Tax & Business Update

Transcription

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 4 of 2012 Publisher : Boardroom Corporate Services (KL) Sdn Bhd (Company No X) KDN Publication Licence No. : PP17647/01/2013(031569) Strictly for circulation to clients and associates only Complimentary seminar on n Budget 2013 at Bursa,, Exchange Square, Bukit Kewangan, Kuala Lumpur, from 9.00 am to 2.00 pm, 10 October 2012 (Wednesday) for clients and associates of Boardroom Corporate Services. Please contact Ms. Susan Yong or Ms. Kee Moi Heng at Tel. : /1155/1170 /1170,, susan.yong@boardroomlimited.com for registration/enquiry iry In this issue New Transfer Pricing / Advanced Pricing Arrangement 2012 Guidelines replace earlier 2003 Transfer Pricing Guidelines The Inland Revenue Board sets a 15% tax revenue growth target for Update on withdrawal of Employees Provident Fund Goods & Services Ongoing consultation still in progress Moratorium period by the Companies Commission of for application to strike off dormant companies New Transfer Pricing / Advanced Pricing Arrangement 2012 Guidelines ines replace earlier 2003 Transfer Pricing Guidelines The Transfer Pricing ( TP ) and Advanced Pricing Arrangement ( APA ) 2012 Guidelines issued by the Inland Revenue Board ( IRB ) recently to replace earlier TP 2003 Guidelines provide clearer guidance on the applicability and scope on TP related transactions. The New Guidelines now spell out more clearly the types of documentation and records expected to be kept, the threshold in which these are applied to as well as and the consequences when in breach of these guidelines in cases involving persons not transacting at arm s length ( controlled transactions) between associated persons. Among others, the 2012 Guidelines set out: The threshold for related party transactions before 1

2 maintaining contemporaneous TP documentation becomes mandatory The acceptable TP methodologies styled under the OECD model The type of records and TP documentation required to be maintained for tax audit purposes or presented within 30 days upon request Basis and manner of comparability analysis involving transactions dealt with at arm s length; and The level of penalties to be imposed for TP adjustments where a taxpayer fails to comply with the 2012 Guidelines. Concurrently, the 2012 APA Guidelines now provide the guidance and procedures in which an APA may be applied for. An APA represents an arrangement entered into between a taxpayer and the Director General of Inland Revenue (DGIR) or between Competent Authorities (CAs) that establishes the TP methodologies to ascertain the prospective arm s length transfer prices of specified related party transactions between the taxpayer and its foreign affiliates over a specified period of time, under specified terms and conditions. It is intended to place a taxpayer in a better position to predict costs and expenses, including tax liabilities and potentially dispense with certain onerous record keeping requirements. A taxpayer may apply for an APA from the DGIR/CAs, and these Guidelines set out the manner in which such an application will be processed and administered. These are usually meant for big ticket transactions where the outcome of a transaction can have very significant impact on a taxpayer and there are uncertainties surrounding the tax treatment. There are three types of APA, namely Unilateral APA, Bilateral APA (BAPA) and Multilateral APA (MAPA). Unilateral APA is the arrangement between a taxpayer and the DGIR. BAPA and MAPA are arrangements concluded between CAs of two or more governments. The 2012 Guidelines, together with the coming into force of the thin capitalisation rules previously deferred for implementation until 1 January 2013 sets the stage for greater TP tax audits and enforcement. IRB sets an annual 15% tax revenue growth target for Under its newly launched Corporate Plan , the IRB is targeting an annual tax revenue growth of 15%. This is at the back of a record RM billion tax revenue collected from direct taxes. In a statement issued at the National Conference in July 2012, the DGIR, YBhg. Tan Sri Mohd Shukor had indicated that the target is within reach as the IRB has identified ways to improve tax administration and compliance. The DGIR 2

