2.9.14
Burger King: Whopping its tax base to Canada
A Reuters analysis of Burger King’s regulatory filings in the U.S. and overseas, which was also reviewed by accounting experts, shows that it has been making major efforts to decrease its U.S. tax bill for some time. Burger King's recent decision to move its tax base to Canada, claiming that this decision was about international expansion, has been attacked by some US lawmakers and critics. Click here for the full story.
26.8.14
GST: Types of GST
Basically there are 3 categories of goods & services under the GST scheme in Malaysia:
1) Standard-rated GST
Goods & services in this category will be charged a tax rate of 6% at every stage of the supply chain. The tax is billed and collected by businesses and paid to the government. Each party, except the final consumer, can claim back credits on the GST they already paid (know as input tax). E.g. car, fruits & cloth.
2) Zero-rated GST
Goods & services in this category will be charged 0% GST. This means that GST is not charged to the final consumer. However, businesses can claim back credits on their input tax. E.g. meat, fish & cooking oil.
3) Exempt-rated GST
Goods & services in this category will be non-taxable and are not subject to GST at the output stage. This means that GST is not charged to the final consumer. However, it also means that businesses, especially the final party in the supply chain (before the final consumer) cannot claim back credits on their input tax even if they might have incurred it earlier on. E.g. residential property and health care services.
Information courtesy of Loanstreet.
1) Standard-rated GST
Goods & services in this category will be charged a tax rate of 6% at every stage of the supply chain. The tax is billed and collected by businesses and paid to the government. Each party, except the final consumer, can claim back credits on the GST they already paid (know as input tax). E.g. car, fruits & cloth.
2) Zero-rated GST
Goods & services in this category will be charged 0% GST. This means that GST is not charged to the final consumer. However, businesses can claim back credits on their input tax. E.g. meat, fish & cooking oil.
3) Exempt-rated GST
Goods & services in this category will be non-taxable and are not subject to GST at the output stage. This means that GST is not charged to the final consumer. However, it also means that businesses, especially the final party in the supply chain (before the final consumer) cannot claim back credits on their input tax even if they might have incurred it earlier on. E.g. residential property and health care services.
Information courtesy of Loanstreet.
GST: Dates that You & I should know
6 months before GST implementation (October 2014) - it is the recommended period to register GST as it provides adequate time for businesses to make preparation.
3 months before GST implementation (January 2014) - GST system makes it compulsory for businesses that exceeded the prescribed threshold to register GST
Official date of GST implementation (1 April 2015) - GST registered businesses begin to impose 6% GST
3 months before GST implementation (January 2014) - GST system makes it compulsory for businesses that exceeded the prescribed threshold to register GST
Official date of GST implementation (1 April 2015) - GST registered businesses begin to impose 6% GST
GST: Can Malaysia Builders survive the next big wave?
It is reported that Malaysia's biggest developer by market value, UEM Sunrise Bhd (UEMS) faces lower profit margins from a new tax and may delay some projects amid Malaysia's steepest slump in property sales since the 1998 recession. The company's costs will rise as a 6% GST which is starting in April 2015 boosts prices of building materials that can't be passed on for certain projects. The government introduced the GST to broaden its revenue base after running a fiscal deficit since 1998. Property demand has dropped 11% in 2013, the most since the 1998 recession. Fitch Ratings cut its Malaysia outlook to negative in July 2013, citing concern over deteriorating public finances. Whether Malaysia Builders can survive the GST wave next year is yet to be seen, although Malaysians are already feeling the pinch now. To read more: Bloomberg news
5.2.12
PRC Tax Reform: China expanding VAT scope
On 16 November 2011, the PRC State Administration of Taxation (SAT) and the Ministry of Finance ("MoF") jointly issued a notice regarding their general plan of replacing the business tax ("BT") system with the VAT system ("the Plan"). In accordance with the Plan, details of the Shanghai Pilot Program are provided under the Tax Circular Caishui [2011] No.111 ("Circular 111").
The author decided to offer to sneak preview of what this tax reform is all about. Below is an article written by Charlie Sun (Head of Tax PAG, CMS China) on this regard.
