Asia Tax Bulletin SUMMER 2018 Americas | Asia | Europe | Middle East www.mayerbrownjsm.com Asia Middle East Bangkok Dubai Shanghai Hong Kong Ho Chi Minh City Hanoi Beijing Singapore Tokyo This Edition Pieter de Ridder Partner, Mayer Brown LLP +65 6327 0250 | email@example.com The last three months have seen many countries fine-tuning and regulating existing tax incentives and announcing new tax incentives in accordance with the OECD’s BEPS action reports, we refer to the sections in this Bulletin on China, Hong Kong (R&D), Indonesia (prescribed pioneer industries), Singapore (IP) and Thailand (wide range of incentives). China is looking to reform the individual income tax law which will inter alia remove the existing five-year tax facility for foreigners living in China and it has reduced VAT rates for specified services and goods. Hong Kong has now gazetted the new legislation introducing tax exemptions for qualifying privately offered open-ended fund companies. Also, Hong Kong is relaxing its taxation rules for qualifying investments in intellectual property (more about this in the next edition of this Bulletin, where we will report details about the ability to claim tax depreciation allowances on a wider range of IP assets). India has passed into law the tax changes proposed in its budget released at the end of January of this year. Notably, foreign companies doing business with India will be deemed to have a taxable presence in the country if their turnover exceeds certain thresholds. Japan’s parliament has approved the anti-avoidance provisions included in the multilateral tax treaty proposed by the OECD (the so called Multilateral Instrument, MLI), which will cause the anti- avoidance provisions in the MLI to automatically apply to most of its existing tax treaties. Malaysia’s new government has immediately acted on its election promise to effectively abolish the unpopular GST in June 2018 and announced the reintroduction of the Sales and Service Tax in September of this year. Finally, in June, Thailand issued the draft transfer pricing provisions in order to provide the statutory basis for its transfer pricing guidelines, which will introduce reporting obligations of related party transactions. We hope you will enjoy reading this Bulletin and that you will find it useful. Please let us know if we can be of assistance. With kind regards, Pieter de Ridder We are pleased to present the summer 2018 edition of our firm’s Asia Tax Bulletin and hope that you will find it useful and interesting. Vietnam Taiwan Philippines Thailand Indonesia Contents 30 Tax residence certificate for trust funds 30 Extension of reduced rate for securities transaction tax rate 30 Taxation of logistics centres established by foreign enterprises 31 Deductions for investment by individuals in innovative companies 32 Tax incentives for Eastern Economic Corridor 32 Tax incentives generally 33 Single point additional duty payment programme 33 Draft transfer pricing law 34 Importation 34 International tax developments 20 Preliminary tax refund 21 Tax holiday for pioneer industries 22 International tax developments 23 International tax avoidance 23 International tax developments 24 GST to be abolished/SST to be re-introduced 25 Tax investigation framework 25 Tax incentives for returning experts 26 International tax developments 27 Court of Appeal decides on exchange of information case 27 Intellectual property tax incentive 27 Public consultation on Income Tax (Amendment) Bill 2018 28 Goods and Services Tax 29 International tax developments 6 Adjustments to VAT rates 6 Import tariffs and VAT on cancer-related medicines 6 Refund of input VAT for certain industries and enterprises 7 Land appreciation tax exemption for business reorganisation/restructuring 7 Integration of state and local tax bureaus 7 Amendments to individual income tax proposed 8 Broadening of tax incentives anticipated 9 Expansion of tax incentive to advanced technology service enterprises nationwide 9 Tax incentives for integrated circuit manufacturing enterprises 10 Venture capital enterprises and individual angel investors 11 Retaliation tariffs imposed on US products 11 Import tariffs on consumer products reduced 11 Stamp duty 11 Centralised immigration administration 12 Tax deduction and tax depreciation for enterprises 12 International tax developments 13 Two-tiered profits tax rates 13 Tax information sharing and assistance 13 Open-ended fund companies 13 Concessionary tax measures 14 Tax incentives for qualifying R&D activities proposed 14 Stamp duty on instruments involving more than one residential property 14 Master and local file thresholds changed 15 International tax developments 16 Cross border warranty reimbursements not subject to withholding tax 16 Task force for drafting new direct tax legislation 17 Permanent establishment 18 India gazettes Finance Bill, 2018 18 Separate business segments can be aggregated for arm’s length price determination 19 International tax developments Key: Jurisdiction (Click to navigate) India China Hong Kong Japan Malaysia Singapore JURISDICTION: 6 | Asia Tax Bulletin MAYER BROWN JSM | 7 Adjustments to VAT rates Following the announcement from the State Council, the Ministry of Finance (MoF) and the State Administration of Taxation (SAT) jointly issued a circular reducing the rates of value added tax (VAT) on 4 April 2018 (Circular  No. 32, the Circular). The Circular will apply as from 1 May 2018. According to the Circular, the VAT rate of 17% will be reduced to 16% and that of 11% to 10%. The input tax refund rate for exports will correspondingly be reduced to 16% and 10%, respectively. The input tax deduction rate for purchases of agricultural products is adjusted to 10%. The timing of the application of new rates must be based on the date of export as stated in the export goods clearance statement, or, in the case of exports other than of goods, the date of invoice issuance. With respect to the purchase of agricultural products used in sales, production or contract processing arrangements, which are charged at 16% VAT (and not 10%), the input tax deduction rate is 12%. Moreover, a transitional rule applies for enterprises engaged in foreign trade in respect of goods purchased before 31 July 2018, which are subject to different VAT rates. Import tariffs and VAT on cancer-related medicines The Customs Tariff Commission of the State Council issued a Public Notice (Shui Wei Hui  No.2) promulgating that the import tariffs on all common medicines, including cancer-related medicines, alkaloid-based medicines with anti-cancer effects and imports of Chinese medicines, will be reduced to zero. A list of eligible items is attached to the Notice. The Ministry of Finance (MoF), the State Administration of Taxation (SAT) and National Drug Administration jointly issued a circular (Circular  No. 47) regarding VAT on medicines against cancer. According to this Circular, the supply of medicines against cancer by VAT general taxpayers may, if they so elect, be taxed at the VAT collection rate of 3% under the simplified method. Once the election is made, it cannot be altered within the next period of 36 months. Imports of cancer-related medicines will be subject to 3% VAT. A list of medicines eligible for this VAT treatment is attached to the Circular. Both changes to import tariffs and VAT treatment will apply from 1 May 2018. Refund of input VAT for certain industries and enterprises On 27 June 2018, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly issued a circular (Circular  No.70) announcing the refund of input VAT that has not been offset against output VAT for certain industries or enterprises in 2018. Generally, the input VAT can only be offset against the output VAT in China. If the output VAT of a current period is not sufficient, the input VAT of an enterprise will not be offset and cannot be refunded. This circular makes an exception to this rule and the input VAT that is not offset in 2018 may be refunded. The refund policy applies to advanced manufacturing industries, modern service industries or power-grid companies. Advanced manufacturing industries and modern service industries include special equipment manufacturing, research and experimental development and 18 other categories of industries including a new generation of information technology, high-end CNC machine tools and robots, aerospace equipment, marine engineering equipment and high-tech ships, advanced rail transportation equipment, energy-saving and new energy vehicles, power equipment, agricultural machinery China (PRC) and equipment, new materials, bio-pharmaceuticals and high-performance medical devices. Similarly, high-tech companies, technologically advanced service companies, and high-tech SMEs will be given priority. The refund policy also extends to all power grid companies with electric power transmission or supply qualification certificates. A taxpayer’s tax credit rating (reliability and repute rating) A or B is required to apply for the refund. To be refunded input VAT must be calculated as follows: refundable input VAT = taxpayer’s not being offset input VAT at the end of the previous period × refundable tax rate. With respect to advanced manufacturing industries and modern service industries, the MOF and the SAT will, on the basis of the data of refundable input VAT of each province in 2018, announce the refund date separately. In the case of the input VAT credit for grid companies in each province, the final tax refund for the current period must be determined in accordance with the provisions of the circular and refunded. Land appreciation tax exemption for business reorganisation/restructuring On 16 May 2018, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly issued a circular continuing the land appreciation tax exemption for business reorganisation/restructuring (Circular  No. 57, the Circular). The Circular states that the exemption previously granted under Circular  No. 5, which expired on 31 December 2017, has been extended until 31 December 2020. Integration of state and local tax bureaus On 15 June 2018, all local tax bureaus at the provincial level were integrated into state tax bureaus at the provincial level. Further integration of both tax authorities below provincial level will take place in the short term. In order to ensure smooth and orderly operations of all tax authorities following the integration, the State Administration of Taxation (SAT) issued a set of Public Notices and Orders, including Notice  No. 31, No. 32 and No.33, and Order No. 44, which address the following issues: • The duties of pre-integration state tax bureaus and local tax bureaus are carried over to the new tax bureaus. • The terms “state tax bureau” and “local tax bureau”, which were previously used in tax notices, orders and regulations in force, will now be referred to as “tax bureau”. • If a tax dispute arises between the taxpayer and a tax bureau, the taxpayer must appeal to the higher level tax authority (i.e. the new tax bureau) for administrative review. The local government is no longer authorised for this matter as it was. • Value-added tax (VAT) invoices that have been issued or supervised by pre-integration state or local tax bureaus at provincial level can be used until 31 December 2018. Amendments to individual income tax proposed It has been reported that amendments to the individual income tax were proposed to the Standing Committee of the People’s