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Issue No. 4 - 2018 of the Asia-Pacific Tax Bulletin is now available online.

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Number 4 - 2018 contains the following:
ARTICLES
Regional

Is International Tax Controversy Emerging in Asia?

Satoru Araki

This article discusses whether international tax controversy is set to increase in Asia, whether there are any characteristics of tax controversy in the region, and how enforcement trends will evolve. The author contends that the combination of limited tax administration capacity, particularly of human resources, and a strong desire to secure tax revenue could lead to disagreement between tax authorities and taxpayers. He argues that it is beneficial to understand the enforcement trends and behaviour patterns of tax authorities as an evolutionary process in the step development of the capacities of tax authorities.

Australia

Phoenixing – Long Road to Reform

Anton Joseph

This article discusses the taxation-related aspects of the recently released federal government’s consultation paper, which sets out proposals to combat illegal phoenixing activity in Australia. The author questions whether powers proposed to be given to the Commissioner of Taxation to recover tax liabilities from companies in financial distress may be used in a manner that discourages businesses from making genuine restructuring efforts to avoid winding up pre-insolvent companies for the long-term good of their employees and other creditors, including the Australian Tax Office. While the prevalence of phoenixing in Australia is calling out for a legal solution, the author concludes that the reforms should be approached with circumspection.

Pakistan

Enforcement Policy to Tackle Sales Tax Fraud in Pakistan

Bilal Hassan

In the November-December 2017 and March-April 2018 issues of the Asia-Pacific Tax Bulletin, the author discussed the search for tax policies to improve taxpayer compliance and to boost investment in Pakistan. In this article, the author continues his commentaries on Pakistan tax issues, now providing an analysis of the Federal tax authorities’ enforcement of Pakistan’s sales tax law. He concludes that the legislation has provided the mechanism to combat sales tax fraud and to recover defrauded tax, and dispels certain arguments advanced by taxable persons to thwart the recovery measures. He also suggests that implementation of the tax authorities’ enforcement policies depends on the integrity and professional capacities of the authorities’ revenue officers.

CASE NOTES
India
Seismic Survey Vessel Constitutes a Permanent Establishment
Abhishek Dugar and Lakshita Bhandari

This case note reviews the ruling issued by the Authority for Advance Rulings to SeaBird Exploration FZ LLC, which determined that the applicant’s seismic survey activities conducted from its vessels operating in Indian territorial waters constituted a fixed place permanent establishment in India under article 5(1) of the India-United Arab Emirates Income Tax Treaty (1992).

India

AAR Decides on Taxability of Non-Resident Indian’s Salary and Incorporation of Foreign Tax Credits in the Calculation of Resident’s Withholding Tax

Abhishek Dugar and Lakshita Bhandari

This case note outlines the recent ruling issued by the Authority for Advance Rulings to Texas Instruments India Private Limited, which determined that the salary paid in India to a non-resident Indian in respect of services rendered in the United States was not taxable in India, and that foreign tax credits available to a resident and ordinary resident of India may be taken into account in the calculation of the amount of withholding tax that is to be deducted by the employer from the resident’s salary.

India

Income from Domain Name Registration Services Held to be Taxable Royalties

Abhishek Dugar and Lakshita Bhandari

This case note sets out the Delhi Income Tax Appellate Tribunal’s decision in Godaddy.com LLC v. ACIT, which held that the rendering of domain name registration services was tantamount to the rendering of services in connection with the use of intangible property that is similar to a trademark. Consequently, income received for such services was taxable as a royalty.

India

High Court Finds Exports to Foreign Associate Not Comparable with Goods Sold in Domestic Market

Abhishek Dugar and Lakshita Bhandari

This case note reviews the High Court decision in Principal Commissioner of Income-tax-5, Pune v. Keihin Fie (P.) Ltd, which held that margins derived on the export of components and parts to an associated enterprise of the taxpayer were not comparable with the margins derived from sales of goods made in the domestic market because the parts and finished goods were not comparable and the classes of customers to which they were sold were different.

New Zealand

New Zealand Taxpayer Not Entitled to Foreign Tax Credit for Tax Sparing Granted to Controlled Foreign Company

Kevin Holmes

This note summarizes the New Zealand Court of Appeal’s decision in Commissioner of Inland Revenue v. Lin, which overturned the High Court’s 2017 ruling that a New Zealand-resident taxpayer with relevant interests in certain controlled foreign companies in China was entitled to a foreign tax credit for both tax paid in China by the controlled foreign companies and to tax spared in China arising from tax concessions granted to those companies.

INTERNATIONAL PERSPECTIVE ON ASIA-PACIFIC TAXATION AND INVESTMENT
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