www.pwc.com Base Erosion and Profit Shifting (BEPS) in Asia David Smith Senior Adviser, Hong Kong Nigel Hobler Partner, Hong Kong Paul Lau Partner, Singapore Former official China State Administration of Taxation
Agenda 1. Position of China on BEPS 2. Singapore position on BEPS 2
The position of China on BEPS 3
Agenda 1. General attitude 2. Target and purpose 3. Internal activities 4. Publicised position 4
The position of China on BEPS General attitude Political commitment in G20 (China being a member) Strongly supportive in attitude and actions 5
The position of China on BEPS Target and purpose Participate in international rule formulation - Principle of profits should be taxed in the location where economic activities take place and value created Improve domestic laws and regulations Strengthen anti-avoidance measures and EOI Optimise taxpayer service - Make regulations more transparent - Clarify taxpayer rights and obligations - Get different stakeholders involved in tax reform Help developing countries to upgrade tax administration capacity 6
The position of China on BEPS Internal activities Establish a BEPS task force within State Administration Of Taxation (SAT) Participate in BEPS Focus Group meetings Provide SAT s observations or comments to each BEPS Action Share SAT s action plans on both an international and domestic level 7
The position of China on BEPS Publicised position 15 unacceptables (e.g. double non-taxation, aggressive tax planning, deduction of inappropriate costs, treaty abuse, etc.) 8
Singapore position on BEPS 9
Agenda 1. Singapore s stance 2. Areas of focus 10
Singapore position on BEPS Singapore s stance Support for internationally coordinated efforts - Accommodate legitimate business models and promote trade - Avoid disguise for protectionism through unilateral action Country specific fiscal characteristics - Revenue needs for economic and social objectives - Aligned with international norms, but not a one size fits all approach Strategy for diversified corporate eco-system - Spinoff from FDI and knowledge transfers by MNCs - SMEs contribute 50% of GDP and 48% of value-add 11
Singapore position on BEPS Areas of focus Transfer pricing - Substance and documentation Harmful tax practices - Incentives design - Peer review Treaty network - Deliverables as a set of options to provide flexibility - Capacity for dispute resolution 12
Singapore position on BEPS pwc.com/sg/beps 13
Singapore position on BEPS Polling question #1 The Singapore government should make more public pronouncements on its stance on the BEPS action plans to help taxpayers respond to changes. a. Yes b. No 14
Singapore position on BEPS Polling question # 2 I consider the following to be most important feature to ensure the effectiveness of Singapore's tax treaties in light of the BEPS developments (choose one only) a. Including a derivative benefit clause (when the new Limitation of Benefit article is adopted) b. Having objective criteria for accessing treaty benefits through competent authority agreement ( e.g., the quantitative treaty access criteria in Singapore - India protocol) c. Introducing a mandatory arbitration clause within the Mutual Agreement Procedures article 15
Singapore position on BEPS Polling question #3 Which one of the following should be the priority of the Singapore authorities? (choose one only) a. Building capacity - It is anticipated that there will be increase in tax disputes. Singapore should build capacity for dispute resolution. b. Substance position - Singapore should issue guidance on what it considers as substance, in particular in relation to its role as a hub location. c. Exchange of information - Taxpayers are concerned with the leak of commercially sensitive information. Singapore could share more on how it intends to deal with such requests for information exchange. 16
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