Dbriefs Bytes

1. Japan • Prime Minister Abe’s tax reform statement on 1 October 2013 • Rate of consumption tax (i.e., VAT) will increase from 5% to 8%, effective 1 April 2014 • Major fiscal stimulus - Corporate income tax reductions + Effective tax rate (for a large company based in Tokyo) will decrease from 38% to 36.5%, effective 1 April 2014 + R&D credit: extended scope + Tax incentives to encourage investment in equipment and to encourage increased employee wages - Increased government spending + Subsidies to low income earners + Major public works program • For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp • For Steve’s interview with CNBC: http://video.cnbc.com/gallery/?play=1&video=3000203341 2. China • Shanghai Pilot Free Trade Zone - Formally opened on 29 September 2013 - “Negative” list of foreign investment areas + For our online Zone hub: www.deloitte.com/cn/pftz_en + For information: Vivian Jiang (Shanghai): vivjiang@deloitte.com.cn Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn • R&D (Bulletin 70) - Bulletin 70: expands scope of R&D expenses which are eligible for the extra 50% deduction - Effective from 1 January 2013 + For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 3. Mauritius • Conditions changed for Category 1 Global Business Company, in order to ensure a greater level of substance in Mauritius • Financial Services Commission will take into account an additional list of factors • Start date is 1 January 2015 • For information: Twaleb Butonkee (Mauritius): tbutonkee@deloitte.com 4. India • GAAR - Central Board of Direct Taxes has issued “rules” in regard to the GAAR provisions - Exclusion from GAAR provisions + De minimis level + Foreign Institutional Investors (FIIs) + Non-residents with offshore derivative investments in FIIs – e.g., P-notes + Grandfathering exemption: 30 August 2010 - Procedural requirements + Procedures and timetable for a GAAR assessment to be raised + Objections by the taxpayer - For information : K.R. Sekar (Bangalore): krsekar@deloitte.com • Nokia - Order of Delhi High Court regarding payment of dividends or transferring physical assets 5. In brief • Japan / New Zealand treaty - Will enter into force on 25 October 2013 • Korea - Government has announced several tax reform proposals for 2014 - For information: Gyung Ho Kim (Seoul): gykim@deloitte.com • India: Bayer case - Mumbai Income Tax Appellate Tribunal - Transaction in regard to IP was held to be for the use of, or the right to use, IP (and thus the payment was a royalty), and not a capital gains transaction - For information: Sunil Shah (Mumbai): sunilshah@deloitte.com And also: - For Deloitte’s submission to the OECD regarding the intangibles discussion draft: http://deloitte-ap.12hna.com/DbriefsAP/Deloitte_Response_OECD_Revised_Discussion_Draft_on_Intangibles_29.9.13.pdf

1. Japan • Prime Minister Abe’s tax reform statement on 1 October 2013 • Rate of consumption tax (i.e., VAT) will increase from 5% to 8%, effective 1 April 2014 • Major fiscal stimulus - Corporate income tax reductions + Effective tax rate (for a large company based in Tokyo) will decrease from 38% to 36.5%, effective 1 April 2014 + R&D credit: extended scope + Tax incentives to encourage investment in equipment and to encourage increased employee wages - Increased government spending + Subsidies to low income earners + Major public works program • For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp • For Steve’s interview with CNBC: www.deloitte.com/ap/dbriefs/bytes 2. China • Shanghai Pilot Free Trade Zone - Formally opened on 29 September 2013 - “Negative” list of foreign investment areas + For our online Zone hub: www.deloitte.com/cn/pftz_en + For information: Vivian Jiang (Shanghai): vivjiang@deloitte.com.cn Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn • R&D (Bulletin 70) - Bulletin 70: expands scope of R&D expenses which are eligible for the extra 50% deduction - Effective from 1 January 2013 + For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 3. Mauritius • Conditions changed for Category 1 Global Business Company, in order to ensure a greater level of substance in Mauritius • Financial Services Commission will take into account an additional list of factors • Start date is 1 January 2015 • For information: Twaleb Butonkee (Mauritius): tbutonkee@deloitte.com 4. India • GAAR - Central Board of Direct Taxes has issued “rules” in regard to the GAAR provisions - Exclusion from GAAR provisions + De minimis level + Foreign Institutional Investors (FIIs) + Non-residents with offshore derivative investments in FIIs – e.g., P-notes + Grandfathering exemption: 30 August 2010 - Procedural requirements + Procedures and timetable for a GAAR assessment to be raised + Objections by the taxpayer - For information : K.R. Sekar (Bangalore): krsekar@deloitte.com • Nokia - Order of Delhi High Court regarding payment of dividends or transferring physical assets 5. In brief • Japan / New Zealand treaty - Will enter into force on 25 October 2013 • Korea - Government has announced several tax reform proposals for 2014 - For information: Gyung Ho Kim (Seoul): gykim@deloitte.com • India: Bayer case - Mumbai Income Tax Appellate Tribunal - Transaction in regard to IP was held to be for the use of, or the right to use, IP (and thus the payment was a royalty), and not a capital gains transaction - For information: Sunil Shah (Mumbai): sunilshah@deloitte.com And also: - For Deloitte’s submission to the OECD regarding the intangibles discussion draft: www.deloitte.com/ap/dbriefs/bytes