Congress on 19 June 2018. The main amendments include the following: • Introduction of the “resident” and “non-resident” concepts, which are absent in the current individual income tax law, since the system of individual taxation is based on these two concepts. Consideration is being given to modifying China’s personal tax residence rule to a 183-day test. If introduced, a residence test based on 183 days of presence in China can be expected to have a profound impact on foreigners working in China. Currently, foreigners working in China are only exposed to Chinese tax on worldwide income if they are resident in China for five full years. The five-year period of residence is commonly broken, and liability to tax on worldwide income prevented, by a period of absence, commonly referred to as a “tax break”. • An increase in the monthly standard deduction from CNY 3,500 to CNY 5,000. The monthly additional deduction for expatriates of CNY 1,300 will be abolished. • Taxation of income derived by an individual from services, copyright and royalties as wages and salaries at progressive rates; currently, these income items are subject to a flat rate of 20%). JURISDICTION: 8 | Asia Tax Bulletin MAYER BROWN JSM | 9 • The tax brackets for low tax rates will be widened. • Special deductions will be introduced, including savings for children’s education, adult education, medical expenses, mortgage interest and rents. • Anti-tax avoidance rules will be introduced for individuals who do not transfer properties at arm’s length and who apply offshore schemes to avoid Chinese taxes. Broadening of tax incentives anticipated During a meeting of the State Council on 25 April 2018, it was announced that several tax incentives will be broadened in order to promote entrepreneurship, innovation and development of small and medium-sized enterprises (SMEs). These tax incentives are set out below: Between 1 January 2018 and 31 December 2020 • The machinery and equipment newly purchased for research and development (R&D) purposes may be deducted as cost in the current accounting period if the value is below CNY 5 million (previously CNY 1 million). • Small and low-profit enterprises are subject to enterprise income tax on 50% of the taxable income if the annual taxable income does not exceed CNY 1 million (previously CNY 500,000). From 1 January 2018 • The super-deduction incentives for commissioned research and development (R&D) activities are also allowed if the commissioned party is a foreign entity. On 25 June 2018, the Ministry of Finance (MoF), the State Administration of Taxation (SAT) and the Ministry of Science and Technology (MOST) jointly issued a circular (Circular  No.64, the Circular) announcing new rules regarding the super-deduction for R&D expenses incurred by foreign organisations. The Circular will apply retroactively from 1 January 2018. According to the Circular, 80% of the actual expenses incurred by an enterprise for engaging a foreign organisation to conduct R&D activities may be accounted for as foreign R&D expenses (superdeduction). These foreign R&D expenses are deductible for enterprise income tax purposes, as long as they do not exceed two thirds of the total qualifying R&D expenses of that enterprise. • The actual amount incurred must be determined at arm’s length. If the enterprise assigning the R&D activities is associated to the foreign organisation, the latter must provide the former with the breakdown of the expenses for such R&D project. • The expenses incurred by an enterprise in respect of assigning foreign individuals to conduct R&D activities will not be eligible for super-deduction. • The loss carry-forward period increases from 5 to 10 years for high-tech enterprises and technology SMEs. • The employee’s education expenses are deductible up to 8% (previously 2.5%) of the total amount of salaries and wages for general enterprises, which has applied to high-tech enterprises since 2015. From 1 May 2018 • Stamp duty levied on capital accounts of enterprises according to the total amount of paid-in capital and capital reserves will be reduced by 50%. Stamp duty levied on certain types of documents based on fixed amounts per document will be exempt. • The tax policies especially designed for eight pilot innovation (designated) areas and Suzhou Industrial Park will be extended nationwide and include the following: o Venture capital investment enterprises are granted a tax deduction of 70% of the investment amount on their taxable income for enterprise income tax purposes from 1 January 2018 if they invest in seed-stage and early-stage technology enterprises. o Individual angel investors will be granted a tax deduction of 70% of the investment amount on their taxable income for individual income tax purposes from 1 July 2018 if they invest in seedstage and early-stage technology enterprises. China (PRC) cont’d Expansion of tax incentive to advanced technology service enterprises nationwide On 19 May 2018, the Ministry of Finance (MoF), the State Administration of Taxation (SAT), the Ministry of Commerce (MOFCOM), the Ministry of Science and Technology (MOST) and the National Development and Reform Commission (NDRC) jointly issued a circular (Circular  No. 44, the Circular) expanding the existing tax incentive to advanced technology service enterprises nationwide. The Circular will apply retroactively from 1 January 2018. The advanced technology service enterprises are subject to enterprise income tax (EIT) at a rate of 15% (the standard tax rate for enterprise is 25%). The services that are eligible for the incentive include: • Computer and information services such as information system integration services and data services; • research & development and technical services such as research and experimental development services, industrial design services, cross-border licensing and transfer of intellectual property; • culture technical services such as digital production of cultural products and related services, translation, dubbing and production services for cultural products; and • medical services of traditional Chinese medicine such as traditional Chinese medicine health care and related services. Previously, the tax incentive was applicable only to 15 designated zones, including Tianjin, Shanghai, Hainan, Shenzhen, Hangzhou, Wuhan, Guangzhou, Chengdu, Suzhou, Weihai, Harbin New Area, Jiangbei New Area, Liangjiang New Area, Guian New Area and Xixian New Area. Tax incentives for integrated circuit manufacturing enterprises On 28 March 2018, the Ministry of Finance (MoF), the State Administration of Taxation (SAT), the National Development and Reform Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT) jointly issued a circular (Circular  No.27, the Circular) clarifying the income tax incentives for integrated circuit (IC) manufacturing enterprises and projects. The Circular, which is summarised below, retroactively applies from 1 January 2018: • An IC manufacturing enterprise or project which produces integrated circuits smaller than 130 nanometres and which has been in operation for a period of more than 10 years, may enjoy a two-year tax exemption followed by three years of a 50% tax reduction if such enterprise or project is established on or after 1 January 2018. • An IC manufacturing enterprise or project which produces integrated circuits smaller than 65 nanometres or has an investment of more than CNY 15 billion and which has been in operation for a period of more than 15 years may enjoy a five-year tax exemption followed by five years of a 50% tax reduction if such enterprise or project is established on or after 1 January 2018;. • An IC manufacturing enterprise which is established before 31 December 2017 and has not yet made any profit, may enjoy a five-year tax exemption followed by five years of a 50% tax reduction if it produces integrated circuits smaller than 0.25 micron or has an investment of more than CNY 8 billion, and has been in operation for a period of more than 15 years. • An IC manufacturing enterprise which is established before 31 December 2017 and has not yet made any profit, may enjoy a two-year tax exemption followed by three years of a 50% tax reduction, if it produces integrated circuits smaller than 0.8 micron. JURISDICTION: 10 | Asia Tax Bulletin MAYER BROWN JSM | 11 The tax exemption period for an enterprise will commence from the first profit-making year or from the year where the project earns its revenue. The project must be whollyowned by the IC manufacturing enterprise. To be eligible for the incentives, IC manufacturing enterprises must also satisfy the conditions laid down in article 2 of Circular  No.49, which provides that the minimum research and development (R&D) expenditure incurred must not be less than 5% of the total revenue of the enterprise. In this Circular  No.27, the threshold percentage has been reduced to 2% to encourage more enterprises to meet the conditions stipulated therein. Venture capital enterprises and individual angel investors On 14 May 2018, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly issued a circular (Circular  No. 55, the Circular) announcing tax incentives for venture capital enterprises and individual angel investors investing in technology start-ups. The Circular applies from 1 January 2018 in respect of enterprise income tax and from 1 July 2018 in respect of individual income tax. The content of the Circular is summarised below: • A venture capital enterprise or a limited partnership investment enterprise that invests and holds a direct equity investment in qualifying technology start-ups for at least two years will be granted a tax deduction of 70% of the investment amount from its taxable income once a holding period of two years has expired. If the allowable deduction cannot be fully utilised in a tax year, the balance amount may be carried forward to the following tax years. • The same tax policy applies to individual angel investors for the purposes of individual income tax. Technology start-ups • These must be resident enterprises located in China which are collected by audit for the purpose of income tax (as opposed to verification collection). • They must have fewer than 200 employees (at least 30% of whom must have a university degree. In addition, their assets and annual revenue may not exceed CNY 30 million at the time of investment. • They must have been in business for no more than five years (i.e. 60 months) at the time of investment. • They are not listed in the year in which the investment is made or in the following two years. • The ratio of total R&D expenditure to costs is no less than 20% in the year in which the investment is accepted and the subsequent tax year. Venture investment enterprises • These must be resident enterprises located in China which are collected by audit for the purpose of income tax (as opposed to verification collection) and not belong to the founder of technology start-ups described above. • They must register and operate in compliance with the provisions stipulated in the Administrative Measures on Venture Investment Enterprises (Order No. 39 of the Development and Reform Committee) or the “Provisional Regulations on the Supervision and Management of Private Equity Funds” (Order No. 105 of China Securities Regulatory Commission). • The total equity proportion of technology start-ups held by venture capital investment enterprises and their associated enterprises must be less than 