Asia Pacific VAT/GST Alert InTouch - PwC
Asia Pacific VAT/GST AlertInTouchwith indirect tax newsOctober 2011 Issue 04/11AustraliaMalaysia Draft legislation on reform of GSTfinancial services provisions New draft GST ruling on multi-partytransactions New draft GST ruling on loyalty programs Case laws GST and new residential premises GST Guides by the Malaysian CustomsauthoritiesChinaSingapore Pilot program for indirect tax reforms New GST schemes and enhancements witheffect from 1 October 2011India Notifications/circulars on VATVAT case lawsNotifications/circulars on Service TaxService Tax case lawsJapan Taxability on tuition of educationcurriculum for authorised nurseNew Zealand Late payment fees Achieving GST-neutrality for cross bordersuppliesSouth Korea Tax reform proposal for 2012Taiwan De Minimis VAT exemptionVietnam Proposed tax reforms Supporting documents for input VAT claimsby foreign contractorsWelcome to the October2011 issue of InTouch*.The major developmentsin the current issueinclude updates andrecent case laws inAustralia, China, India,Japan, Malaysia, NewZealand, Singapore,South Korea, Taiwan andVietnam. Please feel freeto reach out to any ofthe PwC contacts on theback of this issue.
AustraliaDraft legislation on reform of GSTfinancial services provisionsAn exposure draft legislation released on18 August 2011 contains the following changesto the financial supply provisions of theGST law: Increasing the financial acquisitionsthreshold input tax credit test from 50,000to 150,000; Allowing small businesses that account ona cash basis to access full input tax creditsupfront when they enter into hire purchasearrangements; and Excluding bank deposit accounts from thecurrent special rules for borrowings.New draft GST ruling on multi-partytransactionsDraft addendums were issued by the AustralianTaxation Office (“ATO”) in relation to suppliesand insurance settlements and entitlements toinput tax credits. The proposed amendmentsresult in a broader approach to determine if asupplier makes a supply to a third party payerunder a tripartite arrangement.New draft GST ruling on loyaltyprogramsThe ATO released a draft GST ruling concerningthe GST implications of certain loyaltyprograms which include the treatment of pointsallocation and redemption, and arrangementsbetween loyalty program operators and thirdparties.Case laws In Central Equity Limited v Commissionerof Taxation, the Federal Court consideredthat a property transaction amount to ataxable supply of real property on or after1 July 2000 if the enforceable contract forsale was entered into before 1 July 2000 butsettlement of the contract occurred after thatdate. In Qantas Airways Limited v Commissionerof Taxation, the Full Federal Court heldthat GST was not payable by Qantas whena person booked and paid for domesticair travel but subsequently cancelled thebooking, or did not turn up for the flight, anddid not receive a refund. The Commissionerhas lodged an application for special leave toappeal to the High Court on 29 September2011.GST and new residential premisesOn 23 September 2011, the Australian Treasuryreleased exposure draft legislation andexplanatory material on proposed changes toGST rules concerning new residential premises.For more information, please contact:Patrick Walkerpatrick.d.walker@au.pwc.com 61 2 8266 1596ChinaPilot program for indirect tax reformsThe VAT Reform Program was officiallyannounced on 26 October 2011. The pilotprogram will be introduced on 1 January 2012to gradually expand the scope of VAT to includeindustries that are currently subject to BusinessTax. The transportation industry and somemodern service industries in Shanghai willparticipate in the pilot program. Two additionalVAT rates will be introduced, i.e. 11% and 6%.During the pilot program, the Business Taxrevenue of the pilot revenue will still belong tothe pilot location after changing to VAT. TheBusiness Tax incentive for the pilot industriesmay continue but adjust accordingly to VAT. TheVAT incurred by taxpayers in the pilot industriescan be taken as input credit according to theregulation.For more information, please contact:Alan Wualan.wu@cn.pwc.com 86 10 6533 2889
IndiaNotifications/circulars on VAT Tamil Nadu – The VAT rate on right to useconstruction equipment has been reducedfrom 14.50% to 5% with effect from12 July 2011, subject to the condition thatthe dealer would not be eligible to claiminput tax credit. Uttarakhand – An exemption has beenprovided from levy of Central Sales Tax oninter-state sales of specified informationtechnology products against submissionof Form C and subject to fulfillment ofprescribed conditions. West Bengal – A new facility “e-refund oftaxes” has been introduced for smoothprocessing of refund claims throughelectronic mode.VAT case law The Bombay High Court in AdditionalCommissioner of Sales Tax VAT-III Vs.Sehgal Autoriders Pvt. Ltd. has held thatno VAT is payable