1. Japan • Prime Minister Abe’s tax reform statement on 1 October 2013 • Rate of consumption tax (i.e., VAT) will increase from 5% to 8%, effective 1 April 2014 • Major fiscal stimulus - Corporate income tax reductions + Effective tax rate (for a large company based in Tokyo) will decrease from 38% to 36.5%, effective 1 April 2014 + R&D credit: extended scope + Tax incentives to encourage investment in equipment and to encourage increased employee wages - Increased government spending + Subsidies to low income earners + Major public works program • For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp • For Steve’s interview with CNBC: www.deloitte.com/ap/dbriefs/bytes 2. China • Shanghai Pilot Free Trade Zone - Formally opened on 29 September 2013 - “Negative” list of foreign investment areas + For our online Zone hub: www.deloitte.com/cn/pftz_en + For information: Vivian Jiang (Shanghai): vivjiang@deloitte.com.cn Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn • R&D (Bulletin 70) - Bulletin 70: expands scope of R&D expenses which are eligible for the extra 50% deduction - Effective from 1 January 2013 + For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 3. Mauritius • Conditions changed for Category 1 Global Business Company, in order to ensure a greater level of substance in Mauritius • Financial Services Commission will take into account an additional list of factors • Start date is 1 January 2015 • For information: Twaleb Butonkee (Mauritius): tbutonkee@deloitte.com 4. India • GAAR - Central Board of Direct Taxes has issued “rules” in regard to the GAAR provisions - Exclusion from GAAR provisions + De minimis level + Foreign Institutional Investors (FIIs) + Non-residents with offshore derivative investments in FIIs – e.g., P-notes + Grandfathering exemption: 30 August 2010 - Procedural requirements + Procedures and timetable for a GAAR assessment to be raised + Objections by the taxpayer - For information : K.R. Sekar (Bangalore): krsekar@deloitte.com • Nokia - Order of Delhi High Court regarding payment of dividends or transferring physical assets 5. In brief • Japan / New Zealand treaty - Will enter into force on 25 October 2013 • Korea - Government has announced several tax reform proposals for 2014 - For information: Gyung Ho Kim (Seoul): gykim@deloitte.com • India: Bayer case - Mumbai Income Tax Appellate Tribunal - Transaction in regard to IP was held to be for the use of, or the right to use, IP (and thus the payment was a royalty), and not a capital gains transaction - For information: Sunil Shah (Mumbai): sunilshah@deloitte.com And also: - For Deloitte’s submission to the OECD regarding the intangibles discussion draft: www.deloitte.com/ap/dbriefs/bytes