50%. Individual investors • These cannot be founders or employees of technology start-ups as described above. The same restriction applies to family members of individual investors. China (PRC) cont’d • There must be no labour dispatch relations with technology start-ups. • Within two years after the investment, the total equity proportion of the technology start-ups held by themselves and their relatives must be less than 50%. Retaliation tariffs imposed on US products On 16 June 2018, the Customs Tariff Commission of the State Council issued a public notice (Shui Wei Hui Public Notice  No.5) imposing import tariffs on US products from 6 July 2018. As a response to the US government’s decision to impose 25% tariffs on USD 50 billion worth of Chinese goods, China decided to impose similar tariffs on US products of the same value. As a result, 545 goods or products to a total amount of USD 34 billion, including agricultural products, automobiles and aquatic products, will be subject to additional tariffs from 6 July 2018. Also, the implementation date for additional tariffs on another 114 items of US goods, including chemicals, medical equipment and energy products, will be announced separately. With respect to the above US products, the 25% tariff will be imposed on top of the current tariffs and on the valuation method. The current policy on bonded and tax exemption will remain unchanged; however, the preferential treatments do not apply to the additional tariffs. In total, 659 products are affected and two lists of the tariff changes are published together with the Notice. Import tariffs on consumer products reduced On 31 May 2018, the Customs Tariff Commission of the State Council issued a public notice (Shui Wei Hui Public Notice  No.4) reducing import tariffs on consumer products from 1 July 2018. The average import tariff for garments, kitchen utensils and fitness equipment will be reduced from 15.9% to 7.1%; for washing machines and refrigerators from 20.5% to 8%; for seafood, mineral water from 15.2% to 6.9% and for cleaning supplies and cosmetics such as skin care and hairdressing products from 8.4% to 2.9%. In total, 1,449 products are affected and two lists of the tariff changes are published together with the Notice. Stamp duty On 3 May 2018, the Ministry of Finance (MoF) and the State Administration of Taxation (SAT) jointly issued a circular (Circular  No. 50, the Circular) announcing the exemption from and reduction of stamp duty for accounting records of businesses. According to the Circular, from 1 May 2018, stamp duty on capital accounts (which are subject to 0.05% stamp duty) is reduced to 0.025%, while other accounts (which are subject to stamp duty of CNY 5 per account) are exempt from stamp duty. Centralised immigration administration With the surge of foreign workers in China, the Chinese government recently confirmed plans to establish one central immigration agency in order to improve immigration administration and services. The agency will be overseen by the Ministry of Public Security. The agency will formulate and oversee immigration policies and procedures, operate border control, administer compliance, and manage the treatment of refugees and nationality. The agency will also enforce immigration laws, pursue foreign nationals who enter the country illegally or work or stay without authorisation, and oversee the repatriation of illegal immigrants. Finally, the agency will provide services to Chinese nationals exiting from and returning to China. As a related matter, the Ministry of Science and Technology will oversee the employment of foreigners, transferring the responsibility out of the hands of the State Administration of Foreign Experts Affairs. JURISDICTION: 12 | Asia Tax Bulletin MAYER BROWN JSM | 13 Tax deduction and tax depreciation for enterprises On 7 May 2018, the Ministry of Finance (MoF) and the State Administration of Taxation (SAT) jointly issued two circulars (Circular  No. 51 and Circular  No. 54) announcing new rules regarding deduction and depreciation for purposes of enterprise income tax. These new policies are set out below: • Based on Circular  No. 51, from 1 January 2018 to 31 December 2020, any expenses incurred during the year on newly purchased machinery or equipment with a value not exceeding CNY 5 million will be eligible for tax deduction. If the value of such assets exceeds CNY 5 million, they will be recorded as fixed assets and depreciated according to accelerated depreciation rates stipulated under previous Circular  No. 75 and Circular  No. 106 for industries that upgraded their machinery and equipment. Further, the Circular clarifies that buildings and constructions do not fall within the scope of such rules. • Based on Circular  No. 54, as from 1 January 2018, expenses incurred on employees’ education are deductible up to 8% of the total amount of salaries and wages of an enterprise. Prior to 1 January 2018, the tax deduction rate was 2.5%, with the deduction rate of 8% only being applicable to high-tech enterprises. With the announcement of Circular  No. 54, the application of 8% has been extended to all enterprises. International tax developments Cambodia On 26 January 2018, China’s tax treaty with Cambodia entered into force. The treaty generally applies from 1 January 2019. The Chinese State Administration announced the entry into force on 27 April 2018 by way of Announcement No.22 of 2018. Chile On 29 May 2018, Chile and China signed an amending protocol to their existing tax treaty. Sweden On 4 April 2018, the amending protocol, signed on 5 June 2017, to China’s tax treaty with Sweden, as amended by the 1999 protocol, entered into force. The protocol generally applies from 1 June 2016. China (PRC) cont’d JURISDICTION: Hong Kong Two-tiered profits tax rates On 29 March 2018, the Inland Revenue (Amendment) (No.3) Ordinance 2018 (the Ordinance) was gazetted by the government. The Ordinance enables Hong Kong to implement the two-tiered profits tax rates announced in the 2017 Policy Address. According to the Ordinance, the two-tiered profits tax rates will be applicable to any year of assessment commencing on or after 1 April 2018. The profits tax rate for the first HKD 2 million of profits of corporations will be reduced to 8.25%, while the standard profits tax rate of 16.5% will remain unchanged for profits beyond HKD 2 million. For unincorporated businesses (i.e. partnerships and sole proprietorships), the two-tiered tax rates will correspondingly be set at 7.5% and 15%. This brings Hong Kong on par with Singapore’s income tax rate for businesses. Tax information sharing and assistance On 1 September 2018, the multilateral Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 protocol, will enter into force in respect of Hong Kong. The convention and the amending protocol generally apply from 1 January 2019. Open-ended fund companies On 18 May 2018, the government and the Securities and Futures Commission published three pieces of gazetted subsidiary legislation enabling the implementation of the open-ended fund company (OFC) regime. The three gazetted laws are: • the Securities and Futures (Amendment) Ordinance 2016 (Commencement) Notice (the Commencement Notice); • the Securities and Futures (Open-ended Fund Companies) Rules (the OFC Rules); and • the Securities and Futures (Open-ended Fund Companies) (Fees) Regulation (the Fees Regulation). The Commencement Notice will bring into effect all provisions of the Securities and Futures (Amendment) Ordinance 2016 from 30 July 2018 onwards, the OFC regime taking effect on that same day. In addition, extension of profits tax exemption to onshore privately offered OFCs will also take effect from 30 July 2018. Concessionary tax measures The Inland Revenue (Amendment) (No. 5) Bill 2018 (Amendment Bill) was gazetted on 8 June 2018. The Amendment Bill seeks to implement three tax concession measures as proposed in the 2018-19 Budget – the measures include the following: • Allowing the husband and wife the option of electing for personal assessment separately; • allowing enterprises to claim a 100% tax deduction for capital expenditure incurred for procuring environmental protection installations in one year instead of over five years; and • extending the scope of the tax exemption for debt instruments under the Qualifying Debt Instrument Scheme. The Amendment Bill will be introduced into the Legislative Council on 13 June 2018. Subject to the approval by the Legislative Council, the three tax measures will be implemented retroactively from the year of assessment 2018/19. JURISDICTION: 14 | Asia Tax Bulletin MAYER BROWN JSM | 15 Tax incentives for qualifying R&D activities proposed The Inland Revenue (Amendment) (No.3) Bill 2018 (the Bill) was gazetted by the government on 20 April 2018. By amending the Inland Revenue Ordinance (IRO), the Bill seeks to provide for enhanced tax deduction for expenditure incurred by enterprises on qualifying research and development (R&D) activities in Hong Kong. According to the proposal, section 16B of the IRO is to be amended and restructured to provide for a new schedule which sets out the operational details of the basic and enhanced tax deduction regimes for R&D activities. These include the definitions, scope and rates of the basic tax deduction, and the enhanced tax deduction. The schedule also contains provisions to empower the Commissioner of Inland Revenue (CIR) to seek advice from the Commissioner for Innovation and Technology (CIT) on R&D and qualifying R&D claims, as well as to empower CIT to designate local institutions as “designated local research institutions” for tax deduction purposes. Currently, the IRO provides 100% deduction for R&D expenditure, as well as capital expenditure incurred in the purchase of plant or machinery for R&D purposes, in the year it is incurred. Subject to the passage of the Bill, enterprises will be able to enjoy additional tax deduction for domestic R&D expenditure incurred. The first HKD 2 million spent on qualifying R&D will enjoy a 300% tax deduction, and expenditure beyond that threshold will enjoy a 200% tax deduction. In addition, there is no cap on the amount of enhanced tax deduction. The Bill was introduced into the Legislative Council on 2 May 2018. Stamp duty on instruments involving more than one residential property The Stamp Duty (Amendment) (No. 2) Ordinance 2018 was gazetted by the government on 20 April 2018. According to the Amendment Ordinance, unless specifically exempt or otherwise provided in the law, acquisition of more than one residential property under a single instrument executed on or after 12 April 2017 will be subject to ad valorem stamp duty (AVD) at a flat rate of 15%. This is applicable even if the purchaser/transferee is a Hong Kong permanent resident acting on its own behalf and not owning any other residential property in Hong Kong at the time of acquisition. Master and local file thresholds changed At the end of April, the Hong Kong government relaxed the new exemption criteria for preparation of master and local files (reference is made to the criteria mentioned in the spring edition of this bulletin). These files do not have to be prepared for an accounting period if any two of the following three conditions are satisfied: • total revenue for the financial year is less than or greater to HK$ 400M (was HK$ 200M); • total value of assets at the end of the financial year is less than or greater to HK$ 