on handling chargesrecovered from a buyer for facilitating theregistration of a vehicle. The Uttarakhand High Court in ScholorsHome Senior Secondary School Vs. State ofUttarakhand has held that supply of food byan educational institution to the studentsresiding in the hostel is not liable to VAT asthe educational institution is not involvedin the business of sale and purchase offood stuff.Notifications/circulars on Service Tax The Central Government has clarified themeaning of the term ‘completion of service’under the Point of Taxation Rules, 2011 andthe Service Tax Rules, 1994 to include notonly the actual provision of the underlyingservice but also the completion of all otherauxiliary activities. The Central Government has made electronicfiling of service tax returns as a mandatoryrequirement for all assessees regardless ofturnover.Service tax case laws In Idea Mobile Communication Ltd. Vs. CCE,the Supreme Court has held that since SIMcards are not sold or transacted as goodsindependent from the telecommunicationservices attached thereto, the value of theSIM card is to be included in the taxable valuefor the purpose of levy of service tax and notsubject to sales tax. In Small Industries & Development Bank ofIndia Vs. CCE, the Tribunal has held that thecharges levied by banks towards foreclosure,pre-payment or re-scheduling of loans, whichare in the nature of compensatory chargesand not service charges, are not subject toservice tax under the category of Banking andFinancial Services.For more information, please contact:Vivek Mishravivek.mishra@in.pwc.com 91 124 330 6518Anita Rastogianita.rastogi@in.pwc.com 91 124 330 6531JapanTaxability on tuition of educationcurriculum for authorised nurseA public university requested an advance rulingto confirm that consumption tax is not assessedon tuition of education curriculum for authorisednurse.The Nagoya Regional Taxation Bureau respondedpublicly on the web site on 11 June 23 that thetuition is subject to 5% consumption tax foreducation curriculum that does not correspondto the education curriculum prepared based onthe School Education Law or other regulations(which is exempt from consumption tax).For more information, please contact:Masanori Katomasanori.kato@jp.pwc.com 81 3 5251 2536Kotaku Kimukotaku.kimu@jp.pwc.com 81 3 5251 2713
MalaysiaGST Guides by the Malaysian CustomsauthoritiesThe Malaysian Customs authorities havemade available the following GST Guides forcomments. The guides can be downloaded fromtheir website www.gst.customs.gov.my. General GuideThe Manufacturing SectorWarehousing schemeDuty Free ShopApproved Jeweller SchemeApproved Toll Manufacturer SchemeAuctioneerApproved Trader SchemeRelief on Second-Hand GoodsExportTOGC (Transfer of Going Concern)Partial ExemptionImportDesignated AreasAgentFor more information, please contact:Wan Heng Choonheng.choon.wan@my.pwc.com 60 3 2173 1488New ZealandLate payment feesA new Bill has been introduced proposingto make late payment fees subject to GST.If implemented, this change will applyretrospectively from 1 April 2003. Businesses,who currently do not charge GST on suchfees, have until 1 April 2012 to implement thenecessary systems changes.Achieving GST-neutrality for cross bordersuppliesThe Government released a discussion documentcontaining proposals to introduce an enhancedGST registration option for non-residentbusinesses. The aim of the proposed changes isto make it easier for a non-resident business toclaim input tax deductions in respect of costsincurred in New Zealand and to promote GSTneutrality between resident and non-residentbusinesses.Alternative proposals are also being consideredsuch as introducing a direct refund scheme(similar to that available under the VAT regimein the EU) or expanding the zero-rating rulesor introducing a special zero-rating rulefor “tooling” costs charged by New Zealandmanufacturers to non-resident businesses.For more information, please contact:Eugen Trombitaseugen.x.trombitas@nz.pwc.com 64 9 355 8686Gary O’Neillgary.oneill@nz.pwc.com 64 9 355 8432Jared Ottojared.a.otto@nz.pwc.com 64 9 355 8073SingaporeNew GST schemes and enhancements witheffect from 1 October 2011 Specialised Warehouse Scheme (SWS)The scheme is introduced for warehouses thatprovide specialised storage facilities to overseasperson, with most of the goods stored eventuallyexported. The purpose of the SWS is to facilitatethe zero-rating relief on following supplies tooverseas persons:(i) Qualifying services performed on qualifyinggoods stored in an Approved SpecialisedWarehouse
