13 Jul ASEAN Today – Regional Legal and Business News – June 2021
ASEAN Today – Regional Legal and Business News for June 2021 including an Immigration Update on the Phuket Sandbox and Corporate Law News including Significant Changes to Interest Rates and the Tax Exemption for Domestic Seminars.Download PDF
ASEAN Economic Community News
ASEAN Access Portal
The ASEAN Coordinating Committee on Micro, Small, and Medium Enterprises (ACCMSME) launched ASEAN Access earlier this month. ASEAN Access is a one-stop business information gateway for international- oriented businesses to expand their market outreach both in ASEAN and internationally. ASEAN Access will facilitate international-ization efforts among Micro, Small and Medium Sized Enterprises (MSMEs) and provide trade-related information and market opportunities for ASEAN businesses from both the supplier and customer sides at no cost. The ASEAN Access portal will help mitigate the risks of entering a new market and will connect businesses to service providers in the areas of distribution, transportation and logistics, market research, and consultancy on intellectual property, laws and regulations, etc. ASEAN Access is a flagship initiative of ACCMSME, spearheaded by the Office of SMEs Promotion (OSMEP) Thailand, and supported by the Federal Government of Germany and the German Agency for International Cooperation (GIZ).
ASEAN-EU Air Transport Agreement
ASEAN and the European Union concluded the world’s first bloc-to-bloc air transport agreement this month, the ASEAN-EU Comprehensive Air Transport Agreement (AE CATA), which will allow airlines to expand their services to and within ASEAN and the EU. After the agreement is formalized, non-stop flights will be allowed between the countries by the airlines of the combined 37 member states. Additionally, the airlines will be permitted to fly up to 14 weekly passenger services with one stop within the other region to pick up passengers on the return leg, and there will be no limits on flights with one stop to pick up cargo. AE CATA will make ASEAN and EU airlines more competitive compared to airlines from other regions. The EU is ASEAN’s third largest source of foreign investment and its third largest trading partner.
ASEAN Digital Currency Sandbox
The ASEAN Financial Innovation Network (AFIN) launched a digital currency sandbox where banks and fintechs can experiment with central bank digital currency applications. The sandbox entity is a joint endeavor by the Monetary Authority of Singapore (MAS), the International Finance Corporation, and the ASEAN Bankers Association in partnership with a global enterprise software firm and hosted on a cross-border open-innovation platform that serves as a curated global marketplace for application programming interfaces (APIs). Select APIs from the digital currencies sandbox will be available from August 2021. This collaboration will help equip financial institutions and fintechs with the tools to build central bank digital currency applications for new payment rails and multi-currency payment systems.
Bank Secrecy Act and Money Laundering
Philippine business and professional organizations are advocating for the proposed amendments to the country’s bank secrecy law. The private sector maintains that lifting the bank secrecy law will help reduce public and private corruption and facilitate the collection of more taxes. The groups say that the Philippines is lagging behind the global trend to relax bank deposits secrecy laws across jurisdictions to effectively combat both domestic and global tax evasion, money laundering, and other financial crimes and to comply with international standards on transparency. Additionally, the Philippines Court of Appeals rule of procedures for bank inquiries into or the examination of deposit and investment accounts relating to unlawful activities or money laundering offenses came into effect in June 2021. Under these rules, the bank inquiry order mandates that banks and non-bank financial institutions must give the Anti-Money Laundering Council full access to all documents and information pertaining to deposit and investment accounts being inquired into within 120 days from the order.
Indonesia plans to make changes to its tax regime to boost revenues to fund its spending as its economy continues to be affected by the COVID-19 pandemic. A carbon tax is being considered that would apply to fossil fuels and emissions released by factories and vehicles and to carbon-intensive industries like power generation, cement, and petrochemicals. Broadening the base of the country’s value added tax and raising the VAT rates is also being considered. The government also plans to add another income layer to the existing personal income tax regime. Indonesia continues to struggle with its tax system, especially compared to other ASEAN member states. Indonesia’s tax-to-gross domestic product ratio was 11.9% in 2018 and much lower than countries like Thailand and the Philippines and well below the OECD average of 34.3%. With a population of 270 million, Indonesia had only 39 million registered tax payers in 2019
Cross-Border QR Payment System
Bank Negara Malaysia (BNM) and the Bank of Thailand (BOT) launched a cross-border QR payment system to help bridge the transactional gaps between the neighboring countries. The new payment system is the first phase of integrating the real-real time payment systems of Malaysia’s Real-time Retail Payments Platform (RRP) and Thailand’s PromptPay system. Currently, users in Thailand can use mobile payment applications to make payments to merchants in Malaysia. In Q4 2021, Malaysian users will be able to do the same with Thailand. The system will be expanded to include cross-border remittances where users will be able to make real-time fund transfers by referencing the mobile phone number of the recipient in Q4 2022.
Insolvency Cash Flow Test Ruling
A new ruling by the Singapore Court of Appeal states that the cash flow test is now the sole test in determining insolvency under the Singapore Companies Act. The cash flow test assesses if the company’s current assets will exceed its current liabilities and refers to assets which will be realizable and debts which will fall due within a 12-month timeframe. The Court gave three reasons for its ruling: 1) The wording of the law does not envisage two or more tests being applied, 2) it is supported by case law in the United Kingdom, and 3) the test intended by the Companies Act is not the balance sheet test.
