13 Feb ASEAN Today – Regional Legal and Business News – January 2020
ASEAN Today – Regional Legal and Business News for January 2020 including an update on the Personal Income Tax Extension Deadline for 2020 and Tax Reduction for Land and Building TaxesDownload PDF
ASEAN Economic Community News
2019 ASEAN Foreign Direct Investment
A new report by the United Nations Conference on Trade and Development (UNCTAD) says that while global foreign direct investment (FDI) levels were flat in 2019, FDI into ASEAN continued its upward progression. The 2019 global FDI spend was US$1.39 trillion of which ASEAN member states received US$177 billion, up from US$155 billion in 2018. Singapore received US$110 billion of ASEAN FDI, a 42% increase on 2018, driven by deals in the information and communications sectors. FDI into Indonesia grew 12% to US$24 billion with significant investment into wholesale and retail trade including the digital economy and manufacturing. Investment into Hong Kong and China dropped to US$55billion, down 42%, due to divestments and global tensions over the trade war.
Obesity in ASEAN
Multiple reports over the last year document the continuing rise in overweight and obese adults and children in the ASEAN member states. A global credit ratings agency reports that a shift in lifestyle is responsible for rising obesity levels in the Asia-Pacific region. Improving economic standards have led to more unhealthy diets as food with low nutritional value is easily available and the region is adopting Western dietary habits. The report estimates that 26% of ASEAN’s population is overweight. While the overall number of obese individuals remains low in many ASEAN countries, there is still a high rate of growth. For example, in Vietnam, there was a 38% increase in obesity from 2010 – 2014, but only 3.6% of its population is obese. Experts say the high-levels of dietary-induced obesity will incur significant downstream costs for healthcare systems.
ASEAN Single Window
The Philippines officially joined the ASEAN Single Window (ASW) on Dec 30, 2019 and went live at three pilot ports, the Port of Manila (POM), Manila International Container Port (MICP), and the Ninoy Aquino International Airport (NAIA). The Bureau of Customs and its Export Coordination and Export Divisions have begun issuing electronic Certificates of Origin through the country’s National Single Window (NSW), TradeNet, at the three pilot ports. TradeNet will initially cover 7,400 regulated goods across 76 regulatory agencies and will simplify and interconnect the documentation process. The government says that the ASEAN Single Window will lower communications costs by an estimated 10% and encourage small and medium-sized enterprises (SMEs) to take advantage to the preferential tariffs under the ASEAN Trade in Goods Agreement.
A recent survey by a global market research company finds that Vietnam has one of the world’s highest rates of consumer savings with 69% of the Vietnamese surveyed putting their excess cash into savings. Vietnam is a wealthy, developing nation and its citizens are following a global trend of increased savings. However, experts say that while savings appear positive for individuals, a global surplus in savings can distort the broader investment environment and lead to negative interest rates.
Digital Payments Platform
The National Bank of Cambodia (NBC) plans to launch Bakong, a blockchain-based, peer-to-peer payment and money transfer platform, in the first quarter of 2020. The NBC says that Bakong will be the national payment gateway for Cambodia and play a central role in bringing all payment options in Cambodia under the same platform and allow end-users to pay each other regardless of the institutions they bank with. Bakong is a central bank digital currency (CBDC) and is not decentralized like most cryptocurrencies. Bakong is a closed system backed by banking authorities and has zero possibility for speculation. The Bakong wallet will be linked to users’ bank accounts to exchange with hard currency and all transactions will be done in real time with all records stored at the NBC.
Omnibus Reform Bills
As part of Indonesia’s sweeping economic reforms, the government has drafted three omnibus bills that will revise 79 separate existing laws and 1,244 clauses. Indonesia wants to transition from a commodity-reliant economy to a manufacturing hub and needs to encourage job creation and promote foreign investment. The omnibus laws will reform the country’s two decade old labor law, make it easier for companies to secure permits, and relax foreign ownership rules, local content requirements, and land procurement conditions. To create 2 million jobs a year, the Indonesian economy needs to expand at 6% yearly and requires US$58 billion a year in investment. Additionally, part of the omnibus bills is an overhaul of the negative investment list which restricts foreign investment in a range of industries. The government plans to establish a priority list for investment that includes the high-tech, digital, and labor-intensive sectors.
Myanmar’s Ministry of Commerce announced that it plans to provide vehicle import permits to senior government officials as a reward for their work. The vehicles allowed for import would be determined by the ministry and allowed directly into the country. Critics made up of local and international automotive associations and foreign chambers of commerce say that plan will be highly detrimental to Myanmar’s automotive industry as a whole. Only 25,000 new cars were actually sold in Myanmar in 2019, and there are 34,000 government officials who qualify for the permits. The plan allows the grant of one import permit to each qualified official, but the imported car cannot be sold or traded for one year. Critics say the government will lose hundreds of millions in tax revenue under the scheme.