1. Japan • Prime Minister Abe’s tax reform statement on 1 October 2013 • Rate of consumption tax (i.e., VAT) will increase from 5% to 8%, effective 1 April 2014 • Major fiscal stimulus - Corporate income tax reductions + Effective tax rate (for a large company based in Tokyo) will decrease from 38% to 36.5%, effective 1 April 2014 + R&D credit: extended scope + Tax incentives to encourage investment in equipment and to encourage increased employee wages - Increased government spending + Subsidies to low income earners + Major public works program • For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp • For Steve’s interview with CNBC: www.deloitte.com/ap/dbriefs/bytes 2. China • Shanghai Pilot Free Trade Zone - Formally opened on 29 September 2013 - “Negative” list of foreign investment areas + For our online Zone hub: www.deloitte.com/cn/pftz_en + For information: Vivian Jiang (Shanghai): vivjiang@deloitte.com.cn Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn • R&D (Bulletin 70) - Bulletin 70: expands scope of R&D expenses which are eligible for the extra 50% deduction - Effective from 1 January 2013 + For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 3. Mauritius • Conditions changed for Category 1 Global Business Company, in order to ensure a greater level of substance in Mauritius • Financial Services Commission will take into account an additional list of factors • Start date is 1 January 2015 • For information: Twaleb Butonkee (Mauritius): tbutonkee@deloitte.com 4. India • GAAR - Central Board of Direct Taxes has issued “rules” in regard to the GAAR provisions - Exclusion from GAAR provisions + De minimis level + Foreign Institutional Investors (FIIs) + Non-residents with offshore derivative investments in FIIs – e.g., P-notes + Grandfathering exemption: 30 August 2010 - Procedural requirements + Procedures and timetable for a GAAR assessment to be raised + Objections by the taxpayer - For information : K.R. Sekar (Bangalore): krsekar@deloitte.com • Nokia - Order of Delhi High Court regarding payment of dividends or transferring physical assets 5. In brief • Japan / New Zealand treaty - Will enter into force on 25 October 2013 • Korea - Government has announced several tax reform proposals for 2014 - For information: Gyung Ho Kim (Seoul): gykim@deloitte.com • India: Bayer case - Mumbai Income Tax Appellate Tribunal - Transaction in regard to IP was held to be for the use of, or the right to use, IP (and thus the payment was a royalty), and not a capital gains transaction - For information: Sunil Shah (Mumbai): sunilshah@deloitte.com And also: - For Deloitte’s submission to the OECD regarding the intangibles discussion draft: www.deloitte.com/ap/dbriefs/bytes

1. Cases - Philippines: Deutsche Bank • Supreme Court • Philippines branch remitted profits to German head office, withholding 15% branch profit remittance tax (domestic law rate) • Philippines / Germany treaty limits the rate to 10% • Branch did not comply with domestic law administrative procedure for treaty benefits • Taxpayer sought refund of 5% tax • Court: Non-compliance with administrative procedure does not disentitle taxpayer to treaty benefits, as treaty is superior law • Also, Court held that taxpayer did not breach administrative procedure, because branch withheld at domestic law rate For information: Fredieric Landicho (Taguig): flandicho@deloitte.com 2. Treaties - China / Switzerland • New treaty signed on 25 September • Protocol contains a provision on Business Tax and VAT • Treaty and protocol signed in "Peking"! - Australia / India • 2011 protocol has entered into force - China / Bahrain • Protocol signed on 16 September 3. BEPS - Singapore conference • OECD: There are situations where the arm's length principle does not give rise to a "coherent" tax policy, because it leads to double non-taxation • IMF: It may be too early to completely reject formulary apportionment - San Francisco conference • U.S. Treasury officials i. Opposed to "virtual PE" proposal of French government ii. BEPS Project should not drift into broader question of reviewing source vs. residence taxation - New York conference • Pascal Saint-Amans (OECD) i. "Agnostic" view of the sanctity of the arm's length principle ii. Scoping papers for Actions 9 and 10 will be issued "soon" 4. Taiwan: Free Economic Pilot Zone - First stage approved by Executive Yuan on 8 August 2013 - Targeting high-end services: logistics, international medical services, and value-added agricultural processing - Tax exemption and 10% tax rate offered for qualifying income For information: Cheli Liaw (Taipei): cheliliaw@deloitte.com.tw 5. In brief - China • Bulletin 52: VAT exemption on exported services • For information: Vicky Wang (Shanghai) or Ye Hong (Shanghai) - OECD • Public consultation on intangibles discussion paper: Paris on 12 and 13 November - Japan • Prime Minister Abe is expected to announce final decision next week on timing of consumption tax increases • Media speculation that he will also announce corporate income tax rate reductions For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp

1. Cases - Philippines: Deutsche Bank • Supreme Court • Philippines branch remitted profits to German head office, withholding 15% branch profit remittance tax (domestic law rate) • Philippines / Germany treaty limits the rate to 10% • Branch did not comply with domestic law administrative procedure for treaty benefits • Taxpayer sought refund of 5% tax • Court: Non-compliance with administrative procedure does not disentitle taxpayer to treaty benefits, as treaty is superior law • Also, Court held that taxpayer did not breach administrative procedure, because branch withheld at domestic law rate For information: Fredieric Landicho (Taguig): flandicho@deloitte.com 2. Treaties - China / Switzerland • New treaty signed on 25 September • Protocol contains a provision on Business Tax and VAT • Treaty and protocol signed in "Peking"! - Australia / India • 2011 protocol has entered into force - China / Bahrain • Protocol signed on 16 September 3. BEPS - Singapore conference • OECD: There are situations where the arm's length principle does not give rise to a "coherent" tax policy, because it leads to double non-taxation • IMF: It may be too early to completely reject formulary apportionment - San Francisco conference • U.S. Treasury officials i. Opposed to "virtual PE" proposal of French government ii. BEPS Project should not drift into broader question of reviewing source vs. residence taxation - New York conference • Pascal Saint-Amans (OECD) i. "Agnostic" view of the sanctity of the arm's length principle ii. Scoping papers for Actions 9 and 10 will be issued "soon" 4. Taiwan: Free Economic Pilot Zone - First stage approved by Executive Yuan on 8 August 2013 - Targeting high-end services: logistics, international medical services, and value-added agricultural processing - Tax exemption and 10% tax rate offered for qualifying income For information: Cheli Liaw (Taipei): cheliliaw@deloitte.com.tw 5. In brief - China • Bulletin 52: VAT exemption on exported services • For information: Vicky Wang (Shanghai) or Ye Hong (Shanghai) - OECD • Public consultation on intangibles discussion paper: Paris on 12 and 13 November - Japan • Prime Minister Abe is expected to announce final decision next week on timing of consumption tax increases • Media speculation that he will also announce corporate income tax rate reductions For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp

1. Cases - Philippines: Deutsche Bank • Supreme Court • Philippines branch remitted profits to German head office, withholding 15% branch profit remittance tax (domestic law rate) • Philippines / Germany treaty limits the rate to 10% • Branch did not comply with domestic law administrative procedure for treaty benefits • Taxpayer sought refund of 5% tax • Court: Non-compliance with administrative procedure does not disentitle taxpayer to treaty benefits, as treaty is superior law • Also, Court held that taxpayer did not breach administrative procedure, because branch withheld at domestic law rate For information: Fredieric Landicho (Taguig): flandicho@deloitte.com 2. Treaties - China / Switzerland • New treaty signed on 25 September • Protocol contains a provision on Business Tax and VAT • Treaty and protocol signed in "Peking"! - Australia / India • 2011 protocol has entered into force - China / Bahrain • Protocol signed on 16 September 3. BEPS - Singapore conference • OECD: There are situations where the arm's length principle does not give rise to a "coherent" tax policy, because it leads to double non-taxation • IMF: It may be too early to completely reject formulary apportionment - San Francisco conference • U.S. Treasury officials i. Opposed to "virtual PE" proposal of French government ii. BEPS Project should not drift into broader question of reviewing source vs. residence taxation - New York conference • Pascal Saint-Amans (OECD) i. "Agnostic" view of the sanctity of the arm's length principle ii. Scoping papers for Actions 9 and 10 will be issued "soon" 4. Taiwan: Free Economic Pilot Zone - First stage approved by Executive Yuan on 8 August 2013 - Targeting high-end services: logistics, international medical services, and value-added agricultural processing - Tax exemption and 10% tax rate offered for qualifying income For information: Cheli Liaw (Taipei): cheliliaw@deloitte.com.tw 5. In brief - China • Bulletin 52: VAT exemption on exported services • For information: Vicky Wang (Shanghai) or Ye Hong (Shanghai) - OECD • Public consultation on intangibles discussion paper: Paris on 12 and 13 November - Japan • Prime Minister Abe is expected to announce final decision next week on timing of consumption tax increases • Media speculation that he will also announce corporate income tax rate reductions For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp

1. India • India / U.S. competent authority relationship - Proposed meetings: 4 to 6 per year • India’s APA program - July 2012 to 31 March 2013: 146 applications (mostly from U.S. groups and mostly for unilateral APAs) - Site visits - Art. 7 profit attribution - No bilateral APA where the treaty does not have Art. 9(2): this policy will be reviewed - Safe harbor margins are not considered to be arm’s length - No “roll-back” For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • Final transfer pricing “safe harbor” rules - Rules will apply for 5 years - Financial value ceilings have been relaxed for IT services, IT-enabled services, corporate guarantees, and knowledge process outsourcing (KPO) For information: Rakesh Alshi (Mumbai): ralshi@deloitte.com • Indian-based fund managers of offshore funds - Proposed law change: presence of Indian-based fund manager will be deemed not to cause offshore fund to have a business connection, or a PE, in India For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 2. Cases • Indonesia: Bekaert - Indonesian subsidiary of Dutch parent: related party debt to equity ratio of 4.4 to 1 considered non-arm’s length - Application of Indonesia’s “debt to equity re-characterization” rules: calculation of “hidden capital” - Interest on the “hidden capital” is non-deductible and subject to dividend withholding tax For information: Nazly Siregar (Jakarta): nsiregar@deloitte.com • India: Raheja - Swiss resident sells units in Indian unit trust - Tax authorities assert that the profit is permitted to be taxed in India under Art. 13(5) of the India / Switzerland treaty: alienation of shares in a company resident in India - Tribunal: Art. 13(5) does not apply, because units in a unit trust are not shares in a company - Thus, Art. 13(6) exempts Swiss resident from Indian tax For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 3. In brief • Treaties - Philippines / Germany + New treaty signed on 9 September (to replace existing 1983 treaty) + General reduction in dividend, interest, and royalty withholding tax rates - India / Latvia + New treaty signed on 18 September • Japan - Still waiting for decision on phase-in of consumption tax rate increases - Capital gains tax rate (for individuals) will increase from 10% to 20% on 1 January 2014 + Will there be a large sale of shares in November and December? For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp Linda Ng (New York): ling@deloitte.com • China - SAT has issued Bulletin 53 (guidelines on Hong Kong residency certificates required for claiming benefits under the China / Hong Kong double tax arrangement) For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn

1. India • India / U.S. competent authority relationship - Proposed meetings: 4 to 6 per year • India’s APA program - July 2012 to 31 March 2013: 146 applications (mostly from U.S. groups and mostly for unilateral APAs) - Site visits - Art. 7 profit attribution - No bilateral APA where the treaty does not have Art. 9(2): this policy will be reviewed - Safe harbor margins are not considered to be arm’s length - No “roll-back” For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • Final transfer pricing “safe harbor” rules - Rules will apply for 5 years - Financial value ceilings have been relaxed for IT services, IT-enabled services, corporate guarantees, and knowledge process outsourcing (KPO) For information: Rakesh Alshi (Mumbai): ralshi@deloitte.com • Indian-based fund managers of offshore funds - Proposed law change: presence of Indian-based fund manager will be deemed not to cause offshore fund to have a business connection, or a PE, in India For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 2. Cases • Indonesia: Bekaert - Indonesian subsidiary of Dutch parent: related party debt to equity ratio of 4.4 to 1 considered non-arm’s length - Application of Indonesia’s “debt to equity re-characterization” rules: calculation of “hidden capital” - Interest on the “hidden capital” is non-deductible and subject to dividend withholding tax For information: Nazly Siregar (Jakarta): nsiregar@deloitte.com • India: Raheja - Swiss resident sells units in Indian unit trust - Tax authorities assert that the profit is permitted to be taxed in India under Art. 13(5) of the India / Switzerland treaty: alienation of shares in a company resident in India - Tribunal: Art. 13(5) does not apply, because units in a unit trust are not shares in a company - Thus, Art. 13(6) exempts Swiss resident from Indian tax For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 3. In brief • Treaties - Philippines / Germany + New treaty signed on 9 September (to replace existing 1983 treaty) + General reduction in dividend, interest, and royalty withholding tax rates - India / Latvia + New treaty signed on 18 September • Japan - Still waiting for decision on phase-in of consumption tax rate increases - Capital gains tax rate (for individuals) will increase from 10% to 20% on 1 January 2014 + Will there be a large sale of shares in November and December? For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp Linda Ng (New York): ling@deloitte.com • China - SAT has issued Bulletin 53 (guidelines on Hong Kong residency certificates required for claiming benefits under the China / Hong Kong double tax arrangement) For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn

1. India • India / U.S. competent authority relationship - Proposed meetings: 4 to 6 per year • India’s APA program - July 2012 to 31 March 2013: 146 applications (mostly from U.S. groups and mostly for unilateral APAs) - Site visits - Art. 7 profit attribution - No bilateral APA where the treaty does not have Art. 9(2): this policy will be reviewed - Safe harbor margins are not considered to be arm’s length - No “roll-back” For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • Final transfer pricing “safe harbor” rules - Rules will apply for 5 years - Financial value ceilings have been relaxed for IT services, IT-enabled services, corporate guarantees, and knowledge process outsourcing (KPO) For information: Rakesh Alshi (Mumbai): ralshi@deloitte.com • Indian-based fund managers of offshore funds - Proposed law change: presence of Indian-based fund manager will be deemed not to cause offshore fund to have a business connection, or a PE, in India For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 2. Cases • Indonesia: Bekaert - Indonesian subsidiary of Dutch parent: related party debt to equity ratio of 4.4 to 1 considered non-arm’s length - Application of Indonesia’s “debt to equity re-characterization” rules: calculation of “hidden capital” - Interest on the “hidden capital” is non-deductible and subject to dividend withholding tax For information: Nazly Siregar (Jakarta): nsiregar@deloitte.com • India: Raheja - Swiss resident sells units in Indian unit trust - Tax authorities assert that the profit is permitted to be taxed in India under Art. 13(5) of the India / Switzerland treaty: alienation of shares in a company resident in India - Tribunal: Art. 13(5) does not apply, because units in a unit trust are not shares in a company - Thus, Art. 13(6) exempts Swiss resident from Indian tax For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 3. In brief • Treaties - Philippines / Germany + New treaty signed on 9 September (to replace existing 1983 treaty) + General reduction in dividend, interest, and royalty withholding tax rates - India / Latvia + New treaty signed on 18 September • Japan - Still waiting for decision on phase-in of consumption tax rate increases - Capital gains tax rate (for individuals) will increase from 10% to 20% on 1 January 2014 + Will there be a large sale of shares in November and December? For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp Linda Ng (New York): ling@deloitte.com • China - SAT has issued Bulletin 53 (guidelines on Hong Kong residency certificates required for claiming benefits under the China / Hong Kong double tax arrangement) For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn

1. Treaties - Korea / Luxembourg treaty: protocol entered into force on 4 September 2013 - Changes to dividend, interest, and royalty withholding tax rates - Deletion of Article 28 from treaty • Excludes certain Luxembourg holding companies from treaty benefits • Korean tax authorities have used Article 28 to deny treaty benefits to Luxembourg SICAVs and SICAFs (collective investment vehicles) • Deletion of Article 28 should avoid such disputes in future – however, existing disputes remain unresolved For information: Gyung Ho Kim (Seoul): gykim@deloitte.com 2. Cases - India: Reliance Infocom • Mumbai Income Tax Appellate Tribunal • Supply of software by Lucent (U.S. resident) to Indian company, relating to mobile telecom network • Tribunal held that payment for supply of software was a payment for the use of, or the right to use, copyright – and was therefore a "royalty" under Indian domestic tax law and the India / U.S. treaty • Commentators have criticized this decision, on the basis that it confuses copyright and copyrighted product For information: Rajesh Gandhi (Mumbai): rajegandhi@deloitte.com 3. China: Shanghai Free Trade Zone - High level of anticipation of the new Shanghai FTZ - Speculation that Hong Kong's competitive position might be damaged by the Shanghai FTZ For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 4. Indonesia - Government announces tax measures to provide cash flow advantages to certain labor-intensive companies - Measures apply to companies in specified industries • Textile industry • Apparel industry • Footwear industry • Children's toy industry For information: Nazly Siregar (Jakarta): nsiregar@deloitte.com 5. In brief - Vietnam: foreign individuals • Circular (11/2013) issued • For information: Tom McClelland (Ho Chi Minh): tmcclelland@deloitte.com - "Call me Mike" • Indian and U.S. competent authorities meet - Australia: change of government • New government does not control upper house of Parliament: impact on policies to repeal certain taxes? • Status of the previous government's announced, but not yet legislated, tax law changes? • Presidency of G20: strong or low key leadership position in regard to BEPS? • For information: David Watkins (Sydney): dwatkins@deloitte.com.au • For our report on the tax policies of the new Australian government: http://www.deloitte.com/ap/dbriefs/bytes

1. Treaties - Korea / Luxembourg treaty: protocol entered into force on 4 September 2013 - Changes to dividend, interest, and royalty withholding tax rates - Deletion of Article 28 from treaty • Excludes certain Luxembourg holding companies from treaty benefits • Korean tax authorities have used Article 28 to deny treaty benefits to Luxembourg SICAVs and SICAFs (collective investment vehicles) • Deletion of Article 28 should avoid such disputes in future – however, existing disputes remain unresolved For information: Gyung Ho Kim (Seoul): gykim@deloitte.com 2. Cases - India: Reliance Infocom • Mumbai Income Tax Appellate Tribunal • Supply of software by Lucent (U.S. resident) to Indian company, relating to mobile telecom network • Tribunal held that payment for supply of software was a payment for the use of, or the right to use, copyright – and was therefore a "royalty" under Indian domestic tax law and the India / U.S. treaty • Commentators have criticized this decision, on the basis that it confuses copyright and copyrighted product For information: Rajesh Gandhi (Mumbai): rajegandhi@deloitte.com 3. China: Shanghai Free Trade Zone - High level of anticipation of the new Shanghai FTZ - Speculation that Hong Kong's competitive position might be damaged by the Shanghai FTZ For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 4. Indonesia - Government announces tax measures to provide cash flow advantages to certain labor-intensive companies - Measures apply to companies in specified industries • Textile industry • Apparel industry • Footwear industry • Children's toy industry For information: Nazly Siregar (Jakarta): nsiregar@deloitte.com 5. In brief - Vietnam: foreign individuals • Circular (11/2013) issued • For information: Tom McClelland (Ho Chi Minh): tmcclelland@deloitte.com - "Call me Mike" • Indian and U.S. competent authorities meet - Australia: change of government • New government does not control upper house of Parliament: impact on policies to repeal certain taxes? • Status of the previous government's announced, but not yet legislated, tax law changes? • Presidency of G20: strong or low key leadership position in regard to BEPS? • For information: David Watkins (Sydney): dwatkins@deloitte.com.au • For our report on the tax policies of the new Australian government: http://www.deloitte.com/ap/dbriefs/bytes