300M (was HK$ 200M); • average number of employees during the financial year is less than or greater to 100 (no change). The exemption criteria by size of related party transactions did not change. The deeming provision that deems taxable in Hong Kong a part of the profits derived by a non-Hong Kong resident from IP to which its Hong Kong based associate has made value creation contributions (s.15F IRO) will apply from the year of assessment beginning on or after 1 April 2019. Finally, the deadline for preparing the files has now been changed to nine months after year end (was six months). Hong Kong cont’d International tax developments Saudi Arabia The Hong Kong Chief Executive in Council issued an Order to implement the Hong Kong-Saudi Arabia Income Tax Agreement (2017). Finland On 24 May 2018, Hong Kong signed a tax treaty with Finland. It will replace the current Transport Treaty between the two jurisdictions. The maximum rates of dividend withholding tax are 5% for companies and 10% for individuals. Interest will not be subject to withholding tax whereas royalties will be subject to only 3% withholding tax. The agreement also includes an article on the exchange of information which enables both countries to fulfil their international obligations with regard to enhancing tax transparency and combatting tax evasion. India Details of the Hong Kong-India Income Tax Agreement, signed on 19 March 2018, have become available. The agreement contains some provisions from the OECD Multilateral Convention (MLI) (2016), to which both countries are signatories. The maximum rates of withholding tax are: • 5% on dividends (however, neither Hong Kong or India levy a dividend withholding tax currently); • 10% on interest with some exemptions; and • 10% on royalties. JURISDICTION: 16 | Asia Tax Bulletin MAYER BROWN JSM | 17 Cross border warranty reimbursements not subject to withholding tax1 Recently, the Chennai Bench of the Income Tax Appellate Tribunal (Tribunal) in the case of M/s Nissan Motor India Pvt Ltd vs DCIT [ITA No. 1854/CHNY/2017], ruled in favour of the taxpayer and held that payment to offshore sister concerns, in the nature of reimbursement of warranty expenses, is not taxable in India, as the source of such income is not in India. Hence, the payer is not required to withhold tax at the time of such payment. Under the provisions of the Income Tax Act, 1961 (IT Act), in case of a non-resident, any income arising or deemed to be arising to such non-resident, in India, is chargeable to tax in India. Section 9 of the IT Act, provides the instances where income shall be deemed to accrue or arise to a non-resident in India. As per section 9(1)(vii)(b) of the IT Act, income in the nature of fees for technical services (FTS) shall be deemed to accrue or arise in India when the payer is a resident of India, unless such FTS is payable in respect of services utilised in (a) a business or profession carried on by such resident outside India; or (b) for the purpose of making or earning any income from a source outside India. The Tribunal referred to the provisions of section 9(i)(vii) (b) of the IT Act, and ruled in favour of Nissan India. The Tribunal observed that the warranty expenses were incurred by Nissan India to reimburse its offshore Dealers for the warranty services provided by the dealers, to the offshore customers of Nissan India, to whom Nissan India had exported its goods. Therefore, such expense was incurred by Nissan India for the purpose of earning income from a source outside India and was therefore not taxable in India. The decision of the Tribunal is a welcome ruling, and may have an impact on intra-group arrangements of similar nature. In relation to such arrangements, the first question that arises is whether the income is in the nature of FTS. If such income is considered to be FTS, the next test that applies is whether exports by a resident would qualify as a source of income outside India and would therefore be eligible to fall under the exception provided under section 9(1)(vii)(b) of the IT Act. The issue regarding whether exports made by residents can qualify as a source of income outside India has been a subject matter of litigation. While the Tribunal in the instant case has taken a favourable view, it is important to note that there are contrary rulings on this issue, and it has been held in various judicial decisions that an export of goods by an Indian resident would not constitute activities of the resident “outside India” if the manufacturing of such goods and conclusion of contracts with the non-resident in relation to such goods takes place in India. Thus, it will be interesting to see how the higher judicial fora looks at this issue if appealed further. Task force for drafting new direct tax legislation On 22 May 2018, the Central Board of Direct Taxes announced that the term of the task force – set up in November 2017 to review the existing Income Tax Act, 1961 and draft new direct tax law – has been extended by three months. The task force was previously required to submit its report within six months. India Permanent establishment On 28 March 2018, the Indian Authority for Advance Rulings (AAR) issued its decision in the case of Seabird Exploration FZ LLC, IN RE (403 ITR 82) that the applicant has a fixed place permanent establishment (PE) in India on account of its vessels engaged in seismic surveys conducted on the high seas. The applicant (Seabird Exploration FZ LLC), a company incorporated under the laws of the United Arab Emirates (UAE) and a tax resident of that country, was engaged in the business of rendering geophysical services to the oil and gas exploration industry. Its core business activity involved 4C-3D seismic data acquisition and processing aimed at increasing the exploration success of its oil and gas clients and maximising their production. In India, it provided these services to Oil and Natural Gas Corporation Ltd (ONGC) and other oil companies. It entered into a contract with ONGC to provide 4C-3D seismic data acquisition, processing and interpretation services in Mumbai High Field in India. The applicant sought a ruling on the nature of income arising from such services and its implications from an income tax perspective. The issues were whether the income from such services would be in the nature of fees for technical services (FTS) or royalty, and more particularly, whether the applicant has a PE in India as per the India-UAE Income Tax Treaty (the tax treaty) in respect of its contract with ONGC. The AAR issued its ruling, partly in favour of the applicant. The consideration for such services cannot be regarded as FTS or royalty. The AAR did not delve deeply into this issue as both the applicant and the Revenue agree on this position. The AAR referred to its own ruling in an earlier case with similar facts filed by the current applicant (Seabird Exploration FZ LLC, In Re  (320 ITR 286 AAR)) where it was held that the definition of FTS under the Income Tax Act, 1961 (ITA) (s. 9(1)(vii)) excludes services in connection with mining operations. The applicant’s activities carried out through its survey and seismic vessels are intrinsically connected with oil and mineral exploration, which assists in oil and mineral extraction. Further, since ONGC does not use or obtain the right to use the vessels or equipment of the applicant, receipts from ONGC cannot be termed as royalty either. Therefore, the consideration cannot fall within the definition of FTS or royalty. In respect of whether the applicant has a PE in India, the AAR stated that the vessels used by the applicant on Mumbai High Field passed all the tests required for constituting a fixed place PE. The vessels are in a definite and composite geographical area and their movements from one point to another are integrated, have commercial and geographical coherence, and comply with the nature of the business contract. Further, the applicant’s business of conducting surveys in connection with exploration is carried out through such a fixed place which is at the disposal of the applicant. It is immaterial that the period of their operation is only 113 days in India as a PE need not be permanent or for all times as held in the Indian Supreme Court decision of Formula One World Championship Limited v. CIT (International Taxation)  (394 ITR 80). Hence, the vessels used by the applicant constitute a fixed place PE under article 5(1) of the tax treaty. In respect of the applicant’s argument that the service PE clause of article 5(2)(i) of the tax treaty should be applied rather than the basic fixed place PE in article 5(1), the AAR ruled that the services of seismic surveys were not carried out mainly by employees or personnel but primarily by the vessels and equipment mounted thereon and deployed in the ocean. The AAR observed that there was no specific provision in article 5(2) of the tax treaty, either mentioned or intended, that could cover the services carried out by the applicant. Therefore, the applicant has a fixed place PE in India as per article 5(1) of the tax treaty in the form of its vessels through which it carries on its business of seismic surveys on the high seas in connection with the exploration of mineral oil/natural resources. The income arising from the PE shall be subject to tax in India as business income of the applicant and the computation of business income shall be in accordance with the presumptive taxation provisions as prescribed in the ITA (s. 44BB). 1 Courtesy Khaitan & Co, Mumbai. JURISDICTION: 18 | Asia Tax Bulletin MAYER BROWN JSM | 19 India gazettes Finance Bill, 2018 The Union Budget for the fiscal year 2018-19 was presented in Parliament on 1 February 2018. Subsequently, the Lower House of Parliament passed the Finance Bill, 2018 with 21 amendments and three new clauses, and the final Finance Bill, 2018 received the President’s assent on 29 March 2018. The key amendments introduced in the Finance Bill 2018 are summarised below: Corporate tax • The scope of “significant economic presence”, where income of a foreign entity is taxed in India if specified criteria are met, is expanded to include transactions/ activities with respect to which agreements have been entered into outside India. • Regarding incentives for “start-ups” as to income from “eligible business”, the requirement stating that turnover does not exceed INR 250 million is relaxed, only relating to the years in which the deduction is claimed under section 80-IAC of the Income Tax Act, 1961 (the Act) (instead of to a period of seven years from the year in which the start-up is incorporated, as originally proposed). • The benefit of indexation will be available for long-term capital gains from the transfer of shares which had not been listed as at 31 January 2018, but were listed as at the date of transfer and became the property of the assessee by any of the modes prescribed under section 47 of the Act. • The actual cost of capital assets will be the fair market value of the inventory on the date of conversion of the inventory into capital assets. • The obligation to obtain a Permanent Account Number (PAN) will be required only for non-individual residents entering into financial transactions of INR 250,000 or more in any year (previously proposed for all nonindividuals). • The definition of “short-term capital gains” under section 2(42A) of the Act will be modified, with the term “equity oriented fund” having the meaning