10 Nov ASEAN Today – Regional Legal and Business News – October 2020
ASEAN Today – Regional Legal and Business News for October 2020 including an Immigration Update on the Amnesty Visa and an overview of the Repeal of the DBD’s Measure Allowing Businesses to Postpone Convening Meetings as Required by Law and the Additional Income Tax Reduction of up to THB 30,000 for Individuals.Download PDF
ASEAN Economic Community News
Regional Green Investment
A new report by a regional development bank says that ASEAN countries need to invest US$3.1 trillion into climate-adjusted infra- structure in the region to recover from the pandemic. The bank maintains that the investments are needed to develop and grow green economies and create jobs for 650 million people and should be financed by innovative, environmentally sustainable, and climate-resilient financing instruments such as green and transition Covid-19 bonds, blue credits, and green securitization efforts. Green finance also aims to reduce greenhouse-gas emissions, boost climate resilience, and improve environmental protection, such as air and water quality, ecosystems and biodiversity. The report says that countries in Southeast Asia show some of the most visible manifestations of the overuse and pollution of natural capital resources and that half of the plastic entering the world’s oceans can be traced to five countries, of which four are in ASEAN. Additionally, according to the Global Climate Risk Index, Myanmar, the Philippines, Thailand, and Vietnam rank in the top 10 countries affected by extreme weather due to climate change over the past 20 years.
A global credit ratings agency says that banks in the ASEAN member states will not be able to accurately calculate the impact of the COVID-19 crisis on banks’ asset quality because the extension of schemes to support borrowers in region will continue to obscure the extent of deterioration in regional banks’ asset quality. However, once the relief programs start scaling back, banks will be able to quantify the scale of non-performing loans and there will also be a reduction in the volume of lending under moratorium. This will provide greater clarity on the impact of the COVID-19 crisis on banks’ asset quality, but the agency warns that this could reveal worse than expected bad debt problems, especially in ASEAN countries experiencing sharper economic downturns.
ASEAN Customs Transit System
The ASEAN Customs Transit System (ACTS), a single cross-border transit regime, will launch in early November 2020 and will be implemented in Cambodia, Laos, Malaysia, Singapore, Thailand and Vietnam. ACTS is part of the ASEAN Framework Agreement on Facilitation of Goods in Transit (AFAFGIT). It is a computerized customs transit management system that allows operators to move goods across borders without having to pay the required duties and taxes otherwise due when the goods enter or leave a country and are only required to complete/pay one final customs formality. ACTS is an administratively simple and cost advantageous procedure to carry goods across territories outside the normal import and export customs regimes.
Multilateral Tax Compliance
Singapore plans to amend the Income Tax Act so that the country can participate in multilateral tax compliance programs that will benefit companies headquartered in Singapore or that run their regional hub operations there. The proposed amendments include allowing for the disclosure of any information relating to any person to an authorized officer of the government of another country if express written consent is provided. Effective tax administration together with international cooperation, tax certainty, consistency, and currency are becoming increasingly important deciding factors when companies are comparing two similar locations.
Digital Trade Portals
MyanTrade, Myanmar’s trade promotion agency under the Ministry of Commerce, launched a new website this month to promote trade between local and international businesses. The website includes features such as information, guidelines, and live chats for local businesses interested in expanding overseas and is also a portal for foreign traders wanting to obtain products made in Myanmar. Myanmar also plans to launch an online portal that will enable all paperwork and payments to be completed digitally. Administrative procedures including applications and payments for import and export permits can be done online at the Myanmar Tradenet 2.0 portal with such documents being issued digitally.
Under the Corporate Recovery and Tax Incentives for Enterprises (CREATE), the second package of the country’s pending comprehensive tax reforms, the Philippines hopes to boost investments into renewable energy through generous tax perks. The country wants to decrease its reliance on carbon-based energy and recently imposed a moratorium on new coal-fired power plants. CREATE includes performance-based fiscal incentives and the government also plans to steer private capital towards new investments in green energy. CREATE will also lower corporate income tax from 30% to 25% for eligible businesses. Currently, the Philippines has the highest corporate income tax rate in ASEAN.
Power Integration Project
The Lao-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) launched in 2014 without Singapore being a signatory and the project began sending electricity from Laos to Malaysia via Thailand’s electrical grid in 2018. Singapore will sign the memorandum of understanding for LTMS-PIP at the 38th ASEAN Ministers on Energy Meeting in November 2020 and the project will then become fully operational. For the first two years, Singapore will import 100 MW annually and during this time will upgrade the existing cables between Peninsular Malaysia and Singapore and improve their existing technical and regulatory frameworks. The LTMS-PIP is the first step in the regional integration goals in the ASEAN Power Grid vision. A new report by the ASEAN Centre of Energy predicts that energy demand in ASEAN will increase by more than 70% between 2020 and 2040.
New Jobs Law
Indonesia’s parliament passed a controversial and sweeping jobs law this month that is intended to simplify the country’s complex overlapping regulations and make it easier for companies to do business in Indonesia. The new jobs law makes changes to over 70 laws in the labor, business, and environmental sectors, but critics say that it will have an adverse effect on Indonesia’s economy and a disastrous impact on the country’s forests and rich biodiversity as the law loosens environmental protections and could lead to widespread deforestation and habitat loss.
