guai Gam Senior Manager Mr. Wilson Lam Senior Manager Ms. Carol Xu Manager Country Regional Singapore China/Hong Kong China Contact (DID) Address (65) william.chua@boardroomlimited.com (603) kenneth.lim@boardroomlimited.com (603) clements.joseph@boardroomlimited.com (65) guaigam.sam@boardroomlimited.com (852) (86) carol.xu@boardroomlimited.com.cn 8

Tax & Business Update

Tax & Business Update & Business Update Boardroom Corporate Services (KL) Sdn Bhd (Company No. 3775-X) Lot 6.05, Level 6, KPMG Tower 8, First Avenue, Bandar Utama 47800 Petaling Jaya, Selangor Darul Ehsan, T: (603) 7720 1188