assigned to it as per section 112A of the Act. • Along with income computation and disclosure standards, extant guidelines issued by the Reserve Bank of India (RBI) are also to be considered for valuation of securities held by a scheduled bank or public financial institution. Personal tax • The amount standing to the credit of the Public Provident Fund (PPF) will not be liable to any attachment under any decree or order of a court in respect of any debt or liability incurred by the depositor. Indirect tax • No amendments have been made to the proposed 2018 Bill. Separate business segments can be aggregated for arm’s length price determination On 7 November 2017, the High Court (HC) gave its decision on whether two separate business segments can be aggregated for purposes of determining an arm’s length price (CIT v. ESPN Software India Limited [ITA Nos. 882, 890 and 891 of 2017]). The taxpayer (ESPN Software India Limited) had entered into international transactions with its associated enterprises (AE). It applied the transactional net margin method and aggregated closely related business segments for benchmarking purposes. The Transfer Pricing Officer (TPO) noted from the transfer pricing (TP) study and the audited accounts that the taxpayer maintained separate India cont’d audited segmental accounts for subscription/distribution business, advertisement sales business, production revenue business, and calculated segmental profitability based on such division. However, for TP purposes, the taxpayer had aggregated the financials of both distribution and advertisement sales businesses. The TPO contended that the artificial aggregation had been adopted to conceal financial losses arising from the advertisement sales model, and hence breached the concept of comparability analysis. The taxpayer appealed before the Income Tax Appellate Tribunal (ITAT). The ITAT gave its decision in favour of the taxpayer. The aggrieved revenue department then appealed to the HC. The issue was whether the taxpayer is allowed to aggregate two different and distinct business segments for benchmarking purposes. The HC upheld the decision given by the ITAT in favour of the taxpayer. The HC agreed with the ITAT that closely related business segments can be aggregated for benchmarking purposes, even if the taxpayer has maintained segmental records. Furthermore, the HC agreed that losses arising in one of the segments, on account of a change in business model, would not prevent the taxpayer from aggregating the two segments for determining arm’s length remuneration. It is a settled proposition that whether or not two transactions should be segregated is entirely a fact-dependent exercise that cannot in itself be treated as a question of law. The findings on facts given by the ITAT are binding and cannot be interfered with unless they are found to be perverse. The HC found that, based on present facts, it would not interfere with the ITAT’s decision and accordingly, dismissed the appeal. International tax developments Kuwait On 26 March 2018, the amending protocol, signed on 15 January 2017, to the India-Kuwait Income Tax Treaty (2006) entered into force. The protocol generally applies from 26 March 2018. Kazakhstan On 12 March 2018, the amending protocol, signed on 6 January 2017, to the India-Kazakhstan Income and Capital Tax Treaty (1996) entered into force. The protocol generally applies from 1 January 2019 in respect of Kazakhstan and from 1 April 2019 in respect of India. Hong Kong Details of the Hong Kong-India Income Tax Agreement, signed on 19 March 2018, have become available. The agreement contains some provisions from the OECD Multilateral Convention (MLI) (2016), to which both countries are signatories. The maximum rates of withholding tax are: • 5% on dividends (however, neither Hong Kong or India levy a dividend withholding tax currently); • 10% on interest with some exemptions; and • 10% on royalties. 20 | Asia Tax Bulletin MAYER BROWN JSM | 21 JURISDICTION: Indonesia Preliminary tax refund The Ministry of Finance issued Regulation no. 39/ PMK.03/2018 on 12 April 2018, setting out the criteria for taxpayers to obtain preliminary tax refunds of income tax and value added tax (VAT). The qualifying taxpayers would be entitled to speedier tax refunds. The following three categories of taxpayers are eligible to apply for the preliminary tax refunds: Taxpayers that meet certain criteria (Wajib Pajak Kriteria Tertentu (WPKT) include: • taxpayers that have submitted their tax returns by the due dates; • taxpayers with unpaid taxes, unless permission has been obtained from the authorities to pay in instalments or to postpone the payments; • taxpayers with audited financial statements with unqualified opinions for three consecutive years; • taxpayers that have not been convicted of tax crime in the past five years; Taxpayers that meet certain requirements (Wajib Pajak Persyaratan Tertentu (WPPT) include: • individuals not engaging in business or freelance jobs who have applied for tax refunds in their tax returns; • individuals engaging in business or freelance jobs who have applied for tax refunds not exceeding IDR 100 million in their tax returns; • companies that apply for tax refunds not exceeding IDR 1 billion in their tax returns; • VAT-able entrepreneurs that apply for VAT refunds not exceeding IDR 1 billion in their tax returns. Low-risk VAT-able entrepreneurs (Pengusaha Kena Pajak Berisiko Rendah (PKPBR)) include: • companies listed on the Indonesian stock exchange; • companies whose majority shareholders are the central and/or regional government; • companies that are Priority Partners of Customs or Authorised Economic Operators; • manufacturers with a premise to carry on manufacturing activities and have submitted VAT returns for the past 12 months by the due date; • VAT-able entrepreneurs that apply for VAT refunds not exceeding IDR 1 billion in their tax returns The PKPBR must be engaged in the following activities: • export of goods and services; • supply of VAT-able goods and/or services to a VAT Collector; and/or • supply of VAT-able goods and/or services for which VAT is not collected. Application for a WPKT status must be submitted by 10 January. The Director General of Tax (DGT) has to decide on the application within one month from the date of receipt of application, otherwise the application is deemed approved by the DGT. Approval by the DGT can be revoked if the taxpayer subsequently defaults in the submission of tax returns or is investigated for tax crimes. Income tax refund applications made under the WPKT will be processed within three months from the date of receipt of application while VAT refunds will take one month. WPPT-eligible persons may apply for preliminary tax refunds via tax returns without having to apply for WPPT status. Under the WPPT, a refund application by an individual will be processed within 15 days from the date of receipt of application. VAT refunds and refund applications by a company will take one month to process. To apply for a PKPBR status, a company must not be investigated for tax crimes and must never be convicted of tax crimes in the past five years. The DGT will have to decide on the application within 15 working days from the date of receipt of application, failing which the application will be deemed to have been approved. The approval may be revoked if the conditions for the granting of a PKPBR status were not adhered to. Tax refund applications from a PKPBR-eligible person will be processed within one month from the date of receipt of application. Tax holiday for pioneer industries Regulation No. 35/PMK.010/2018 (PMK35), which took effect from 4 April 2018, was issued by the Ministry of Finance (MoF) to regulate the granting of tax holidays to specified pioneer industries. PMK 35 revokes MoF Regulation No. 159/PMK.010/2018 as amended by Regulation No. 103/PMK.010/2016. Full tax exemption will be granted as follows: The eligible taxpayer will be granted a 50% income tax reduction for the next two years after the tax holiday. The eligible pioneer industries are: • integrated industry of upstream basic metal (steel and non-steel) with or without derivatives; • integrated industry of refining of oil and gas with or without derivatives; • integrated industry of petrochemicals based on petroleum, natural gas or coal with or without derivatives; • integrated industry of basic chemicals with or without derivatives; • integrated industry of basic organic chemicals derived from agricultural, plantation or forestry products with or without derivatives; • integrated industry of pharmaceutical raw materials with or without derivatives; • manufacturing of semi-conductors and other main components for computers; • manufacturing of main components of communication equipment for smartphones; • manufacturing of main components of health equipment for irradiation, electromedical or electrotherapy equipment; • manufacturing of main components of industrial machines for the manufacturing of machines; • manufacturing of main components of machines for motor vehicles with at least four wheels; • manufacturing of robotic components for manufacturing machines; • manufacturing of main components for vessels, aircrafts and trains; • power generation plants industry; and • economic infrastructure. The eligible taxpayer must be incorporated in Indonesia and must adhere to the debt to equity ratio stipulated by the MoF. The taxpayers should not have been granted a tax holiday in the past or have been rejected for its prior tax holiday application. The tax holiday application must be submitted with the application for new investment before the commencement of commercial production or within a year after the issuance of the investment registration. A taxpayer that has been granted the tax holiday is required to submit annual reports to the Director General of Tax within 30 days after the end of a tax year and keep separate accounts of the tax exempted industry. Value of new investments (IDR) Tax Holiday IDR 500 billion and not more than IDR 1 trillion 5 years IDR 1 trillion and not more than IDR 5 trillion 7 years IDR 5 trillion and not more than IDR 15 trillion 10 years IDR 15 trillion and not more than IDR 30 trillion 15 years IDR 30 trillion and above 20 years JURISDICTION: 22 | Asia Tax Bulletin MAYER BROWN JSM | 23 Indonesia cont’d If it is discovered during an audit that the taxpayer which has been granted a holiday does not meet any of the stipulated conditions, the tax authorities will revoke or amend the tax holiday granted. International tax developments Belarus On 9 May 2018, the Belarus-Indonesia Income Tax Treaty entered into force. The treaty generally applies from 1 January 2019 and provides for a 10% withholding tax rate on dividends, interest, royalty and branch profits. Bermuda The Bermuda-Indonesia Exchange of Information Treaty entered into force on 23 November 2017. The agreement generally applies from 23 November 2017 for criminal tax matters and from 1 January 2018 in respect of Indonesia and from 1 April 2018 in respect of Bermuda for all other tax matters. USA On 13 June 2018, the competent authority arrangement on the exchange of country-by-country (CbC) reports between Indonesia and the United States, which was signed on the same date, entered into force. JURISDICTION: International tax avoidance The Japanese House of Councillors (upper house of parliament) approved