07 Aug ASEAN Today – Regional Legal and Business News – July 2017
ASEAN Today – Regional Legal and Business News for July 2017Download PDF
ASEAN Economic Community News
Regional Tax Cooperation
The International Monetary Fund (IMF) wants ASEAN member countries to work together on a regional basis to increase cooperation over tax issues and to avoid tax competition. The IMF also says that tax exemptions and incentives used to attract foreign investment are damaging national revenues. While the ASEAN Economic Community promotes economic integration and cross-border investment, there are also unwanted side effects such as corporate tax competition, cross-border tax avoidance, and illegal tax evasion. Instead of increasing much needed government revenues, the IMF says that this competition between countries only benefits investors.
ASEAN Consumption Study
A study by a global information and measurement company and a strategic advisory company maintains that ASEAN’s first-tier cities, Jakarta, Manila, Bangkok, Ho Chi Minh City, and Singapore, currently drive total consumption in the region, but will be overtaken by secondary population centers after 2030. The study says that cities with populations between 500,000 to 5 million will have the fastest growth in consumption.
Rubber Output Cuts
The Malaysian government says that the International Tripartite Rubber Council of Malaysia, Thailand and Indonesia plans to cut rubber output by 10-15% to stabilize rubber prices. The countries are also exploring ways to increase domestic demand and use of rubber. The three countries plan to promote the use of rubberized asphalt for roads. The mixture of scrap rubber and asphalt is very durable, lasts longer, and is easy to maintain. It also helps reduce road noise.
A UK government funded project, the DaNa Facility, recently launched the Myanmar Business Environment Index (MBEI). The DaNa Facility says that the MBEI will enhance state and regional competitiveness and focus on helping companies understand and improve the local business environment. The MBEI will be based on a nationwide survey of domestic businesses.
New Tax Law
Indonesia’s parliament passed a new tax law aimed at combating tax evasion that will give the country’s tax office direct access to financial information held at overseas financial institutions and banks. With the new law, Indonesia meets the requirements to participate in the Organisation for Economic Co-operation and Development’s Automatic Exchange of Information framework. With the reciprocal exchange of tax data between countries, the tax office hopes to uncover billions in assets parked abroad.
Corporate Bond Market
The Securities and Exchange Commission of Cambodia (SECC) has established the new regulations needed to launch the country’s corporate bond market. The new capital market tool will allow companies to raise funds for expansions, debt refinancing, or acquisitions without needing to change the company’s equity structure.
Singapore has enhanced its EntrePass scheme which allows eligible foreigners to start and operate a new business in the country. The evaluation criteria for global startup founders have been broadened to attract innovative businesses and the validity period is now two years after the first renewal.
Fraudulent Tax Invoices
Thailand’s Revenue Department warns that it has started taking criminal actions against companies that file fraudulent tax invoices and will release more stringent measures in September 2017. Previously, the department only issued fines, now a prison term of up to 20 years is possible. The filer and issuers of the fake tax invoices and anyone else involved will be held liable.
Sin Tax Increase
The Cabinet on Tuesday approved a 2% increase in Thailand’s sin tax to support a welfare fund for the elderly poor. The current sin tax is 5.5% on items such as alcoholic beverages and tobacco. The 7.5% sin tax will become effective in 2018.
Medical Expense Increase
A new ministerial regulation from the Labour Department increases the maximum amount an employer must spend on medical expenses for employees being treated at public hospitals. Now, an employer is responsible for THB2 million in medical expenses. The new regulation is backdated to January 2016.
The Bank of Thailand released new measures on credit cards and unsecured personal loans to contend with the country’s high household debt levels and concerns on overspending and rising bad loans. Now, only credit-card holders with a monthly salary over 50,000 baht are eligible for a credit limit of five times their monthly salary. The new rules also lowered credit card rates to 18%.
The Tourism Authority of Thailand (TAT) wants give foreign film producers extra incentives to use Thailand as a location for films. The proposal includes work permit exemptions and additional tax incentives. There were 779 overseas film shoots in Thailand in 2016.
Online Regulation Portal
The World Bank director for Southeast Asia believes an online cross-border regulation portal would benefit Cambodia, Laos, Myanmar, Vietnam and Thailand and reduce complications and promote transparent trade. The director said that businesses need predictability in order to plan future investment, so an online resource that has all relevant trade regulations would encourage transparency and help all countries involved.
The government will start enforcing export controls on goods that have both a commercial and military use on January 1, 2018. Companies are responsible to ensure that their exports are covered under the Commerce Ministry requirements. This will affect companies producing electronics, semiconductors, computers, chemicals and pharmaceuticals, medical equipment, steel, and telecommunications equipment.
Due to rising prices in China’s cities, an increasing number of Mainland Chinese are buying properties in Thailand for personal use and investment. Thai property developers are opening offices in China. Developers are reporting that Chinese buyers now make up 30-60% of their foreign buyers.
An international credit ratings agency reports that Thailand’s banking system will be stable for the next 12-18 months. They credit this to Thailand’s improving operating environment and Thai banks’ strong capitalization and loan loss reserves.
“One Belt One Road”
The Commerce Ministry is urging Thai small and medium-sized enterprises (SMEs) to capitalize on China’s “One Belt One Road’ policy, an initiative to create physical links with neighboring nations. China announced an investment of US%1.4 trillion into the policy. China is Thailand’s top trade partner.
Thailand Legal Review
New Immigration Procedures
The Immigration Department at the One Stop Service Center (OSSC) promulgated an unwritten announcement concerning the legalization of marriage certificates and birth certificates which became effective on July 17, 2017.
The documents used in supporting long-term dependent visa applications for all nationalities, both first-year applications and renewal applications, i.e., marriage certificates and birth certificates (“Documents”) must be officially legalized by either of the following methods before being submitted to the OSSC.
1. The Documents must be officially legalized by the concerned Embassy in Thailand. Please be aware that the embassies of some countries such as China do not offer legalization services, so method 2 is the only option.
2. The Documents must be officially legalized by the Ministry of Foreign Affairs or the equivalent authority of the concerned country and subsequently authenticated by the Thai Embassy in the country where the Documents were first legalized.
Please be aware that method 2 can add considerable time to the visa and work permit process. For example, if a US citizen cannot use method 1, the Documents must be legalized in the United States. The Documents must be first notarized by a state notary public, then sent to the U.S. Department of State in Washington D.C. for authentication which can take over 12 business days from time of receipt, and finally legalized by a Thai Embassy or Consulate in the United States.
This Announcement only applies to Non-BOI companies. The reason behind this announcement is national security. The Immigration Department at the OSSC discovered that applicants have made fraudulent filings in the past. The Announcement is being put in place to counter this problem. The new regulations will be implemented for ALL foreign national visa applicants without discrimination. In the past, this rule only applied to visa applicants from a list of 21 countries (Indian, South Asia and most African countries).
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.