Stock Exchange Upgrades
The Ho Chi Minh City Stock Exchange (HSX) announced that it will adopt new infrastructure in July 2021 to resolve trading congestion and lagging. The exchange has been suffering prolonged technical issues and overload and Vietnam’s Ministry of Finance is now implementing drastic solutions to handle the technical outages on the HSX that include increasing the board lot size, stopping the trading of newly-listed shares, and the adoption of the technical infrastructure from the Korea Exchange (KRX) which is expected to launch by the end of 2021
THAILAND LEGAL REVIEW
Effective from July 1, 2021, the Phuket Sandbox program will allow entry to Thais and foreigners traveling from designated countries (must be from countries/regions with a low to medium risk of the SAR-CoV-2 virus as announced and constantly updated by the Thai Ministry of Public Health) that have resided in the country of departure for at least 21 days before traveling to Phuket. Both direct and transit flights are allowed to enter Phuket under the Phuket Sandbox Scheme.
All travelers must also be vaccinated and comply with the same processes and document requirements for entering Thailand as all other foreigners as follows:
• A vaccine certificate proving that they are fully vaccinated against COVID-19 of no less than 14 days before, but no later than 1 year, from the travel date with a vaccine registered with the MoPH or approved by the World Health Organization (WHO). Children under 18 years of age do not need to be vaccinated, but must travel with parents or guardians who have been vaccinated;
• A valid visa;
• A Certificate of Entry (COE) issued by a Royal Thai Embassy or Consulate;
• A COVID-19 health insurance policy with a minimum coverage of US$100,000 per traveler;
• A medical certificate with an RT-PCR laboratory result indicating that COVID-19 was not detected that was issued no more than 72 hours before departure;
• A confirmation of booking (and receipt) for 14 nights in an Amazing Thailand Safety and Health Administration (SHA) Plus certified accommodation in Phuket. In case the length of stay is less than 14 days, travelers must present a confirmed flight ticket out of Thailand and payment confirmation for accommodation and receipt for the RT-PCR tests at hotels that cover their intended duration of stay;
• A receipt of advanced payment for COVID-19 testing in Phuket – After the travelers enter Thailand, they will undergo 3 COVID-19 tests using the RT-PCR method, 1) 1st day, 2) 6th – 7th day, and 3) 12th -13th day after arrival, as per the MoPH’s guidelines;
While staying in Phuket, the vaccinated travelers must stay in a SHA Plus-certified accommodation and are required to return to the hotel every day and are not allowed to stay overnight elsewhere. Travelers are allowed to engage in any tourism activities, but are advised to strictly follow the DMHTTA precautions to prevent the spread of COVID-19: D – Distancing, M – Mask wearing, H – Handwashing, T – Temperature check, T – Testing for COVID-19, and A – contact tracing application (Download and install the ThailandPlus application and Morchana tracing application. The app must be kept on at all times as the foreigner moves to different locations around Phuket).
For travelling from Phuket to other Thai destinations, vaccinated international travelers are required to show a vaccine certificate, a medical certificate showing that they have tested negative for COVID-19 during their stay in Phuket, and valid visa at the Phuket Airport. All travelers must stay in Phuket for 14-days before they can travel to other parts of Thailand except for those travelers who only plan to travel within Phuket without leaving it to other provinces in Thailand or stay less than 14 days and are only permitted to depart Thailand by direct international flight from Thailand to the destination country.
IMPORTANT NOTE: The Phuket Sandbox Scheme is subject to a reduction in the number of travelers to the city OR being revoked at any time if the number of Covid-19 cases in Phuket passes more than 90 cases within a week or there are more than 3 clusters or an explosion of Covid-19 cases in multiple areas.
Corporate Law News
Tax Exemption for Domestic Seminars
The Royal Decree on the Revenue Code governing the exemption from revenue taxes No.716 came into effect on May 27, 2021. The purpose of the Royal Decree is to grant a tax exemption of 100% of the income tax for companies or juristic partnerships for expenses from convening trainings and seminars for its own employees in Thailand between January 1, 2021 and September 30, 2021.
Such expenses include training and seminar rooms, accommodation, transportation, or other expenses relating to holding domestic training and seminars, as well as service charges made to tourism business entrepreneurs under the laws concerning tourism businesses and guides.
Significant Changes to Interest Rates
The Emergency Decree amending the Civil and Commercial Code on interest rates has been effective from April 11, 2021 onwards. The significant changes are as follows:
1. The rate of interest which is not fixed by a juristic act or by an express provision of law will be reduced from 7.5% to 3% per annum. Such new rate, however, will be reviewed by the Ministry of Finance every 3 years and may be set lower or higher according to the state of the economy.
2. The rate of default interest will be reduced from 7.5% to 5% per annum (Interest rate of 3% as mentioned in 1) above, plus additional interest rate of 2%). However, creditors can still demand higher interest on any legitimate grounds.
3. In case of paying off debt by instalments, the interest during the default shall be only calculated from the principal of the instalment in which the debtor is in default. Any agreement referring the calculation of default interest accrued from the total principle amount that remains outstanding will be null and void.
|Interest which is not fixed||7.5%||3%|
|Calculation Method of Interest Paid in Installment||Accrued from the total principle amount that remains outstanding||Accrued from the principle of instalment in which the debtor is in default|
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.