New Payment Services Act
Singapore’s Payment Services Act 2019 (PSA) came into effect on January 28, 2020, and is a forward looking and flexible framework for the regulation of payment systems and payment service providers. Under the PSA, the Money-changing and Remittance Businesses Act and the Payment Systems (Oversight) Act have been repealed and now all payment services including digital payment services, cryptocurrencies, and e-wallets are now regulated by the PSA. The Monetary Authority of Singapore says that the PSA adopts an activity-based licensing framework in recognition of the different kinds of activities and new developments in payment services. The PSA enhances the regulatory framework for payment services in Singapore, strengthens consumer protection, and promotes confidence in the use of e-payments.
Digital Goods and Services Tax
Effective January 1, 2020, Singapore’s Overseas Vendor Registration regime requires foreign digital services providers to register for and pay Goods and Services Tax (GST). A company located outside Singapore must register for GST if the company has an annual global turnover exceeding S$1 million and supplies digital services to individuals and customers not registered for GST in Singapore exceeding S$100,000. Operators of electronic marketplace, excluding internet service providers and payment processors, may be regarded as the supplier of the services made through the marketplaces and will be required to register, charge, and account for GST instead of the overseas suppliers. The liable digital services include downloadable digital content, subscription-based media, software programs, electronic data management, and support services, performed via electronic means, to arrange or facilitate a transaction, which may not be digital in nature. Currently, the GST is 7%, but Singapore plans to raise the GST rate to 9% by 2025.
THAILAND LEGAL REVIEW
Corporate Law News
Income Tax Extension Deadline for 2020
The Revenue Department has announced a 3-month extension for personal income tax filing (P.N.D. 90 / P.N.D. 91) in 2020. The deadline for individual taxpayers to file such tax is now June 30, 2020, instead of March 31, 2020. The extension applies to both manual filing and e-Filing.
Tax Reduction for Land and Building Taxes
A taxpayer who owns or occupies land or buildings is liable for a tax payment under the Land and Building Tax Act B.E. 2562 (2019). However, under the Royal Decree regarding the Reduction of Land and Building Tax B.E. 2563 (2020), tax rates will be reduced up to 90% and apply to the following cases from January 1, 2020 onward:
50% Tax Reduction:
a) Land, buildings, and condominium units owned or occupied by an ordinary person for residential purposes and whose name appears in the household registration certificate under laws concerning civil registration;
Remark: Such properties shall be received by way of succession and the ownership registration shall be made with the Land Department prior to March 13, 2020.
b) Land and buildings used for power plant purposes; and
c) Land and buildings including related areas used for dam purposes in order to generate electricity.
90% Tax Reduction:
a) Land or buildings pending for sale by the following institutions and acquired not exceeding 5 years from the date of acquisition:
Financial Institutions under the laws concerning financial institutions business
Specialized Financial Institutions (SFIs) under specific laws
Community Financial Institutions under the laws concerning community financial institutions
Asset Management Companies under laws concerning asset management companies;
b) Land or buildings under development for residential or industrial purposes under the laws concerning land development, for a period not exceeding 3 years from the date of receiving permission to develop such lands;
c) Land or buildings under development for condominium purposes under the laws concerning condominiums, for a period not exceeding 3 years from the date of receiving permission to establish such condominiums;
d) Land or buildings under development for industrial estate purposes under the laws concerning the Industrial Estate Authority of Thailand, for a period of not exceeding 3 years from the date of receiving permission to establish such industrial estates;
e) Land or buildings being used according to the laws concerning land development or laws concerning the Industrial Estate Authority of Thailand that have not yet been sold by the licensed business operators, for a period of not exceeding 2 years from March 13, 2019;
f) Land or buildings used for higher education institution purposes under the laws concerning private higher education institutions (Only applies to those shown in the layout plan indicating the areas and buildings listed in the prescription on the establishment of such higher education institutions);
g) Land or buildings used for school purposes under the laws concerning private schools (Only applies to those shown in the layout plan indicating the areas and buildings listed in the charter of such school):
Non-formal school: religious purpose
Non-formal school: Mosque-based Islamic Educational Centers (Tadika)
Non-formal school: Pondok Learning Institution;
h) Land or buildings used to provide public services for the following purposes:
Sports as prescribed by Sports Authority of Thailand
Zoos as authorized by the laws concerning wild animal reservations and protection
Amusement parks as authorized by the laws concerning building control
Parking lots of Mass Transit Authority of Thailand providing for its passengers
Public parking lots in transport stations;
i) Land or buildings in airports used as runways, driveways, and airport aprons as prescribed by the Civil Aviation Authority of Thailand; and
j) Land or buildings on which road flyovers are situated under the laws concerning the Expressway Authority of Thailand or concession highways under the laws concerning highway concessions.
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.