the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI) on 18 May 2018. The Japanese House of Representatives (lower house of parliament) had previously approved the MLI on 19 April 2018. Japan submitted its MLI position at the time of signature, listing its reservations and notifications and including 35 tax treaties that it wishes to be covered by the MLI. International tax developments China On 9 May 2018, the China-Japan Social Security Agreement (2018) was signed in Tokyo. UAE On 30 April 2018, Japan and the United Arab Emirates signed an investment protection agreement (IPA) in the United Arab Emirates. Philippines On 1 August 2018, the Japan-Philippines Social Security Agreement (2015) will enter into force. The agreement generally applies from 1 August 2018. USA According to an update of 17 April 2018, published by the US Internal Revenue Service (IRS), negotiations for an arrangement on exchange of country-by-country (CbC) reports between Indonesia and the United States are ongoing. Japan 24 | Asia Tax Bulletin MAYER BROWN JSM | 25 JURISDICTION: Malaysia GST to be abolished/SST to be re-introduced In a press conference of 10 May 2018, the newly-elected Prime Minister of Malaysia Mahathir Mohamed announced that the goods and services tax (GST), which had been introduced on 1 April 2015, will be abolished. The Prime Minister also proposed that the previous sales and service tax (SST) be re-instated in its place within 100 days from the date of the election. During a press conference on 30 May 2018, the Prime Minister stated that the SST will be reintroduced on 1 September 2018. We foresee a transitional period being in place for existing GST matters including outstanding refunds to be sorted. Further developments will be reported as they occur. On 17 May 2018, the Royal Malaysian Customs Department released frequently asked questions (FAQs) on the revisions of all standard-rated goods and services to a zero rate under the Goods and Services Tax (GST) regime with effect from 1 June 2018, as follows: • Exempt supplies will continue to be exempt. • GST-registered businesses are not required to cancel their GST licence until further notice. • Tax invoices are not required to be issued if the supply is zero-rated. • GST will still be accounted for invoices issued prior to 1 June 2018, even if payment is made, services are performed or goods are delivered after 1 June 2018. • GST is chargeable for any partial payments made prior to 1 June 2018, but no GST will be imposed if any balance of the payment is made after 1 June 2018. • GST-registered persons are still required to submit GST returns until further notice. • Persons under the following schemes are still required to issue monthly statements: o approved Trader Scheme; o approved Toll Manufacturer Scheme; o approved Jewellers Scheme; o Margin Scheme; and o Warehouse Scheme. • Tourists are still entitled to claim a tax refund when departing from Malaysia, provided that the purchase was made within three months before departure from Malaysia. • Public rulings, advance rulings, DG’s decisions, industry guidelines, etc. are still applicable until further notice. • The tax authority will still conduct audits, and businesses are still required to maintain business records for at least seven years. On 22 May 2018, the Royal Malaysian Customs Department (RMCD) released an updated version of the frequently asked questions (FAQs) on the transition of all standard-rated goods and services to a zero rate under the Goods and Services Tax (GST) regime with effect from 1 June 2018: • New scenarios and chargeability of 6% GST on goods and services are introduced during the transition period. • Registered companies are still eligible to claim additional 2% input tax under the flat rate scheme as the regulation is still in effect. • GST is still payable for K1 and K9 forms (customs declaration forms for imported goods) declared and approved prior to 1 June 2018. • Registered persons are still required to reverse charge imported goods at a rate of 0% from 1 June 2018. • Companies are given until 30 June 2018 to replace their price tags; however, they are required to place a notice informing customers that the GST rate has been revised to 0% if they are unable to replace their price tags within the short notice period. • Insurers are not required to refund the GST paid by policy holders for premiums paid in advance (i.e. premiums from 1 June 2018 onwards). • A registered person has claimed bad debt relief for transactions conducted prior to 1 June 2018 and subsequently receives repayment of the bad debt after 1 June 2018 – such payments are required to be accounted for at 6% GST. Tax investigation framework On 15 May 2018, the Inland Revenue Board of Malaysia (IRBM) released an updated version of the tax investigation framework, which supersedes the prior framework and entered into effect on 15 May 2018. The main changes are summarised below: • IRBM officers are required to introduce themselves and inform the taxpayer of the scope of the investigation prior to an on-site investigation. • In a situation where an additional payment or penalty is imposed on a taxpayer, the letter is allowed to make the payment in instalments, provided that the first instalment is 25% of the total amount charged. However, the penalty amount will be higher in the case of a longer payment period, compared to a shorter period or lump sum payment. • The penalty imposed on a taxpayer having failed to co-operate with investigations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act has been revised as follows: o the amount has been increased from MYR 1 million to MYR 3 million; o the imprisonment term has been increased from 1 to 5 years; and o in the case of a continuing offence, the penalty has been increased from MYR 1,000 to MYR 3,000 for each day during which the offence continues after conviction. Tax incentives for returning experts On 2 May 2018, the Inland Revenue Board of Malaysia (IRBM) issued Public Ruling No. 2/2018 – Tax Incentives for Returning Expert Programme (the PR). The PR aims to explain the tax treatment and tax incentives under the Returning Expert Programme (REP) for Malaysian citizens who have worked overseas as professionals and are returning to work in Malaysia. The REP was introduced to attract Malaysian professionals working abroad in certain areas of expertise to return to Malaysia to contribute to national development. Qualified individuals are entitled to a flat 15% preferred tax rate on taxable employment income for a period of five consecutive years of assessment. To qualify for the REP, an individual is required to fulfil the following conditions: • The applicant must be a Malaysian citizen and resident in Malaysia. • The REP application must be made between the period of 12 April 2011 and 31 December 2020. • The applicant has not derived any employment income in Malaysia for at least 36 consecutive months prior to the REP application. • The applicant has never previously applied for the REP. Other conditions to be fulfilled are as follows: • The REP application must be made when the individual is still living and working abroad. • The employment income will be received from any person resident in Malaysia. • The applicant does not have any financial or legal bond with government companies or agencies to return to Malaysia. • The applicant does not have any bond of outstanding scholarships or loan payment with the Malaysian government or its agencies. An individual who qualifies under the REP has the option to be taxed either at scale rates or at the preferential rate. However, the option for the preferential tax rate must be made within two years of assessment of returning to Malaysia. If the individual does not make an option within this period, he will be deemed to have rejected the REP incentives. 26 | Asia Tax Bulletin MAYER BROWN JSM | 27 International tax developments EFTA On 1 July 2018, the multilateral free trade agreement (FTA) between the European Free Trade Association (EFTA) states (Iceland, Liechtenstein, Norway and Switzerland) and the Philippines, signed on 28 April 2016, will enter into force in relations between the Philippines and Liechtenstein, Norway and Switzerland, respectively. According to a press release of 1 June 2018, published by the European Free Trade Association (EFTA), the multilateral free trade agreement (FTA) between the EFTA member states (Iceland, Liechtenstein, Norway and Switzerland) and the Philippines, signed on 28 April 2016, is currently not being applied by local authorities in the Philippines, due to pending internal procedures. As a result, preferential treatment for products originating in the EFTA member states is not being granted in the Philippines for the time being. The EFTA member states and the EFTA Secretariat are monitoring the issue very closely and every effort is being made to resolve the matter as soon as possible. Japan On 1 August 2018, the Japan-Philippines Social Security Agreement will enter into force. The agreement generally applies from 1 August 2018. Mexico On 18 April 2018, the Mexico-Philippines Income Tax Treaty entered into force. The treaty generally applies from 1 January 2019. JURISDICTION: Singapore JURISDICTION: Philippines Court of Appeal decides on exchange of information case On 4 May 2018, Singapore’s Court of Appeal provided its written grounds of a decision pertaining to a hearing taking place in September 2017, in which the Court affirmed the decision of the High Court to refuse an application by foreign individuals to commence a judicial review of the decision of the Comptroller of Income Tax (CIT) to issue Production Notices to obtain information from banks in Singapore following an exchange of information (EOI) request from the tax authority of South Korea. This is the first case of an application for permission to commence a judicial review in Singapore to challenge the CIT’s issuing of a Production Order for access to information protected under the Banking Act. Intellectual property tax incentive The Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 2018 (Amendment Act) and the Economic Expansion Incentives (Relief from Income Tax) (Intellectual Property Income) Regulations 2018 (Regulations) came into operation on 4 May 2018. The Amendment Act and Regulations effect, among others, the changes relating to the exclusion of intellectual property (IP) income from the Pioneer Service Company and Development and Expansion Company (DEI) tax incentives (as was announced in February 2017 when the Budget proposals for 2017 were released). This was necessary as Singapore is looking to introduce a new IP tax incentive which complies with the OECD’s guidelines for internationally acceptable IP tax incentives. At this point in time we are still waiting for details to be issued about this new incentive, referred to as the IP Development Incentive. For companies whose PC-S or DEI were approved before 1 July 2018, the IP income derived from IP rights acquired before 1 July 2018 (“Existing IP Rights”) will enjoy grandfathering and will be subject to the concessionary tax rate under the existing PC-S or DEI until 30 June 2021. However, IP income derived from: (i) IP that comes into the ownership of the company on or after 1 July 2018, or (ii) IP acquired from related parties after 16 October 2017 but before 1 July 2018 where tax avoidance is the main purpose or one of the main purposes of the IP acquisition (collectively, “New