Category: APJT Archive

The current economic situation shows that Chinese companies will be actively expanding their presence on the world market in the next 10 to 20 years, and one of the possible destinations is the Russian market, which is actively seeking investment. However, Chinese businesses are not yet well aware of the specifics of the Russian market. Making decisions about foreign operations is a complex task that requires knowledge of a country’s commercial and tax climate, bearing in mind that the Russian business and regulatory environment continues to develop on multiple fronts. Below is a brief overview of the Russian tax system which could be useful in the case of expanding into the Russian market....

The United Arab Emirates (“UAE”) is located on the southern coast of the Arabian Gulf and is a federation of seven emirates (Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah). Geographically, the UAE is situated in the middle of Europe, Asia, the Middle East, and Africa. The UAE is a member country of the Gulf Cooperation Council (“GCC”), which is a regional intergovernmental political and economic union consisting of all Arab states of the Persian Gulf except for Iraq. The six member countries of the GCC are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. Indeed, the UAE is one of the most developed economies in the Middle East and North Africa (“MENA”) region, and it is often the entry point for regional investment....

Discretion is considered an integral component of an administrative system. However, striking a balance between discretion and the rule of law is challenging, particularly in developing countries like Pakistan where the immediate concern of the taxation authorities is to maximise revenues to balance the government’s budgets. In this article, the author discusses the discretionary powers of the tax administration in the general sales tax (“GST”) regime of Pakistan from a social perspective and highlights the necessity of rationalising them to ensure the rule of law and to uphold the principles of good tax policy. Strengthening control mechanisms is suggested as a means to prevent the misuse of discretionary powers....

During the course of its economic transformation, China has become more and more aware of the importance of the role played by research and development (“R&D”) activity. As the country’s manufacturing industry is shrinking, China hopes very much that the R&D industry can take the baton and run and become the cornerstone of its new economy. To stimulate innovation, China, like many other jurisdictions, has been revamping the enterprise income tax (“EIT”) incentive rules within the current legal framework in recent years. On one hand, China has relaxed the requirements and procedures for R&D activities to be eligible for the EIT incentives with a view to attracting more R&D investment and retaining more of the income generated by intellectual property (“IP”) within China. On the other hand, given the latest BEPS development, China’s attitude towards tax avoidance has become tougher, aiming to close any loopholes in the EIT incentive system. Given the rapid changes in China’s tax environment, multinational enterprises...

The State Administration of Taxation (SAT) has issued a series of regulations to address questions regarding the Chinese individual income tax (IIT) liability of foreign individuals holding director or senior management positions in mainland China. However, some differences exist among these regulations concerning the nature of directors' fees and how foreign individuals perform their duties. These differences lead to potential contradictions in the assessment method and tax jurisdictional basis which in tum affect these individuals'need for certainty in determining their Chinese IIT liability. This paper endeavours to canvass systematically the IIT policies applicable to these foreign directors and senior managers and to assist them in correctly fulfilling their Chinese IIT obligations in practice....

This article will review selected cases relating to profits tax, salaries tax, penalty loading, and procedural matters reported in Volume 30 (1st and 2nd supplements) of Board of Review Decisions. There are two profits tax cases, four salaries tax cases, two penalty cases, two cases on extension of time to appeal, one case on a section 70A claim, and one case on case stated. The two profits tax cases are on source of profits. Among the four salaries tax cases, two concern the taxability of a termination payment. With regard to the two penalty cases, the Board dismissed one case and reduced the penalty in the other. All the other appeal cases were dismissed....

With the coming into force of the new Companies Ordinance (Cap. 622) (NCO) on 3 March 2014, Hong Kong finally acquired a court-free, simplified amalgamations regime. The relevant governing provisions are found in Part 13, Division 3 of the NCO.1 Companies may amalgamate vertically 2 as, for example, may occur between a parent company and its wholly owned subsidiary, or horizontally,3 as between, for example, two wholly owned subsidiaries of the same third company. It is envisaged that the introduction of a court-free system of amalgamation will simplify and accelerate corporate group reconstructions. Whereas the old Companies Ordinance (Cap. 32) (OCO) contained an amalgamations regime,4 an amalgamation under the OCO required court approval and therefore in practice operated more as a scheme of arrangement, being regarded as too onerous and time-consuming to be an effective instrument for restructuring....

The Foreign Account Tax Compliance Act (FATCA) came into effect in 20101. In addition to the many important changes FATCA brings to the financial and tax landscape, it is also important to understand the many pre-existing US tax obligations and requirements that the US is seeking to enforce through the information it obtains through FATCA. The technical definitions, requirements, and laws of US taxation can be difficult to navigate, even for the most informed tax professionals. Therefore, the primary purpose of this article is not to offer detailed legal analysis or recite the laws but rather to aid in ending some of the misconceptions, review key issues, inform taxpayers of their compliance obligations, and, perhaps most importantly, remove some of the mystique, confusion, and fear surrounding FATCA....

On 17 September 2015, China’s State Administration of Taxation (SAT) issued a Consultation Draft of the circular “Implementation Measures for Special Tax Adjustments” (Consultation Draft), which would replace the existing Guoshuifa (2009) No. 2 (Circular 2). The SAT asked for public comments on the Consultation Draft by 16 October 2015. The existing Circular 2 contains the main body of rules on transfer pricing (TP) in China. It also covers other areas such as thin capitalisation, controlled foreign corporations, and the general anti-avoidance rule. The Consultation Draft can be considered a localisation of the recommendations of the G20/OECD’s Base Erosion and Profit Shifting (BEPS) project. It continues to follow the internationally accepted arm’s length principle, while adding some China-specific features that the SAT has advocated for some time. As in the China chapter ofthe United Nations (UN)TP Manual, concepts such as location savings, market premium, and other locationspecific advantages (LSAs) are advanced. The Consultation Draft is expected to bring many changes...

The Hong Kong Special Administrative Region (HKSAR) is experiencing unprecedented change as it strives to be seen as a cooperative jurisdiction with respect to tax transparency and exchange of information. This paper reviews developments over the last two years since late 2013, the highlights being the HKSAR implementing legislation for facilitating tax information exchange agreements (TIEAs - the first being concluded with the US in mid-2014), signing a Model 2 intergovernmental agreement (IGA) under the Foreign Account Tax Compliance Act (FATCA) to enable financial institutions to transfer relevant information to the Internal Revenue Service (IRS), and embracing the Organisation for Economic Cooperation and Development’s (OECD) new standard for automatic exchange of information (AEOI) by committing to introduce legislation to facilitate AEOI by 2018. The HKSAR is also actively engaged with the challenges and opportunities of the OECD’s base erosion and profit shifting (BEPS) project....