1. Treaties - Korea / Luxembourg treaty: protocol entered into force on 4 September 2013 - Changes to dividend, interest, and royalty withholding tax rates - Deletion of Article 28 from treaty • Excludes certain Luxembourg holding companies from treaty benefits • Korean tax authorities have used Article 28 to deny treaty benefits to Luxembourg SICAVs and SICAFs (collective investment vehicles) • Deletion of Article 28 should avoid such disputes in future – however, existing disputes remain unresolved For information: Gyung Ho Kim (Seoul): gykim@deloitte.com 2. Cases - India: Reliance Infocom • Mumbai Income Tax Appellate Tribunal • Supply of software by Lucent (U.S. resident) to Indian company, relating to mobile telecom network • Tribunal held that payment for supply of software was a payment for the use of, or the right to use, copyright – and was therefore a "royalty" under Indian domestic tax law and the India / U.S. treaty • Commentators have criticized this decision, on the basis that it confuses copyright and copyrighted product For information: Rajesh Gandhi (Mumbai): rajegandhi@deloitte.com 3. China: Shanghai Free Trade Zone - High level of anticipation of the new Shanghai FTZ - Speculation that Hong Kong's competitive position might be damaged by the Shanghai FTZ For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 4. Indonesia - Government announces tax measures to provide cash flow advantages to certain labor-intensive companies - Measures apply to companies in specified industries • Textile industry • Apparel industry • Footwear industry • Children's toy industry For information: Nazly Siregar (Jakarta): nsiregar@deloitte.com 5. In brief - Vietnam: foreign individuals • Circular (11/2013) issued • For information: Tom McClelland (Ho Chi Minh): tmcclelland@deloitte.com - "Call me Mike" • Indian and U.S. competent authorities meet - Australia: change of government • New government does not control upper house of Parliament: impact on policies to repeal certain taxes? • Status of the previous government's announced, but not yet legislated, tax law changes? • Presidency of G20: strong or low key leadership position in regard to BEPS? • For information: David Watkins (Sydney): dwatkins@deloitte.com.au • For our report on the tax policies of the new Australian government: http://www.deloitte.com/ap/dbriefs/bytes

1. Cases: - India: Temasek • Secondment of employees to Indian company, which reimburses the formal employer for salary and related expenses • Is the reimbursement “fees for technical services”? - India: Green Infra • Share premium received on issue of new shares: taxable income? - India: Essar Oil • Art 7(1), second sentence: “may be taxed”: exemption for Indian resident with foreign PE? - Australia: AP Energy Investments • “Land-rich company” rules in Australia’s capital gains provisions • Mining information is not “real property” - China: Cayman Islands case • Sale of shares in Hong Kong listed company with 4 Chinese subsidiaries • China tax authorities + Did not apply GAAR + Did treat Hong Kong listed company as China resident, based on effective management 2. Australia - 7 September 2013: Australia’s Federal Election - Opposition’s tax policies • Abolish mineral resource rent tax • Abolish carbon tax • Reduce corporate income tax rate from 30% to 28.5% • Impose a 1.5% levy on companies with taxable income of more than AUD 5 million 3. BEPS - Modification of tax policies in the Netherlands and Singapore, in light of the BEPS Project 4. India - External commercial borrowing for general corporate purposes permitted (subject to conditions) 5. In brief - Philippines: removal from France’s “blacklist” - Japan: ongoing public debate on timing of consumption tax rate increases - OECD: 2012 MAP Report - Asia Pacific currencies: falling exchange rates (vs. USD) will cause foreign exchange losses

1. Cases: - India: Temasek • Secondment of employees to Indian company, which reimburses the formal employer for salary and related expenses • Is the reimbursement “fees for technical services”? - India: Green Infra • Share premium received on issue of new shares: taxable income? - India: Essar Oil • Art 7(1), second sentence: “may be taxed”: exemption for Indian resident with foreign PE? - Australia: AP Energy Investments • “Land-rich company” rules in Australia’s capital gains provisions • Mining information is not “real property” - China: Cayman Islands case • Sale of shares in Hong Kong listed company with 4 Chinese subsidiaries • China tax authorities + Did not apply GAAR + Did treat Hong Kong listed company as China resident, based on effective management 2. Australia - 7 September 2013: Australia’s Federal Election - Opposition’s tax policies • Abolish mineral resource rent tax • Abolish carbon tax • Reduce corporate income tax rate from 30% to 28.5% • Impose a 1.5% levy on companies with taxable income of more than AUD 5 million 3. BEPS - Modification of tax policies in the Netherlands and Singapore, in light of the BEPS Project 4. India - External commercial borrowing for general corporate purposes permitted (subject to conditions) 5. In brief - Philippines: removal from France’s “blacklist” - Japan: ongoing public debate on timing of consumption tax rate increases - OECD: 2012 MAP Report - Asia Pacific currencies: falling exchange rates (vs. USD) will cause foreign exchange losses