In China, there are two major kinds of turnover taxes, i.e. Value-Added Tax (VAT) and BT. They cover different scopes of transactions. The VAT system mainly covers import and sales of movable/tangible goods, while the BT system covers services, transfer of intangibles and immovable properties. A few exceptions are processing, repairing and maintenance services which are covered by the VAT system, not the BT system. The BT system has been widely criticized for not having the input-output credit mechanism which is adopted in the VAT system. Such feature of the BT system means that BT costs are not recoverable by either party. Further, in case of subcontracting of services, the portion of the subcontracted service value will be taxed twice for BT purposes (once at the main-contractor and once at the subcontractor). In addition, due to the different tax rates and systems, the simultaneous operation of both VAT and BT systems has caused various administrative problems for both taxpayers and tax authorities. To solve the above problems and to ultimately eliminate the BT system, the PRC government has recently taken actions to launch a pilot tax reform starting from 1 January 2012. For the time being, this reform is limited to Shanghai. However, ultimately, it is expected to be extended to all over China in the future.
The author decided to offer to sneak preview of what this tax reform is all about. Below is an article written by Charlie Sun (Head of Tax PAG, CMS China) on this regard.
In China, there are two major kinds of turnover taxes, i.e. Value-Added Tax (VAT) and BT. They cover different scopes of transactions. The VAT system mainly covers import and sales of movable/tangible goods, while the BT system covers services, transfer of intangibles and immovable properties. A few exceptions are processing, repairing and maintenance services which are covered by the VAT system, not the BT system. The BT system has been widely criticized for not having the input-output credit mechanism which is adopted in the VAT system. Such feature of the BT system means that BT costs are not recoverable by either party. Further, in case of subcontracting of services, the portion of the subcontracted service value will be taxed twice for BT purposes (once at the main-contractor and once at the subcontractor). In addition, due to the different tax rates and systems, the simultaneous operation of both VAT and BT systems has caused various administrative problems for both taxpayers and tax authorities. To solve the above problems and to ultimately eliminate the BT system, the PRC government has recently taken actions to launch a pilot tax reform starting from 1 January 2012. For the time being, this reform is limited to Shanghai. However, ultimately, it is expected to be extended to all over China in the future.
28.1.12
An Intro To Transfer Pricing
The following article was written for the Malaysian Corporate Counsel Association (MCCA) and is currently being published in its official website www.mcca.com.my. The author, Zachary Lau is also the current Deputy President of the MCCA.
Transfer Pricing (TP) is a term that reveals little, but requires much an attention from MNCs and governments. This brief article attempts to examine some of the macro concepts underlying the TP framework.
TP impacts the pricing of goods, services and intangibles given for consumption or use to a related party (e.g. a subsidiary).
The category of pricing falling within the ambit of the TP framework can be either market-based, i.e. equivalent to the prevailing market price, or non-market based. The pricing objectives could be internal (e.g. the placement of a price on imported inputs) or, external (e.g. tariffs or taxes) [Source: Mayank K Agrawal, Transfer Pricing A Beginner's Perspective]
In an increasingly global economy, in which sourcing, manufacturing and consumption of goods takes place in different jurisdictions in order to reduce operational costs, the cross-border transactional pricing of goods, services and intangibles is a key focus area for MNC’s in determining the structure of groups of companies to be located all over the world. Obviously, it would be in the best interests of the MNC to familiarize itself with the TP guildelines of their host and home countries, in order to maximize benefits.
There is however, a fine line between maximizing benefits and outright manipulation, the potential for which has been of concern to the international community for some time. Manipulative practices could comprise, for example, the fixing of transfer prices on a non-market basis instead of in line with the dynamics of market forces, resulting in tax savings accruing to the MNC by virtue of deliberate movement of its accounting profits/taxable revenue from a jurisdiction in which taxes are high, to a jurisdiction in which taxes are low.
Such movement of taxable revenue would result in a distortion in Balance of Payments between the host and home country, and would impact the home country’s attractiveness towards Foreign Direct Investment (FDI). [Source: Mayank K Agrawal, Transfer Pricing A Beginner's Perspective]. The impact of such a practice would be to render some Asian countries such as Hong Kong and Singapore which have no TP controls, more attractive as FDI destinations than countries such as Malaysia, in which the TP framework is fairly restrictive.
For more information on TP, please visit the official website of the Inland Revenue Board of Malaysia.
Transfer Pricing (TP) is a term that reveals little, but requires much an attention from MNCs and governments. This brief article attempts to examine some of the macro concepts underlying the TP framework.
