09 Apr ASEAN Today – Regional Legal and Business News – March 2021
ASEAN Today – Regional Legal and Business News for March 2021 including an Immigration Update on the reduction of quarantine times and Corporate Law News including the Request for Tax Filing and Tax Payment via Electronic System with the Department of Business Development and VAT for Foreign e-Service ProvidersDownload PDF
ASEAN Economic Community News
ASEAN Catalytic Green Finance Facility
Experts believe that ASEAN’s current infrastructure investment shortfall of US$100 billion a year has worsened due to the COVID-19 pandemic. The ASEAN Catalytic Green Finance Facility (ACGF) could help mitigate this problem. The ACGF is a green finance facility focused on developing and increasing climate-positive infrastructure projects that are owned by the governments of the ASEAN member states. The ACGF’s innovative finance mechanisms can help generate much-needed funds from private capital to boost a green, sustainable economic recovery in the region with infrastructure that is environmentally sustainable, low-carbon, climate-resilient, and meets the needs of local communities. ASEAN countries will also have access to US$1.4 billion in loans and technical assistance under the ACGF.
ASEAN Digital Economy Taxes
ASEAN governments plan to impose more taxes on digital companies and transactions in the digital economy. New levies have already come into effect and more are in the pipeline. Thailand requires foreign digital platforms with no local subsidiary to pay 7% value added tax on sales of more than US$57,000 a year, and experts believe this could generate US$100 million a year in revenue. Indonesia has imposed a 10% tax on the sale of digital products and services including streaming services, mobile apps, and digital games. Both Singapore and Malaysia now have digital tax regimes for overseas digital platforms. Singapore is targeting imported services and Malaysia has imposed a 6% service tax on foreign providers with an annual turnover of more than US$120,000. Experts say to expect more taxes on digital goods and services in the future as the governments of countries with revenue shortfalls try to increase revenue streams as online sales have been surging in all the ASEAN countries.
A new report says that cloud technology has the potential to modernize and empower communities across the ASEAN region and that it is expected to grow by 117% in the Asia Pacific from 2019-2024. Cloud technology needs minimal infrastructure and investment and allows businesses to operate at scale very quickly and this makes it very attractive to emerging economies. However, the report says that the digital divide is a major impediment to the growth and use of cloud technology in ASEAN. Some ASEAN members are being left behind in the digitization of their countries due to unreliable power supplies and unstable internet provision. ASEAN member states also need to keep focusing on education and computer literacy to ensure continued growth of cloud technology in the region.
Foreign Worker Utilization Plan
Indonesia released new implementing regulations for the Omnibus Law that will make the process of hiring foreigners much easier. There are now new authorization categories for the Foreign Worker Utilization Plan (RPTKA) that is the first step of acquiring a work permit in Indonesia. An RPTKA is a detailed employment plan for a foreign worker that includes their position and length of employment. Additionally, the RPTKA requirement will be waived for directors or commissioners who are shareholders and diplomatic and consular officers, and foreign workers in Indonesia tech-based startups will be exempt for three months after which the company must apply for an RPTKA.
Indonesia-Singapore Investment Treaty
The Indonesia-Singapore Bilateral Investment Treaty (BIT) came into effect on March 9, 2021, and updates the rules on investments from both countries, introduces a multi-tiered dispute resolution mechanism, and broadens the criteria for the protection of investments. It replaces the previous 2006 BIT which expired in 2016 and complements the Double Taxation Agreement between the two countries that was updated in 2020. Bilateral trade between Indonesia and Singapore reached US$36.3 billion in 2020 and, despite the pandemic; Singapore is still Indonesia’s top source of foreign investment. Two-way investments are expected to grow by 18 to 22% over the next five years.
New Business Registration Procedures
New regulations on enterprise registration in Vietnam came into force earlier this year and simplify registration procedures for businesses. Experts believe that Vietnam’s government will continue to amend enterprise regulations due to the country’s strong economic growth and rising foreign investment. Business establishment in Vietnam has been hampered by complex procedures and regulations in the past, so the government is focusing on business regulation amendments in order to improve economic development and foreign investment inflows. The key changes include enterprise code integration, exemption of hard copy document requirements, ability to appeal if enterprise name registration is rejected, and fees refund for unsuccessful registrations.