(ii) Lease/tenancy/license to occupy a storagespace in an Approved Specialised Warehousewhere the supply is made by the operator ofthe Approved Specialised Warehouse Approved Marine Customer (AMC)SchemeThe scheme is designed to ease compliance forbusinesses procuring goods for use or installationon internationally bound commercial ships.Subject to certain conditions, the AMC will enjoyzero-rating on the following:(i) Purchases or rental of goods procured by theAMC in the course of its business(ii) Procurement of repair or maintenanceservices of ship parts or components withouthaving to prove that the parts or componentsare reinstalled or returned onto the ship as aspare New GST measures for the biomedicalindustry(i) No import GST is payable on the importationof clinical trial materials into Singapore ifthey are for local clinical trials, re-export ordisposal/destruction.(ii) Extension of the Enhanced Approved ContractManufacturer and Trader Scheme to contractmanufacturers of Active PharmaceuticalIngredients in the biomedical industry.Contract manufacturers in other businesssegments in the biomedical industry will alsobe considered. Updates to Approved ContractManufacturer and Trader Scheme(ACMT)An ACMT contract manufacturer can disregardthe supply of value-added service relatingto failed or excess productions to a non-GSTregistered overseas customer if the goods thatthe ACMT contract manufacturer has treated/processed are exported or delivered locally toa waste management vendor for disposal ordestruction at no consideration.The GST incurred on goods locally purchased bythe non-GST registered overseas customer anddelivered to an ACMT contract manufacturer toperform value added service is claimable by theapproved contract manufacturer if it has paid theGST on the goods or refunded the GST paid onthe goods by the overseas customer.For more information, please contact:Koh Soo Howsoo.how.koh@sg.pwc.com 65 6236 3600May SY Ngmay.sy.ng@sg.pwc.com 65 6236 3739South KoreaTax reform proposal for 2012On 7 September 7 2011, the Ministry of Strategyand Finance announced a package of proposedchanges to tax law including the VAT Law. Themain proposals are as follow: With effect from 1 January 2012, a foreigncorporation will have the same VAT filingdue date as the domestic corporation. Theproposed change would enforce the foreigncorporation to file the VAT return by 25 daysinstead of 50 days from each quarter end. With effect from 1 July 2012, the provisionof intangibles by a non-resident or foreigncorporation will be subject to proxy paymentand a person or company who receivesservices that are not qualified for input VATdeduction are subject to proxy payment.For more information, please contact:Dong-Keon (D.K.) Leedklee@samil.com 82 2 709 0561
TaiwanDe Minimis VAT ExemptionWith effective from 1 April 2011, servicespurchased from foreign enterprises where theindividual transaction amount is less than orequal to NTD 3,000 are eligible for de minimisVAT exemption. The ruling will not apply wherethe individual transaction amount is more thanNTD 3,000 even though it is an installment saleof services and the amount of each installment isless than NTD 3,000.For more information, please contact:Lily Hsulily.hsu@tw.pwc.com 886 2 27296666 Ext. 26207VietnamProposed tax reformsIn August 2011, the Government released adraft Decree amending and supplementingsome articles of the existing VAT Decree. It isanticipated that the final version will becomeeffective from 1 January 2012. Below is asummary of the major proposed changes:1. Output VAT will not be charged on thefollowing: Services delivered outside Vietnam. Financial income being compensationfor contract cancellation, bonus for earlycontract completion, subsidies and otherfinancial income not resulting fromgoods/services exchanges, income fromtransfer of Certified Emission Reductions;and Certain services purchased from foreignsuppliers who do not have a permanentestablishment in Vietnam or are not aVietnamese resident.2. The definition of VAT exempt supplies willbe expanded to include sale of assets heldas collateral except the case where theownership of the assets has been transferredto the lender; debt factoring; managementof securities investment companies; capitalassignment by way of transfer of rights for aproject and transfer of a project; and foreigncurrency swaps.3. For VAT declaration under the “directmethod”, the negative value added can beoffset against the positive value added forother goods with the same VAT rate. Thenegative balance can be carried forward to asubsequent period.4. Input VAT related to the purchase of goodsthat are subsequently damaged will becreditable.Supporting documents for input VATclaims by foreign contractorsThe General Department of Tax issued a OfficialLetter 2524/TCT (“OL2524”) providing guidanceon the supporting documents required forinput VAT claims by a foreign contractor whois registered for VAT in Vietnam and makespayments to its suppliers/subcontractors inVietnam from its head office’s overseas bankaccount.For more information, please contact:David Fitzgeralddavid.fitzgerald@vn.pwc.com 84 8 3824 0116Richard J Irwinr.j.irwin@vn.pwc.com 84 8 3823 0796