New Business Procedures Reform
Under Decree 122/2020/ND-CP which came into effect on October 15, 2020, the time needed to start a business in Vietnam has shifted from 16 days to 6 days. Now, there are only three procedures a business needs to complete; specifically, 3 days to handle business registration procedures, 2 days for opening a bank account, and 1 day for the issuance of invoices. Previously, businesses had to complete eight procedures in 16 days. The decree also reduced the required administrative procedures. Now, businesses only need to submit one set of documents at the business registration agency instead of four sets of documents at four different agencies. The World Bank’s Ease of Doing Business Report 2020 ranks Vietnam at 115 out of 190 countries; and the government’s goal is to move Vietnam up 10-15 spots in the global rankings and move from 6th to 4th in the ASEAN rankings.
THAILAND LEGAL REVIEW
Extension of State of Emergency
The Thai Cabinet decided to officially extend the State Emergency Decree for one more month until November 30, 2020. The extension was necessary because COVID-19 is still spreading in many other countries around the world and infections continue to rise. Certain countries are still in lockdown and this impacts international travel.
The Ministry of Interior issued the Letter to the Ministry of Foreign Affairs (MFA) dated October 26, 2020: “To request the cooperation from the MFA to inform the foreign Embassies in Thailand regarding the special automated visa extension for foreigners in Thailand (amnesty visa).” Our summary of the Letter to the MFA:
1. Reference is made to the Ministry of Interior Announcement dated September 30, 2020, permitting foreigners who are stranded in Thailand because of the COVID-19 situation to apply for visa extensions until October 31, 2020.
2. With this Letter, the Ministry of Interior does NOT agree to extend the special automatic visa extension for foreigners in Thailand (amnesty visa) any further. This amnesty visa ended on October 31, 2020.
3. Foreigners who wish to continue staying in the Kingdom after October 31, 2020, must apply for a visa extension before October 31, 2020. If applying after October 31, 2020, foreigners must pay an overstaying fine penalty according to the number of days of non-compliance after October 31 until the visa extension can be properly made with the Immigration Authority.
4. After the fine payment is paid, for visa extensions after October 31, 2020, the application must be filed within 90 days. Any delay after 90 days (from October 31, 2020) will be considered as intentionally committing an overstay and will be subject to the regulations under the Immigration Law, which could result in deportation and being banned from entering Thailand.
5. Foreigners who file a delayed 90-day report after October 31, 2020 must pay fine payment for the delayed filing.
Corporate Law News
Update on the Payment of Stamp Duty for Electronic Instruments
The Revenue Department has published the Notification regarding Revenue Stamp (No. 60) placed upon the following electronic instruments made between September 29, 2020, and December 31, 2020, to be subject to a payment of stamp duty via (i) the Revenue Department’s Website or (ii) the Application Programming Interface:
1. Hire of work agreement
2. Loan agreement or bank overdraft agreement
3. Power of Attorney
4. Proxy for voting at a meeting
5. Suretyship contract
The payment must be done before an instrument is executed or within 15 days from the following day of an instrument’s execution. After the payment is made, the competent official shall issue a code and receipt with its electronic signature evidencing the payment was made.
Additional Income Tax Reduction of up to THB 30,000 for Individuals
The Notification of the Director-General of the Revenue Department on Income Tax (No. 390) grants a personal income tax reduction of up to THB 30,000 for any individuals purchasing products and services with a 7% VAT in the country from October 23, 2020 to December 31, 2020. To be eligible for such reduction, individuals shall be subject to the following conditions as summarized below:
1) Taxpayers shall be individuals excluding i) Non-registered ordinary partnerships, ii) Non-juristic groups of persons, iii) Individuals who have already registered for the “Let’s Go Halves” scheme, and iv) Individuals who have already registered for the welfare card scheme
2) The amount to be claimed for tax allowance shall be on the basis of actual payment, but not exceeding THB 30,000
3) Products and services shall be domestically purchased and paid for between October 23, 2020 and December 31, 2020, for the following:
a. Registered VAT operators
b. Book or e-Book excluding newspapers and magazines
c. One Tambon One Product (OTOP) which shall have already registered with the Community Development Department
4) The products and services as mentioned in 3) above do not include:
• Alcoholic beverages, beer, or wine
• Tobacco products
• Fuel oil and gas
• Automobiles, motorcycles, or boats
• Newspapers and magazines, including the same provided in electronic form through the internet
• Any expenses paid to a tourism business operator
5) Evidence to be shown to the Revenue Department includes i) Full-version tax invoice under Section 86/4 of the Revenue Code (In case of VAT registered operators), or ii) Receipt contained information under Section 105 Bis of the Revenue Code, together with full name of the purchaser or service recipient (In case of non-VAT registered operators, i.e., book/e-book, or OTOP)
Repeal of the DBD’s Measure to Support Business Operators Impacted by the Outbreak of COVID-19 in Convening Meetings as Required by Law
The Notification of the Department of Business Development (DBD) of November 2, 2020, repeals the DBD’s March 4, 2020 Notification regarding the measure to support juristic entities who were impacted by COVID-19 in convening meetings as required by law (annual general meeting of shareholders or board of director meeting) and will come into force from December 1, 2020 onwards.
As such, any limited companies, public limited companies, trade associations, and chambers of commerce (“Juristic Entities”) having the accounting period before or within July 31, 2020, and have not yet convened the said meeting, must complete the matter by November 30, 2020. Such Juristic Entities shall also submit the list of shareholders and attach their financial statement within the required period of time as the case may be. In addition, such Entities are still required to submit the clarification letter with the reasons for the interruption in convening the meeting to the Registrar by January 4, 2021.
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.