3 had indicated that the IRB is seeking to identify newer opportunities in expanding our tax base and areas of tax revenue which have not been fully exploited previously as well as fine tuning existing procedures and practices whilst strengthening administration. Since the Goods and Services ( GST ) GST is not within the purview of direct taxation enforced by the IRB (GST is under Royal Customs and Excise) and considering that there is every likelihood that GST to be introduced in the next few years is expected to be accompanied by tax rate deductions, the reference to new opportunities and expanding the tax base would typically be expected to cover areas of tax leakages coupled with greater enforcement of tax laws within areas of direct tax currently within the purview of the IRB. Further, given the average GDP growth rate of 5 6 % during this period, the targeted growth rate would particularly be a heavy burden on existing taxpayers, especially corporate ones, unless new taxpayers are brought into the tax net. Update on withdrawal of Employees Provident Fund Following the passing of the Minimum Retirement Age Bill 2012 in Parliament in June 2012 which has extended the minimum retirement age for private sector employees from 55 to 60, it has now been confirmed that the widely expected change in the proposed age for full withdrawal from the EPF by contributors to be raised to 60 years and partial withdrawal to 55 is untrue. The EPF has confirmed that the minimum age for full withdrawal of the EPF saving would remain unchanged at 55 despite changes to the retirement age. Currently, contributors can make partial EPF withdrawal at 50 and full withdrawal of their savings upon retirement at 55. EPF contributors had earlier expressed concern about whether the age for full EPF withdrawal would be raised when the Minimum Retirement Age Bill 2012 was passed in Parliament in June Many had wanted the option of withdrawing their savings at 55 even if the retirement age was raised to 60, saying that they require their savings for pressing needs such as children's education and elderly parents' medication while some felt that they deserve the flexibility of choosing when they could withdraw their savings. GST Ongoing consultation still in progress Nothing new was indicated on the proposed GST implementation in the speech delivered by the Second Finance Minister, YB Datuk Seri Ahmad Husni Hanadzlah during the National Conference held in July 2012 except that the Government is still engaging with all 3

4 quarters to provide more in depth knowledge on the proposed GST. The Second Finance Minister did indicate that although engaging with the trade associations is not as easy as it seems, he indicated that the responses have been positive. In the meantime, significant developments continue to take place with the recent amendments to the GST Bill to be tabled for second reading as well as an active educational information releases in the Customs GST portal Although no official announcements will likely be mentioned until after the upcoming elections are held, our comments in the previous article on the time frame for businesses to be prepared remains a valid business consideration, as when announced, the lead time would be within the month period. Clients are encouraged to keep in touch with n GST announcements. Moratorium period by the Companies Commission of for application to strike off dormant companies The Companies Commission of ( CCM ) had on 12 July 2012 announced the introduction of the moratorium period beginning from 1 July 2012 until 31 December 2012 to encourage application be made to CCM to strike off the names of dormant companies from the companies registry. As there are compliance costs associated with maintaining a dormant company, the opportunity to strike the name of a dormant company off the register will eliminate inherent liabilities associated and arising from having to continue complying with the lodgment of statutory documents with CCM. The introduction of the moratorium period will provide an opportunity for directors and shareholders to apply to strike off their dormant companies from CCM s register and close their unproductive companies in a speedier manner. The reduction of compounds or penalties will be an added incentive so that the directors of dormant companies will not be burdened with unpaid compounds. During this moratorium period, companies with outstanding penalties or compounds issued prior to the moratorium period will only be required to pay a flat fee of RM200. Directors with outstanding compounds will only be required to pay a flat rate of RM200 for each offence committed. In pursuance to the introduction of the moratorium period, CCM also issued out a new guideline to facilitate the application for striking off the name of dormant companies. Dormant companies may apply to strike off its company s names provided that they fulfill the following conditions: 4

5 The company does not have any assets or liabilities. The company has not been in operation/ has not carried on business. As the requirements for application have been relaxed and application procedures have been further simplified, CCM urges directors or shareholders of dormant companies to take this opportunity to file in their applications at any CCM offices nationwide. Due Dates for Filings 2012 By 30 3 Sept By 31 Oct By 30 Nov By 31 Dec CP 204 (FYE) - Income estimates Oct year end Nov year end Dec year end Jan year end 6th Month Revisions (FYE) Mar year end Apr year end May year end June year end 9th Month Revisions (FYE) Dec year end Jan year end Feb year end Mar year end Return Forms C & R (FYE) Feb year end Mar year end Apr year end May 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. 5

6 About Boardroom Boardroom Corporate Services is one of Asia s leading providers of accounting, corporate secretarial, directors training, internal audit and risk management, payroll, share registration and taxation 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 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 Ms. Sam Guai Gam Mr. Wilson Lam 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 6