Inclusive Business Report
Cambodia launched the Inclusive Business Landscape Study Report this month and is the first ASEAN country to adopt the ASEAN model for inclusive businesses. Inclusive businesses are sustainable business entities that productively integrate low-income populations into their value chain. The Cambodian government says that the study report will have an impact on the development of human resources and the exchange of experiences on the landscape of inclusive businesses in Cambodia and ASEAN. The guidelines for the promotion of inclusive businesses were signed by all ASEAN member states in September 2020.
Intellectual Property MOU
Intellectual property (IP) leaders in the Philippine government and business community signed a memorandum of understanding (MOU) to counter piracy and counterfeiting on e-commerce platforms in the Philippines. The MOU will establish codes of best practices among online retailers to help restrict online IP infringement through self-regulation. Measures include notice and takedown procedures that IP owners can use to inform e-commerce sites about pirated products and infringing goods being sold. Feedback mechanisms between e-commerce sites and IP owners will also be strengthened.
Business Resilience Survey
A recent survey by a professional accounting body in Australia found that Singapore businesses have been more resilient than their ASEAN counterparts during the COVID-19 pandemic. The survey shows that Singaporean business resiliency was mainly due to going digital as most businesses earned revenue from online sales, used social media to promote their business, and adopted new digital payment technologies.
THAILAND LEGAL REVIEW
The Ministry of Public Health announced the names of 11 countries that have been deemed to be carrying new Covid-19 mutations. Any people arriving from these countries will still be required to do the full 14-day quarantine when they arrive in Thailand. Effective April 1, 2021 onwards, the quarantine period will be reduced for all other travelers, but some restrictions will still remain.
The 11 countries on the African continent that will still be required to complete the full 14-day quarantine:
• South Africa
The Ministry of Public Health also announced that they will update the quarantine list every two weeks. As Covid-19 variants are still being discovered all over the world, the Ministry plans to regularly change the list to reflect current conditions. The efficacy of the current Covid-19 vaccines in limiting the symptoms of infection will also be taken into account.
Corporate Law News
Request for Tax Filing and Tax Payment via Electronic System with the Department of Business Development
From February 1, 2021, any business operator that wants to register a business entity’s establishment with the Department of Business Development (the “DBD”) and/or wants to apply for tax filing and tax payment via the electronic system with the Revenue Department (the “RD”) are now able to make both requests to the DBD simultaneously. The main requirement to be used with the DBD is a request form in compliance with the Notification of the Director-General of the RD, dated January 18, 2021, (the “Notification”), and filing this form shall be deemed as making a request for tax filing and tax payment via the electronic system with the RD.
The process of making a request for tax filing and tax payment via the electronic system with the DBD is summarized as follows:
(1) A business operator who wants to register a business entity’s establishment submits the required request form for tax filing and tax payment via the electronic system under the Notification, together with the incorporation document set to the DBD
(2) Once the DBD approves such request, this shall be deemed as such business operator having appeared before the RD’s competent officer. The DBD will be responsible for submitting such request to the RD
(3) The company or juristic partnership that has made the request for tax filing and tax payment via the electronic system shall confirm and accept the terms via the e-mail address as listed in the incorporation document set within 15 days from the date as received from the RD
(4) The RD will send the Username and Password to the company or juristic partnership via the e-mail address within 15 days
If the company or juristic partnership fails to perform the duty as mentioned in (3) above, the request for tax filing and tax payment submitted to the DBD shall not be approved, and such company or juristic partnership will have to make a new request via the RD’s website.
VAT for Foreign e-Service Providers
Under Revenue Code Amendment Act (No.53) that came into effect on February 11, 2021, foreign e-service providers with an annual turnover exceeding 1.8 Million Baht from providing such e-services in Thailand shall be subject to value-added tax (VAT) registration. This means that the foreign e-service provider listed below shall be responsible for tax filing and tax payment the same as Thai VAT registrants. The imposition of VAT will become effective from September 1, 2021.
(1) A foreign e-service provider who provides such e-service in Thailand to a non-VAT registrant (“Foreign e-Service Provider”). In this case, such e-service provider shall be subject to paying VAT by calculating output tax without deducting input tax.
(2) An e-platform operator providing services such as a market, channel, or any other procedure for a large number of Foreign e-Service Providers. Such e-platforms services include a continuous process comprising offering services, receiving payment for services, delivering services, and other processes as prescribed by the Director-General of the RD. In this case, such e-platform operator shall be subject to paying VAT in place of all such Foreign e-Service Providers without having to classify each business person’s service provision details.
Both Foreign e-Service Providers and e-platform operators as mentioned above will have no responsibility for the issuance of tax invoices.
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.