IP Rights”) will not be grandfathered and will no longer fall within the scope of the PC-S or DEI on or after 1 July 2018. Given the different treatment of the IP income derived from the Existing IP Rights compared to New IP Rights during the interim period from 1 July 2018 to 30 June 2021, companies incentivised under the PC-S or DEI will be required to track their IP income derived from Existing IP Rights and New IP Rights, in order to be compliant with the IP income exclusion. In this regard, the Regulations also provide certain guidance as to how the tracking can be done. For companies whose PC-S, DEI, or extensions for the PC-S or DEI are approved on or after 1 July 2018, all IP income derived from IP rights that the company owns will be excluded from the scope of the concessionary tax rate under the PC-S or DEI from the date of the award / extension. Public consultation on Income Tax (Amendment) Bill 2018 The Ministry of Finance is conducting a public consultation on the Income Tax (Amendment) Bill 2018 from 20 June 2018 to 11 July 2018. The amendments to the Income Tax Act (ITA) include changes announced in the 2018 Budget. They also include eight other proposed amendments to the existing JURISDICTION: 28 | Asia Tax Bulletin MAYER BROWN JSM | 29 Singapore cont’d tax policies and administration, as well as to strengthen Whole-of-Government law enforcement. The highlights of these other non-Budget proposed amendments are summarised below: Enhance power of Inland Revenue Authority of Singapore (IRAS) to investigate tax crimes • Enhance IRAS’ enforcement powers for investigation of specified serious tax crimes, or where the suspect attempts to destroy evidence (i.e. power of forced entry, power of arrest without warrant and power of body search subject to conditions). These powers will be exercised only by trained IRAS investigation officers where necessary. • Expand IRAS’ power to gather all information relevant to its investigation from any person. • Align penalties imposed under the ITA for persons who obstruct officers in discharging their duty under the ITA with those under the Goods and Services Tax Act. Sharing of information by IRAS with law enforcement agencies (LEAs) to combat serious crimes • IRAS will be allowed to share with prescribed officers in the LEAs information that IRAS assesses as being critical for investigation or prosecution of serious crimes (as listed in the First and Second Schedules of the Corruption, Drug Trafficking and Other Serious Crimes [Confiscation of Benefits] Act). • Further disclosure of such information which is not for the purpose of investigation or prosecution will be an offence. Provide for disposal of documents or things seized under ITA • Where a matter has not proceeded to prosecution, the amendment will allow for the disposal of documents or things seized during investigation if the owner of the seized items fails to collect the items upon the end of investigation. Introduce Intellectual Property Development Incentive (IDI) • Intellectual property income (arising from a taxpayer’s research and development activities) will be taxed at a concessionary rate for a specific tax relief period under the IDI. The IDI will take effect from 1 July 2018. The public can access the detailed consultation documents on the Ministry of Finance’s website and the REACH consultation portal. All interested parties are encouraged to use the prescribed template for submission of comments. Goods and Services Tax On 22 June 2018, the Goods and Services Tax Act (Amendment of First Schedule) Order 2018 was published. The Order came into effect on 25 June 2018. A non-GST registered person making taxable supplies is liable to be registered if: • The total taxable turnover at the end of any quarter (last day) before 1 January 2019 and the three quarters immediately before that quarter is more than SGD 1 million. The person is required to notify the Inland Revenue Authority of Singapore (IRAS) of that liability within 30 days after the end of that quarter. However, the person is not liable to register for GST if the IRAS is satisfied that the value of taxable supplies in the next four quarters will be less than SGD 1 million. • The total taxable turnover of the year 2019 or a subsequent calendar year is more than SGD 1 million. The person is required to notify the (IRAS) of that liability within 30 days after the end of that calendar year. However, the person is not liable to register for GST if IRAS is satisfied that the value of taxable supplies in the next calendar year will be less than SGD 1 million. • At any time, the total taxable turnover in the next 12 months is expected (with reasonable grounds) to be more than SGD 1 million. In the context of a business transfer by a taxable person, a non-GST registered transferee at the time of transfer is liable to be registered if: • The transferee’s total taxable turnover in the quarter in which the time of the transfer falls before 1 January 2019 and the three quarters immediately before that quarter is more than SGD 1 million. However, the transferee is not liable to register for GST if IRAS is satisfied that the value of taxable supplies in the next four quarters will be less than SGD 1 million. • For a business transferred on or after 1 January 2019, the transferee’s total taxable turnover in the calendar year immediately before the calendar year in which the time of the transfer falls is more than SGD 1 million. However, the transferee is not liable to register for GST if IRAS is satisfied that the value of taxable supplies in the next calendar year will be less than SGD 1 million. • At any time, the total taxable turnover in the next 12 months is expected (with reasonable grounds) to be more than SGD 1 million. International tax developments Brazil Singapore and Brazil signed their first double tax treaty on 7 May 2018. The treaty contains a 10% withholding tax rate on qualifying dividends, interest and royalty payments, and a 183 days’ time test for certain services provided in the other country as well as a six months’ projects test for prescribed projects. Singapore was recently removed from Brazil’s anti-tax haven list and is now a viable jurisdiction for Brazilian outbound structuring. Iran On 28 February 2018, the investment protection agreement between Iran and Singapore, signed on 29 February 2016, entered into force. Sri Lanka On 1 May 2018, the free trade agreement between Singapore and Sri Lanka, signed on 23 January 2018, entered into force. Kenya On 12 June, Singapore signed a tax treaty and an Investment Protection Agreement with Kenya. Qatar On 25 April 2018, the investment protection agreement between Qatar and Singapore, signed on 17 October 2017, entered into force. Rwanda On 14 June 2018, Rwanda and Singapore signed an investment protection agreement (IPA) in Kigali. JURISDICTION: 30 | Asia Tax Bulletin MAYER BROWN JSM | 31 Tax residence certificate for trust funds For the purposes of the application of a tax treaty, under specific conditions, a trust fund may apply for a tax residence certificate from the relevant National Taxation Bureau office, depending on the location where the business is registered. Given the fact that a trust fund is not subject to tax under the Income Tax Law, no tax residence certificate will be issued. However, if the trust deed contains provisions stating that where a trustee of a securities investment trust fund (common trust fund) is responsible for managing the tax matters relating to the investment income on behalf of its beneficial owners, the trust fund trustee or the securities investment trust business may apply for and obtain a tax residence certificate. The trust fund is, however, required to provide information on the ratio of the units of the trust owned by tax residents to the total units issued by the trust. Extension of reduced rate for securities transaction tax rate On 13 April 2018, the amendment to article 2-2 of the Securities Transaction Tax Statute was passed by Legislative Yuan to extend the reduced rate of securities transaction tax (STT) at 0.15% to 31 December 2021. The regular STT rate is set at 0.3%. According to article 2-2, when a buy order and a sell order for a listed stock is of the same kind and in equal quantity, and is executed on the stock market through the same brokerage account on the same day, the STT shall be levied at the reduced rate of 0.15%. The purpose of the STT rate deduction is to increase trading volume on the stock market and promote the operation of the capital markets. Originally, this preferential STT rate was set to end on 27 April 2018, but will now be extended for another five years. The amendment also expands the scope of the reduced STT rate to apply to the securities dealers that buy and sell their own shares on the same day. Taxation of logistics centres established by foreign enterprises On 17 April 2018, the Ministry of Finance published Decree No. 10600664060 (the Decree) providing relevant rules and simplified measures for determining and reporting taxable income derived by foreign enterprises from the distribution of goods to onshore and offshore buyers from logistics centres established in Taiwan. According to article 8, paragraph 9 of the Income Tax Act (ITA), foreign (non-resident) enterprises may derive sources of income by setting up fixed places of business (e.g. logistics centres or hubs in free trade zones) to carry on business activities in Taiwan. To determine the source of the income, the fixed place of business is required to set up accounting records and maintain relevant evidence in accordance with articles 21 and 41 of the ITA. For determining the taxable income for corporate income tax purposes, foreign enterprises may provide relevant records, audited reports issued by certified public accountants (CPAs) and other relevant documentation to prove the division of onshore and offshore trading flows and justify the Domestic Profit Contribution Ratio (DPCR) on the total operating net profits in accordance with items 10 and 15 of the “Guidance on Recognition of Taiwan R.O.C. Source Income” and article 71, paragraph 1 of the ITA. If foreign enterprises carried on the above business activities through fixed places of business but are unable to provide accounting records, evidence or other relevant information, the tax authorities may assess the taxable income by applying the designated profit rates of the same industries under Standard Industrial Codes and the DPCR applicable to the foreign enterprises. Taiwan If the actual DPCR is found to be higher than the above deemed DPCR from the other information, the taxable income of foreign enterprises will be determined based on the tax authorities’ assessed DPCR. The Decree also applies to foreign enterprises without a fixed place of business in Taiwan but which engage with domestic enterprises (including free trade harbour operators, bonded warehouse operators, etc) to carry on the above business activities. Such domestic enterprises will be regarded as business agents. The business agents will file corporate income tax returns on behalf of foreign enterprises in accordance with article 73, paragraph 2 of the ITA, with all the above rules for calculating taxable income within the service scope of the business agents being applicable to the foreign enterprises. If any domestic enterprise, with its headquarters located in Taiwan, has abused the legal formation and made false