Summary: 1. Cases • Casio - Delhi Income Tax Appellate Tribunal - "Excessive" amount of advertising, marketing and promotion (AMP) expenditure - Charge-back principle applies, even though the Indian company is a fully-fledged distributor - For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • Li and Fung - Delhi High Court - Indian company rewarded by related Hong Kong company on "cost plus 5%" basis for performance of sourcing functions - Tax authorities argued that the purchase price of goods should be included in the cost base, and that the Indian company assumed significant risks - Court: decision for taxpayer - For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • Dash Engineering - Philippines Supreme Court - Taxpayer failed to file petition for judicial review (for refund of excess VAT input tax) within 30 day "window" - Court denies refund - For information: Fredieric Landicho (Manila): flandicho@deloitte.com 2. China • Bulletin 72 - Non-recognition treatment for certain share reorganizations - "Foreign to foreign" + Non-recognition treatment will not apply if transferee is in better "capital gains" treaty position than transferor + If transferee is in better "dividend withholding tax" treaty position than transferor, non-recognition treatment can still apply, but transferee will be denied lower treaty rate for dividends paid out of pre-acquisition profits. Treaty override? - For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn • Circular 698 case - Largest tax bill for a circular 698 (indirect share transfer) case 3. India • TP safe harbors - Central Board directs that safe harbors are not evidence of arm's length prices - For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • Vodafone - News report that Vodafone and government are likely to commence conciliation talks in regard to all outstanding tax disputes 4. Japan • 2014 tax reform proposals • Reduction in effective corporate income tax rate from approximately 38% to 35% • For Japanese brances of foreign companies and foreign branches of Japanese companies: change from "entire income" rule to profit attribution rule (effective for income year commencing on 1 April 2016) • For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp 5. In brief • Treaties: entry into force - Belgium / China - Singapore / Belarus - India / Latvia - Thailand / Estonia - India / UK (protocol) • Australia - Backlog of unlegislated measures - Discussion draft on thin cap - For information: David Watkins (Sydney): dwatkins@deloitte.com.au • BEPS - Italy: "Google tax" - Discussion drafts and public consultations: February to May