TP impacts the pricing of goods, services and intangibles given for consumption or use to a related party (e.g. a subsidiary).
The category of pricing falling within the ambit of the TP framework can be either market-based, i.e. equivalent to the prevailing market price, or non-market based. The pricing objectives could be internal (e.g. the placement of a price on imported inputs) or, external (e.g. tariffs or taxes) [Source: Mayank K Agrawal, Transfer Pricing A Beginner's Perspective]
In an increasingly global economy, in which sourcing, manufacturing and consumption of goods takes place in different jurisdictions in order to reduce operational costs, the cross-border transactional pricing of goods, services and intangibles is a key focus area for MNC’s in determining the structure of groups of companies to be located all over the world. Obviously, it would be in the best interests of the MNC to familiarize itself with the TP guildelines of their host and home countries, in order to maximize benefits.
There is however, a fine line between maximizing benefits and outright manipulation, the potential for which has been of concern to the international community for some time. Manipulative practices could comprise, for example, the fixing of transfer prices on a non-market basis instead of in line with the dynamics of market forces, resulting in tax savings accruing to the MNC by virtue of deliberate movement of its accounting profits/taxable revenue from a jurisdiction in which taxes are high, to a jurisdiction in which taxes are low.
Such movement of taxable revenue would result in a distortion in Balance of Payments between the host and home country, and would impact the home country’s attractiveness towards Foreign Direct Investment (FDI). [Source: Mayank K Agrawal, Transfer Pricing A Beginner's Perspective]. The impact of such a practice would be to render some Asian countries such as Hong Kong and Singapore which have no TP controls, more attractive as FDI destinations than countries such as Malaysia, in which the TP framework is fairly restrictive.
For more information on TP, please visit the official website of the Inland Revenue Board of Malaysia.
15.3.11
A snapshot on the major taxes in the PRC
There are 26 taxes in the People's Republic of China (PRC), which can be classified into 7 categories:
1) Turnover taxes (i.e. taxes on transactions), including Value-Added Tax (VAT), Excise Tax, Business Tax and Customs Duty.
2) Income taxes, including Enterprise Income Tax for domestic enterprises, Income Tax on Enterprises with Foreign Investment and Foreign Enterprises and Individual Income Tax.
3) Resource taxes, including Resource Tax and Urban and Township Land Use Tax.
4) Property taxes, including House Property Tax and Urban Real Estate Tax.
5) Taxes for special purposes, including City Maintenance and Construction Tax, Fixed Assets Investment Orientation Tax, Land Appreciation Tax and Vehicle Acquisition Tax.
6) Behavior taxes, including Vehicle and Vessel Usage Tax, Vehicle and Vessel Usage Plate Tax, Vessel Tonnage Tax, Stamp Duty, Deed Tax, Slaughter Tax and Banquet Tax.
7) Agricultural taxes, including Agriculture Tax, Agricultural Specialty Tax, Animal Husbandry Tax, and Farmland Occupation Tax.
For more information on the above tax rates and whether these taxes are applicable to you or your company, please visit the PRC State Administration of Taxation or contact your tax consultant.
1) Turnover taxes (i.e. taxes on transactions), including Value-Added Tax (VAT), Excise Tax, Business Tax and Customs Duty.
2) Income taxes, including Enterprise Income Tax for domestic enterprises, Income Tax on Enterprises with Foreign Investment and Foreign Enterprises and Individual Income Tax.
3) Resource taxes, including Resource Tax and Urban and Township Land Use Tax.
4) Property taxes, including House Property Tax and Urban Real Estate Tax.
5) Taxes for special purposes, including City Maintenance and Construction Tax, Fixed Assets Investment Orientation Tax, Land Appreciation Tax and Vehicle Acquisition Tax.
6) Behavior taxes, including Vehicle and Vessel Usage Tax, Vehicle and Vessel Usage Plate Tax, Vessel Tonnage Tax, Stamp Duty, Deed Tax, Slaughter Tax and Banquet Tax.
7) Agricultural taxes, including Agriculture Tax, Agricultural Specialty Tax, Animal Husbandry Tax, and Farmland Occupation Tax.
For more information on the above tax rates and whether these taxes are applicable to you or your company, please visit the PRC State Administration of Taxation or contact your tax consultant.
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