arrangements in order to be eligible for the above taxation rules under the Decree with the intention of avoiding or reducing its tax liability, the tax authorities will reassess the enterprise’s income tax in accordance with the actual transactions and economic facts. All previous decrees related to the determination of tax liability for foreign enterprises carrying on the above business activities are abolished. The above taxation rules are only applicable to foreign enterprises from jurisdictions that have not concluded effective treaties with Taiwan. If there is a treaty in place, article 5 (permanent establishment) and article 7 (business profits) will override the above rules. The determination of taxable income may be referred to the Report and Additional Guidance on the Attribution of Profits to Permanent Establishments published by the OECD in 2008 and 2018. Deductions for investment by individuals in innovative companies On 6 June 2018, the Ministry of Economy and the Ministry of Finance jointly issued measures regarding deductions for individuals investing in innovative companies. According to these measures, in the period between 24 November 2017 and 31 December 2019, resident individuals investing in new high-risk innovative companies over TWD 1 million in cash in a tax year may deduct up to 50% of the investment amount with a maximum of TWD 3 million for individual income tax purposes if the investment has been held for more than two years, starting from the date of the issuance of the new shares. A “new high-risk innovative company” is referred to as a company that has been in existence for less than two years and meets the following conditions: • the technology, design or business model is innovative and has potential for further development; • it may provide solutions or meet innovation needs of targeted markets; and • the developed goods or services can be commercialised. To be eligible for the deduction for individual investors, a company must submit the following documents to the competent authorities for approval: • the company’s registration; • business plan; • register of shareholders and related information on shareholding of the investors; and • other related documents required. JURISDICTION: 32 | Asia Tax Bulletin MAYER BROWN JSM | 33 Tax incentives for Eastern Economic Corridor On 12 March 2018, the Board of Investment made an announcement regarding additional tax incentives granted to investors engaged in eligible activities in three provinces (Chachoengsao, Chonburi and Rayong) under the development of the Eastern Economic Corridor (EEC). The incentives are allotted to investors based on their establishment in the above provinces as follows: Tax incentives generally On 13 May 2018, the government released several Royal Decrees (RDs) granting tax incentives to relevant persons. A summary of these RDs is set out below: No. 655 • Corporate entities and resident individuals are allowed to deduct 200% of donations for the establishment of international higher educational institutions (as per the Announcement of the National Council for Peace and Order No. 29/2560) from 1 January 2018 onwards. The tax deduction is subject to the following maximum amount: o 10% of net profit for corporate entities; and o 10% of net assessable income for resident individuals. No. 656 • Corporate entities are allowed to deduct 200% of costs of staff training seminars (held in 55 “second-tier” tourism provinces only) incurred from 1 January 2018 to 31 December 2018. The tax deduction is subject to the taxpayer meeting all the rules and conditions set out by the Thai Revenue Department (TRD). No. 658 • A start-up entity operating a targeted industry business and incorporated from 1 January 2018 to 31 December 2018 is granted a tax holiday for 5 financial years. The tax holiday will be subject to the taxpayer meeting all the rules and conditions set out by the TRD. No. 659 • Corporate entities are allowed to deduct 100% of the costs incurred on child daycare centres at the workplace for the welfare of their employees from 1 January 2018 to 31 December 2020. The tax deduction is subject to a maximum amount of THB 1 million and the taxpayer meeting all the rules, procedures and conditions set out by the TRD. Thailand Single point additional duty payment programme On 18 April 2018, the Thai Customs made known its single point additional duty payment programme, which is effective between 1 April 2018 and 30 April 2019. The programme is intended to assist importers/exporters with self-disclosure of non-compliance customs issues and related payments (i.e. duty/tax/surcharges). To participate in the programme, companies are required to submit a self-disclosure letter to the Post Clearance Audit Bureau (PCAB) for consideration. Thereafter, the relevant documents must be submitted within 30 days. The companies that are not eligible to join this programme are those: • presently under audit, investigation or internal processes by the Customs, Economic Crime Suppression Division and Department of Special Investigation; • involved in duty evasion with evidence of fraudulent intention; • involved in smuggling; • involved in trading of counterfeit items; or • involved in evasion of import/export restrictions. For companies participating in this programme, the penalties and fines will be waived if there is no proof of fraud. The outstanding duties and taxes due and payable can be remitted at the PCAB for general self-disclosure cases. Draft transfer pricing law On 5 June 2018, the draft transfer pricing law was submitted to the National Legislative Assembly for approval. This submission followed from the approval by the Cabinet of Thailand on 3 January 2018. Taxpayers exceeding the income threshold prescribed by the Ministerial Regulation are required to prepare and submit an annual report disclosing the details of their related party transactions. This applies regardless of whether such relationships exist throughout the entire fiscal year (FY) or whether the related parties had any intercompany transactions during the year. The transfer pricing law will take effect for the FY beginning on or after 1 January 2019. Therefore, the first filing deadlines of the transfer pricing disclosure form (along with the annual tax return form) will be 30 May 2020 (for the FY ending 31 December 2019) and 28 August 2020 (for the FY ending 31 March 2020). Once the draft transfer pricing law is approved, the Thailand Revenue Department will propose other relevant legislations to the Cabinet in stages. Further developments on this matter will be reported in due course. Zones Zone A (specific activities zones) Eastern Airport City (EEC-A) Eastern Economic Corridor of Innovation (EEC-I); and Digital Park Thailand (EEC-D) Zone B (targeted industries zones) Zone C (promoted industrial estates or industrial zones) Value of new investments (IDR) Extension of corporate income tax exemption by two years; and additional corporate income tax reduction of 50% for five years Additional corporate income tax reduction of 50% for five years Additional corporate income tax reduction of 50% for three years JURISDICTION: 34 | Asia Tax Bulletin MAYER BROWN JSM | 35 Importation On 20 April, the Government issued Decree 59/2018/NĐ-CP amending Decree 08/2015/NĐ-CP on customs procedures applied to imports and exports. It took effect on 5 June 2018. Where goods are subject to value consultation at importation, customs has the right to reject and impose dutiable values, even if the importers do not agree with customs. The Ministry of Finance is expected to issue a guidance note shortly. International tax developments Cambodia On 31 March 2018, Cambodia and Vietnam signed a tax treaty in Hanoi. Macao On 16 April 2018, Macau and Vietnam signed an income tax agreement in Macau. Vietnam 36 | Asia Tax Bulletin MAYER BROWN JSM | 37 About Mayer Brown JSM Mayer Brown JSM is one of Asia’s largest and longest-standing law firms. Representing some of the world’s most significant corporations the firm’s Tax Practice is central in advising on the most complex international deals, structures and multi-jurisdictional corporate activity. The breadth of Mayer Brown’s global Tax Practice is matched by few other law firms. It covers every aspect of corporate, partnership and individual taxation across Asia, the United States and Europe; from international right through to local level. Our subpractices include transactions, consulting and planning, audits, administrative appeals and litigation, transfer pricing and government relations. Mayer Brown’s Tax Practice is globally recognised as top-tier by Chambers, the Legal 500 and the International Tax Review; and offers the depth, knowledge and experience to manage every tax challenge. Asia Tax Practice Pieter de Ridder is a Partner of Mayer Brown LLP and is a member of the Global Tax Transactions and Consulting Group. Pieter has over two decades of experience in Asia advising multinational companies and institutions with interests in one or more Asian jurisdictions on their inbound and outbound work. Prior to arriving in Singapore in 1996, he was based in Jakarta and Hong Kong. His practice focuses on advising tax matters such as direct investment, restructurings, financing arrangements, private equity and holding company structures into or from locations such as mainland China, Hong Kong, Singapore, India, Indonesia and the other ASEAN countries. Pieter de Ridder Partner, Mayer Brown LLP +65 6327 0250 | firstname.lastname@example.org Americas | Asia | Europe | Middle East |www.mayerbrownjsm.com Mayer Brown JSM is part of Mayer Brown, a global legal services organisation, advising many of the world’s largest companies, including a significant proportion of the Fortune 100, FTSE 100, CAC 40, DAX, Hang Seng and Nikkei index companies and more than half of the world’s largest banks. Our legal services include banking and finance; corporate and securities; litigation and dispute resolution; antitrust and competition; employment and benefits; environmental; financial services regulatory and enforcement; government and global trade; intellectual property; real estate; tax; restructuring, bankruptcy and insolvency; and wealth management. Please visit www.mayerbrownjsm.com for comprehensive contact information for all our offices. This publication provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is intended to provide a general guide to the subject matter and is not intended to provide legal advice or be a substitute for specific advice concerning individual situations. Readers should seek legal advice before taking any action with respect to the matters discussed herein. Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the “Mayer Brown Practices”). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe-Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown Mexico, S.C., a sociedad civil formed under the laws of the State of Durango, Mexico; Mayer Brown JSM, a Hong Kong partnership and its associated legal practices in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. Mayer Brown Consulting (Singapore) Pte. Ltd and its subsidiary, which are affiliated with Mayer Brown, provide customs and trade advisory and consultancy services, not legal services. “Mayer Brown” and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions. © 2018 The Mayer Brown Practices. All rights reserved. Attorney Advertising. Prior results do not guarantee a similar outcome.