Beginning in 2015, the 10 member countries of ASEAN intend to form a common market—the ASEAN Economic Community (AEC)—based on the free flow of goods, services, investment, and skilled labor and the free flow of capital. The member states of ASEAN are Malaysia, Singapore, Indonesia, Thailand, Philippines, Vietnam, Cambodia, Laos, Brunei and Myanmar. ASEAN has also entered into a Regional Comprehensive Economic Partnership agreement with surrounding countries including China, Japan and India as well as some bilateral free trade agreements.
Since the signing of the AEC blueprint agreement, ASEAN member countries have been competing against one another for foreign direct investments by reducing corporate tax rates. For example, Singapore has the lowest corporate tax rate at 17% among the ASEAN member states. Tax incentives, such as exemptions from or reductions in corporate tax, remain relevant because such incentives will attract investments in certain encouraged industry sectors.