ContactsAustraliaPatrick Walker, PartnerEmail: patrick.d.walker@au.pwc.comTel: 61 2 8266 1596IndonesiaJim McMillan, PartnerEmail: jim.f.mcmillan@id.pwc.comTel: 62 81 1180 1657New ZealandEugen Trombitas, PartnerEmail: eugen.x.trombitas@nz.pwc.comTel: 64 9 355 8686TaiwanLily Hsu, PartnerEmail: lily.hsu@tw.pwc.comTel: 886 2 2729 6666 Ext. 26207CambodiaSira Intarakumthornchai, PartnerEmail: sira.intarakumthornchai@th.pwc.comTel: 662 344 1244Abdullah Azis, Senior ManagerEmail: abdullah.azis@id.pwc.comTel: 62 21 5289 0601Gary O’Neill, DirectorEmail: gary.oneill@nz.pwc.comTel: 64 9 355 8432ThailandSomboon Weerawutiwong, PartnerEmail: somboon.weerawutiwong@th.pwc.comTel: 662 344 1000 ext 1247JapanMasanori Kato, PartnerEmail: masanori.kato@jp.pwc.comTel: 81 3 5251 2536PhilippinesMary Assumption Bautista-Villareal, PrincipalEmail: mary.s.bautista-villareal@ph.pwc.comTel: 63 2 459 2004Darika Soponawat, DirectorEmail: darika.soponawat@th.pwc.comTel : 662 344 1015Kotaku Kimu, Senior ManagerEmail: kotaku.kimu@jp.pwc.comTel: 81 3 5251 2713SingaporeSoo How Koh, PartnerEmail: soo.how.koh@sg.pwc.comTel: 65 6236 3600VietnamDavid Fitzgerald, PartnerEmail: david.fitzgerald@vn.pwc.comTel : 84 8 3824 0116LaosThavorn Rujivanarom, PartnerEmail: thavorn.rujivanarom@th.pwc.comTel: 662 344 1444May SY Ng, ManagerEmail: may.sy.ng@sg.pwc.comTel: 65 6236 3739Richard J. Irwin, PartnerEmail: r.j.irwin@vn.pwc.comTel: 84 8 3823 0796MalaysiaWan Heng Choon, Senior Executive DirectorEmail: heng.choon.wan@my.pwc.comTel: 60 3 2173 1488South KoreaDong-Keon (D.K.) Lee, PartnerEmail:dklee@samil.comTel: 82 2 709 0561Heng Thy, DirectorEmail: heng.thy@kh.pwc.comTel: 855 23 218 086ChinaAlan Wu, PartnerEmail: alan.wu@cn.pwc.comTel: 86 10 6533 2889IndiaVivek Mishravivek.mishra@in.pwc.com 91 124 330 6518Anita Rastogianita.rastogi@in.pwc.com 91 124 330 6531Sri LankaHiranthi Ratnayake, DirectorEmail: hiranthi.c.ratnayake@lk.pwc.comTel: 94 11 4719838For a comprehensive guide toglobal VAT/GST information fromover 70 countries worldwide,please visit GlobalVATOnlineat www.globalvatonline.com.GlobalVATOnline can keep youup to date on all VAT issues anddevelopments as they unfold.Disclaimer. Clients receiving this Alert should take no action without first contacting their usual PwC Indirect Tax Advisor. 2011 PricewaterhouseCoopers. All rights reserved. Not for further distribution without the permission of PwC. “PwC” refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL),or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services toclients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liablefor the acts or omissions of any other member firm nor can it control the exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any way.
Asia Pacific VAT/GST Alert InTouch with indirect tax news Welcome to the October 2011 issue of InTouch*. . GST Guides by the Malaysian Customs authorities New Zealand . containing proposals to introduce an enhanced GST registration option for non-resident
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Budgeted balance sheet This budget is prepared using the asset, liability and owner’s equity accounts. If GST payable (on GST collected) is GST input tax credits (on GST paid), the net GST payable is shown as a current liability. If GST payable (on GST collected) is GST input tax credits (on GST paid), the net GST input tax
3. Implementation of GST And Acts of GST 4. Whom to Register under GST 5. Who is Exempted from Register under GST 6. GST Composition Scheme 7. Invoice and Its Format under GST 8. Bill of Supply and Its Format under GST 9. E – Way Bill under GST 10. Time of Supply under GST 11. Place of Supply of Goods
A Practical Guide to Reverse VAT 1. Contents 2. What is Reverse VAT? 3. Will Reverse VAT affect your business? 4. What is an End User? 5. Commercial End Users 6. Domestic End Users 7. When will Reverse VAT begin? 8. The Current VAT System 9. The New Reverse VAT System 10. Construction services subject to Reverse VAT 11. What else does Reverse VAT apply to? 12. Services NOT subject to .
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1. VAT inclusive A The VAT received by a business from sales of goods or income earned. 2. VAT vendor B Payments which are made twice in a month. 3. Input tax C VAT is excluded in the marked price. 4. VAT invoice D Receipts issued by SARS for VAT payments. 5. VAT exclusive E VAT is payable when the
GST For Jewellers Frequently Asked Questions . 2 1. What is GST? Ans- GST is an indirect tax which will eliminate various taxes like VAT tax, Excise, Service tax, Octroi, etc. 2. From when will be GST implemented? Ans- GST is likely to be implemented from 1st July 2017. 3. Is income tax required to be paid after GST? .
D. Writing Requirement and Waiver of Final Exam The University has a writing requirement for all graduate degrees. The M.E. degree requires the preparation and defense of a report, which might be from one of the classes on the degree plan or be the result of CVEN 685: Directed Studies.
