20 Mar ASEAN Today – Regional Legal and Business News – February 2018
ASEAN Today – Regional Legal and Business News for February 2018Download PDF
ASEAN Economic Community News
A regional multinational bank and a global business analytics company released a report on ASEAN small and medium-sized enterprises (SMEs) transforming for the future. The report obtained information from 1,235 SMEs in Singapore, Malaysia, Thailand, the Philippines, Indonesia, and Vietnam. The survey found that the trend for ASEAN SMEs is to focus on technology investments rather than conventional fixed asset spending. For those SMEs interested in tech investment, 78% were more interested in software and services – website improvement and mobile apps – than hardware and infrastructure. The report states that SMEs supply 50% of ASEAN countries’ gross domestic product and drive 30% of exports.
Projected E-Commerce Growth
The ASEAN Cultural Heritage Digital Archive (ACHDA) project was launched this month. Now, digital archives of ASEAN’s cultural heritage will be available to the public through one website. The archives will consolidate existing digital archives including ASEAN museum collections. The ACHDA will also expand its existing archives by continuing to digitize ASEAN cultural heritage objects.
ASEAN Framework Agreement on Services
Indonesia’s government announced that it plans to swiftly ratify the Sixth Package of Commitments on Financial Services under the ASEAN Framework Agreement on Services (AFAS). This will allow Indonesian banks to more easily expand their business into other ASEAN countries as it gives them the same banking access as banks from other ASEAN member states. Indonesia is the only ASEAN member state that has not ratified the sixth package of commitments.
New IP Regulations
Amended implementing regulations for Vietnam’s Intellectual Property Law, Circular No. 16, came into force and now supersede the previously amended implementing regulations from Circular No. 1 (2007). In total, 49 of Circular No. 1’s 67 points have been modified in Circular No. 16. The amended implementing regulations will help improve intellectual property practices in Vietnam and bring the country’s IP laws and regulations closer to international standards. Important amendments and supplements regarding intellectual property registration procedures include changes to the time frame for responses to office actions, new defenses for missing deadlines, an alternative for overcoming decisions on refusal, settlement of third-party oppositions, and appeal and termination of a granted protection titles. Circular No. 16 also includes specific changes to trademark and patent and utility solution implementing regulations.
Foreign Ownership Cap
International insurance companies in Malaysia now have until the end of June 2018 to comply with the 70% foreign ownership cap first imposed by the government in 2009. Foreign owned insurance companies must now offload 30% of their domestic business to local partners via share stakes sales or list the stakes on the Malaysian Stock Exchange.
Singapore announced that it will raise its Goods and Services Tax (GST) by two percent, from 7% to 9%, sometime in 2021-25. The increase will be progressive and the government expects a boost in revenue from the GST rate hike. The Buyers’ Stamp Duty (BSD) rate for residential properties has been raised to 4% effective immediately for residential properties valued over SD1 million.
Flat Rate Fees
The Thai Cabinet has resolved to draft a new Ministerial Regulation regarding the fees for company and partnership registration and fees for requests for document examination and certified copies and other relevant fees. Currently, fee rates are progressively calculated. However, the Ministry of Commerce has recommended a move to flat rate fees to be in line with the World Bank’s advice on business facilitation procedures. For example, company registration fees run from 1000-5000 baht at present, but would only be 1000 baht under the flat rate with a 30% discount if registered electronically.
According to a social media management platform and a global agency, Thailand is now the global leader in time spent daily on the internet and mobile internet. Thailand ranks 10th in social media penetration and 4th in time spent on social media. While Thailand ranks 8th for Facebook users, Bangkok tops the world’s list as the city with the most active Facebook accounts – 22 million.
The Revenue Department expects to pay tax refunds to 4 million individual tax payers in 2017, up 25% from the 2016 tax year. More standard deductions and allowances and the widened income band for the 30% and top rate are cited for the jump. The Revenue Department paid out THB40 billion in tax refunds for 2016.
New R&D Center
The Ministry of Industry plans to open Thailand’s first R&D center for recycling technology in 2018. This is part of the 20-year digital economy roadmap to turn Thailand into a zero-waste society. The government hopes the technology developed by the center will encourage the industrial sector to adopt innovative schemes and create secondary raw materials for their operations.
New Residential Landlord Laws
New laws governing the conduct of residential property landlords in Thailand become effective on May 1, 2018. Under the new laws, landlords can no longer ask for more than one month rent and one month security deposit up front, tenants can terminate their contracts at any time with 30-days’ notice, and landlords can no longer add extra charges to the actual costs of utility bills. However, the new laws only apply to landlords who own, lease, or sublease five or more properties.
