Summary: 1. Base Erosion and Profit Shifting (BEPS) - OECD BEPS report endorsed by G20 - BEPS initiative is supported by 42 countries (OECD / G20 membership), including these Asia Pacific countries: • Australia • China • India • Indonesia • Japan • Korea - Joe Andrus (OECD Transfer Pricing Leader): “something is broken” in the existing transfer pricing system - David Bradbury (Australia’s Assistant Treasurer): “global tax rorts” and “the world’s serial tax avoiders” - Speculation: • Transfer pricing: access to large consumer market will be an additional factor • Deemed PEs for: (i) Digital goods and services (ii) Non-contract concluding dependent agents • Domestic law treaty overrides 2. Cases - India: Sandvik • Payment for IT support services • “Royalty” under India / Australia treaty? • “Royalty” definition refers to rendering of services which make available technical knowledge, etc. • Held: not a “royalty” - Australia: Macquarie Bank • Interaction between Australia’s GAAR (Part IVA) and tax consolidation rules • Step-up of cost base to market value upon entering tax consolidation group • Part IVA did not apply because dominant purpose test not satisfied 3. Treaties - Mongolia / Netherlands • Terminated by Mongolia • Will cease to have effect on 1 January 2014 - Vietnam / San Marino • Signed in Rome on Valentine’s Day 4. Australia - R&D tax incentives to be withdrawn for companies with Australian turnover of $20 billion or more 5. Malaysia - Tax incentives for Tun Razak Exchange (TRX) zone in Kuala Lumpur 6. China - Carbon emissions tax planned to be introduced
