Summary: 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
