ASIA PACIFIC TAX UPDATE Lam Fong Kiew 7 th June 2014

Myanmar (The Golden Land)

Permitted Enterprises No.IndustryValue of sector (USD in mil) % 1Power19, Oil and Gas14, Manufacturing3, Mining2, Hotel and tourism1, Real Estate1, Livestock and fisheries Transportation and communication Industrial Estate Agriculture Total44, Myanmar Key Industries Source: Information as of 31/12/2013 by the Directorate of Investment and Company Administration, Ministry of National Planning and Economic Development, Myanmar

Permitted Enterprises No.IndustryUSD in mil% 1China14, Thailand10, Hong Kong6, UK3, Republic of Korea3, Singapore2, Malaysia1, Vietnam France Japan Total42, Foreign Investments by Country Source: Information as of 31/12/2013 by the Directorate of Investment and Company Administration, Ministry of National Planning and Economic Development, Myanmar

Number Myanmar Company35,671 Foreign Company / Branches 2,584 Partnership 1,072 Joint Venture Company 71 Association 79 39,477 Registered Companies and Business Organizations Source: Information as of 31/12/2013 by the Directorate of Investment and Company Administration, Ministry of National Planning and Economic Development, Myanmar

Tax Regime Corporate Taxation  Residence A company is resident if formed under the Myanmar Companies Act or any other laws of Myanmar and where the control, management and decision-making of its affairs are situated and exercised wholly in Myanmar. Companies registered under the Myanmar Foreign Investment Law (MFIL) are treated as resident companies. Branches of foreign companies are generally deemed to be non-resident.  Basis of Taxation Resident companies are taxed on a worldwide basis. However, resident companies registered under MFIL are not taxed on foreign income. Non-resident companies are taxed only on income from sources within Myanmar.

Tax Regime Corporate Tax Rates Taxpayer categoryTax Rate Companies incorporated in Myanmar under the Myanmar Companies Act 25% Entities operating under the MFIL25% # Non-resident foreign entities, including Myanmar registered branches35% Capital gains Resident taxpayer Non-resident taxpayer Transfer of shares in oil and gas companies 10% 40% 40%-50% # 5 years corporate tax holidays can be enjoyed

Tax Regime Withholding Tax Rates Type of IncomeRate applicable to resident recipients Rate applicable to non-resident recipient Dividends-- Interest-15% Royalties15%20% Technical service fees2%3.5% Other Taxes -Individual tax rates range between 1 to 35% -No VAT but commercial tax of 5%, or 8% to 100% -Customs duties range between 0% to 40% -Stamp duties

International Holding Structure Concluded 10 DTAs with: Bangladesh, India, Indonesia, Korea, Laos, Malaysia, Singapore, Thailand, UK, Vietnam Double Tax Agreements (“DTA”) Shareholders Holding Company Project Company Myanmar Which country is suitable? -Dividend withholding tax -Capital gains, etc.

China Tax Developments

BEPS  China’s first official position on BEPS released by Jiangsu State Tax Bureau on 29 th April Offshore Indirect Equity Transfer  GAAR, Circular 698 announced in 2009 but effective 1 st January 2008  Re-characterize indirect equity transfer by disregarding the existence of the corporate vehicle/target company  SAT publicized its official reply to Shenzhen State Tax Bureau on indirect equity transfer  New way to impose China tax on offshore indirect equity transfer  Chinese Tax Resident Enterprise (“TRE”) concept

China Tax Developments US Fund Cayman Co HK listed Co Hold Co China Cos US listed Offshore China Facts of the case: US Fund owns Cayman Co (seller) which held shares in HK listed Cayman Co (target co) which indirectly held China Cos Seller sold target co to US listed buyer => indirect disposal of equity interest in China Cos Seller reported transaction to State Tax Bureau Difficult to disregard target co based on Circular 698 as listed in HK and economic substance Place where overall management and control over production and business for target co is located in China Deem target co as a TRE and impose tax on direct transfer

China Tax Developments Simplified application approval of Chinese TRE  SAT delegates approval power on granting TRE status of Chinese-capital controlled foreign companies (CCCFCs) to provincial-level tax bureaus for year 2013 and beyond  Opportunity or challenge? Permanent Establishment  Circular 19 was issued in 2013 on secondment related PE issues  Main test: which entity bears the liability and risk associated with the work of the secondee, and evaluates the performance of the secondee  Other tests: whether there is a mark-up on the reimbursement, whether the secondee pays Chinese individual income tax on the full income, etc.  Normal stewardship activities would not create PE

India Tax Developments

General Anti-Avoidance Rule (“GAAR”)  Effective from 1 st April 2015 (FY ), burden of proof is on taxpayer Main purpose of an arrangement is to obtain a tax benefit AND Not for bonafide purpose Lacks commercial substance Not at arms length Abuse/Misuse of tax provisions OR Impermissible Avoidance Arrangement Denial of tax treaty benefit Look through corporate structure Disregard whole/part of arrangement, recharacterise Reassign place of residence, location of asset or transaction Reallocate capital, revenue, expenditure, deduction, etc.

India Tax Developments Non-resident transactions  CBDT has prescribed additional information to be furnished by a non- resident claiming treaty benefits in India (retrospective effect from 1 st April 2013)  CBDT has also clarified that WHT liability applies only on the taxable portion of income payable to a non-resident and not on the entire sum payable to a non-resident. Transfer Pricing  Key to reducing controversies is via signing of Advance Pricing Agreement (“APA”)  The Indian APA program has been the fastest to sign initial APAs within one year of application

Regional Indirect Tax updates

Major Updates in Asia Pacific GST countdown for Malaysia MalaysiaSingapore Effective date1 st April st April 1994 GST rate6%3%, 4%, 5%, 7% (effective 1 st July 2007) Why implement GSTAvoid bankruptcy, reduce fiscal deficitShift reliance from direct taxes to indirect taxes Income tax rate: Corporate Individuals 25% 26% (max) 17% 20% (max) Scope of chargeSupplies of goods and services in Singapore, as well as the importation of goods and services into Singapore Supplies of goods and services in Singapore, as well as the importation of goods into Singapore Threshold for GST registration RM500,000S$1,000,000 Transitional ProvisionsRepeal of sales tax and service tax but Customs will still enforce matters where tax is due and payable Nothing in place before implementation of GST

Major Updates in Asia Pacific Australia  Proposals to restrict GST exemption (currently AUD1,000) for goods purchased from overseas via internet  Proposals to implement changes to the application of GST to cross-border transactions China  Expansion of “modern services” to include radio, film, and television services  Telecommunications services is subject to VAT of 11% and 6% on 1 st June 2014  Administrative measures on VAT exemption for cross-border services  New VAT grouping rules for branches  VAT treatment for the transfer of a business as a going concern India  Attempt to create a conducive / simpler tax environment  GST may be implemented in a year’s time or so, no official timeline

Major Updates in Asia Pacific Indonesia  Increase in the minimum threshold for registration from IDR 600 million (USD 55,000) to IDR 4.8 billion (USD 436,000) Japan  CT has been increased from 5% to 8% on 1 st April 2014 and scheduled to increase to 10% on 1 st October 2015  Proposals to reduce CT rate for certain food products and daily essentials  Proposals for outbound payments from Japanese consumers to foreign service providers to be subject to CT Korea  Complete overhaul of VAT Act on 7 th June 2013 to clarify key VAT concepts Vietnam  Expansion of goods eligible for 0% VAT to include goods sold to a local buyer but delivered and accepted outside Vietnam (third country sales)

China. Malaysia. Myanmar. Singapore THANK YOU!