New Building Energy Code
The Energy Policy Administration Committee approved the new building energy code (BEC) which will come into force in mid-2018. Nine types of newly built buildings with an area greater than 10,000 sq.m, including hotels, offices, and condominiums, will have to comply with the new BEC regulations. New buildings with an area between 5-10,000 sq.m will have to comply in 2019 and buildings of 2-5,000 sq.m in 2020.
For small and medium-sized enterprises (SMEs) that follow through with the government’s directive to adopt a single financial account, Thailand’s five largest banks will offer a fixed interest rate of 5% for special loans for two years. The special loans will roll out on January 1, 2019; the same date new Bank of Thailand regulations come into force requiring banks to give greater consideration to SME loans.
The Finance Ministry wants to set up an autonomous body to regulate non-bank institutions not supervised by the Bank of Thailand in order to protect consumers.
Gem and Jewelry Sector
Gem and jewelry exports are expected to grow 2-3% in 2018 to THB233 billion. The sector had 2.3% growth in 2017, but it was the first growth in exports since 2014. Experts attribute the increased exports to the global economic recovery and unique Thai designs.
THAILAND LEGAL REVIEW
Personal Income Tax
A taxpayer who received income in the 2017 tax year (from January 1 to December 31, 2017) is liable to file their Personal Income Tax Return (PIT 90 or PIT 91) and pay tax by April 2, 2018.
The tax return is available for download at www.rd.go.th and the taxpayer may file it by postal mail or in person at their Area Revenue Branch Office. Alternatively, the taxpayer can file the tax return electronically at www.rd.go.th and receive an eight-day automatic deadline extension.
Please note that if tax payable is not paid by April 2, 2018, a surcharge of 1.5% per month (a fraction of a month will equal a month) of the total tax due will be charged. A criminal fine of up to Baht 2,000 may also be charged.
All Thai limited companies and partnerships including foreign juristic companies that are conducting business in the Kingdom and whose fiscal year ended on December 31, 2017, must prepare and have their audited financial statements be approved by their shareholders within 4 months from the fiscal year ending (i.e. April 30, 2018) and submit the audited financial statements to the authorities as follows:
1) Department of Business Development (DBD): Related official forms (SBC 3 and SBC 3/1 Forms) and the list of shareholders as at the shareholders meeting date including the audited financial statements must be submitted via DBD’s e-filing system within one (1) month from the shareholders meeting date.
2) Revenue Department (RD): Related Corporate Income Tax Return and audited financial statement and tax payment must be submitted and paid within 150 days from the fiscal year end (i.e. May 30, 2018) to the RD or via the RD’s e-filing system.
DBD: Any company that fails to comply with such requirement may be subject to a fine not exceeding Baht 50,000.
RD: A fine of 2,000 Baht for late filing. In addition, a surcharge of 1.5 % per month will be imposed on the amount of tax to be made (if any).
There is now a tax exemption for receivers of income derived from money paid by the government in accordance with the E-Commerce Education and Support Program under the National Electronic Transaction Foundation Development Plan. When calculating withholding tax in accordance with Section 50 (5) of the Revenue Code and no tax or less than 5% of the income is withheld, the receiver shall have the right to have such income exempted from being added into the income tax calculation in accordance with Section 48 (1) and (2) of the Revenue Code if the receiver of such reward agrees for the payer of such reward to withhold 5% percent of the income. This provision shall be effective for assessable income received from June 1, 2017 onwards.
Amended Bankruptcy Act
The new Bankruptcy Act B.E. 2561 (2018) contains modifications or additions for up to 17 sections of the Bankruptcy Act to increase protections for the debtor, creditor, and related parties and to improve the efficiency and effectiveness of bankruptcy proceedings. The previous Act was amended because it contained provisions that caused problems for debtors applying for business reorganization due to their financial status. If a debtor was not insolvent at the time of their petition for business reorganization, the debtor could not file the petition. The new Act also allows the debtor better opportunity for timely business reorganization and puts in place mechanisms to monitor, manage, and gather the property of the debtor more effectively. The definition of Secured Creditor was also changed. In the new Act, Secured Creditor is defined as a creditor who has rights over the properties of the debtor whether that be through pledge, mortgage, or right of retention, or a preferential creditor whose rights are enforceable likewise to a pledgee’s. This definition also includes creditors that other laws deem as secured creditors.
The material contained herein is only provided for information purposes. No part thereof may be deemed to constitute legal advice or the opinions of this law firm or any of its attorneys. Whilst every effort has been made to verify the contents of the material contained herein, we do not represent, warrant, undertake or guarantee that the information contained in this newsletter is correct, accurate, or complete. Legal advice must be sought before acting on any information contained herein.