March/April 2018  
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Asia-Pacific Tax Bulletin
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Issue No. 2 - 2018 of the Asia-Pacific Tax Bulletin is now available online.

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Number 2 - 2018 contains the following:
Taxing Uber Drivers
Anton Joseph
In this article, the author discusses the requirement that Uber drivers in Australia register and account for goods and services tax on the basis that they conduct “taxi travel”. He also examines the employee v. independent contractor status of the drivers and limits on their ability to deduct expenses for income tax purposes. The article also addresses the effect of the personal services income provisions of the Income Tax Assessment Act 1997.
China (People’s Rep.)
Chinese Controlled Foreign Company Rules in the Post-BEPS Era: New Developments
Cui Xiaojing and Zhang Han
In this article, the authors argue that key concepts, such as “reasonable business needs”, in China’s controlled foreign company (CFC) rules have not been defined clearly. Consequently, disputes are easily triggered. In response, China promulgated its Implementing Measures for Special Tax Adjustment (Discussion Draft) in 2015, which followed the recommendations of the OECD’s BEPS Action 3 Final Report and provided more specific guidance. However, the Discussion Draft did not clarify how to determine “reasonable business needs”, how to strike a balance between maintaining international competitiveness of Chinese enterprises and protection of China’s tax base, or how to deal with losses suffered by CFCs. The authors suggest that, when China revises its CFC rules, it does not blindly follow the BEPS recommendations nor indiscriminately pursue stricter rules. Rather, it would be preferable to strike a balance between tax base protection and competitiveness in line with China’s economic development strategy and policy objectives.
Budget 2018 – Alignment of Domestic Law with BEPS Action Plans
Siddhesh Rao
In this article, the author examines the recent changes announced in India’s 2018 Budget to extend the scope of the business connection test in the Income Tax Act to bring it into line with the expanded definition of a permanent establishment in the OECD’s Multilateral Instrument. The article also discusses the introduction of the significant economic presence test, which aims to tax new business models in the digital space.
In Search of Tax Policy to Boost Investment in Pakistan
Bilal Hassan
In the November-December 2017 issue of the Asia-Pacific Tax Bulletin, the author discussed the search for tax policy to improve taxpayer compliance in Pakistan. In this article, the author continues his enquiry, examining tax policy to boost investment in Pakistan. He evaluates the tax credit regimes in the Income Tax Ordinance 2001 available to companies, which are intended to encourage investment in plant and machinery, listing on a registered stock exchange and establishing industrial undertakings. The article explains the practical difficulties that have been encountered by companies as a result of contradictory statutory provisions and when excess tax credits arise, and discusses how they are overcome.
Introduction of the Principal Purpose Test and Discretionary Benefits Provisions into Singapore’s Tax Treaties: Not as Black as It Is Painted – Part 1 – Reasons
Blazej Kuźniacki
This comprehensive two-part article addresses the manner in which, and the possible reasons why, Singapore adopted the principal purpose test (PPT) and the discretionary benefits provisions in the OECD’s Multilateral Instrument (MLI), and the potential consequences of that decision. Part 1 of the article focuses on the reasons for, and manner of, introducing the PPT while Part 2 examines the potential consequences, with specific reference to channelling highly mobile income to tax havens via Singapore. The author argues that Singapore’s introduction of the PPT is unlikely to deter foreign direct investment and jeopardize the country’s current attractive business and tax-competitive position. Rather, the way that Singapore introduced the PPT – by way of the MLI together with the discretionary benefits provision – appears to be in line with its policy of granting tax benefits (including treaty benefits) using the tax authority’s broad discretionary powers and deploying a purposive approach to interpretation of the law.
Indirect Share Transfer Not Taxable in India
Abhishek Dugar and Lakshita Bhandari
This case note explains the ruling issued by the Authority for Advance Rulings to GEA Refrigeration Technologies GmbH, which determined that a capital gain arising from the transfer of shares in a German company, approximately 5.4% of the value of which was attributable to its shareholding in an Indian company, was not taxable in India under either section 9(1)(i) of the Income Tax Act 1961 or article 13 of the India-Germany tax treaty (1995).
Payments for Offshore Supply of Equipment Not Taxable in India But Payments for Supervisory Services Are Taxable in India
Abhishek Dugar and Lakshita Bhandari
This case note reviews the ruling given by the Authority for Advance Rulings to Michelin Tamil Nadu Tyres Private Ltd, which held that a payment made to a foreign company outside India for the offshore supply of machinery and equipment was not taxable in India, but payments for supervisory services performed in connection with the installation of the equipment in India by third parties were taxable in India.
New Zealand
High Court Quashes Inland Revenue’s Request for Information Notices Following Information Request from Korea
Kevin Holmes
This case note canvasses the reasons underlying the decision of the High Court to quash request for information notices issued by the New Zealand Inland Revenue Department to obtain information from a tax agent in order to satisfy a request by the Korean National Tax Service under article 25 (Exchange of Information) of the Korea-New Zealand Income Tax Treaty (1981). In particular, the Court addressed the extent that the competent authority enquired into the necessity for the information and admonished the Commissioner of Inland Revenue for her failure to disclose vital documents to the Court.
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