In order to stop tax avoidance and evasion Asian countries are actively taking part with the Organization for Economic Cooperation and Development (OECD)’s plan. The OECD’s Action Plan is far reaching and will help support local Asian countries’ tax systems to protect tax bases against base erosion and profit shifting.
Developing countries like China, Indonesia, Japan and neighbors Australia and New Zealand, are sound responses in line with the BEPS project. New bilateral tax agreements are being agreed, but the objective of the BEPS project is precisely to reduce the need for new treaties by encouraging a system that integrally reflects collaboration on tax matters between jurisdictions.
Following countries are responses with BEPS:
Singapore: releases new guidelines
Singaporean Tax authority issued a new guide on the tax treatment of hybrid instruments on May 19, which reports hybrid mismatch arrangements, one of the points underlined in the OECD’s Action Plan. The guide authorized “Income Tax Treatment of Hybrid Instruments” provides guidance in evaluating how a hybrid instrument would be treated for tax purposes, as it can be considered debt or equity depending on the case.
Japan: implementing new procedures
Although Japan is not providing a direct response to the BEPS cause, but has legislated several pieces of legislation which will help deal with base erosion. They take account of controlled foreign corporation (CFC) provisions, amended rules on corporate debt-equity ratio, and new provisions that will help negate treaty shopping.
India: keeping its distance
India also part of the development of the Action plan, but still remains one of the countries with few public comments to give. With the great focus India has dedicated to transfer pricing in the latest five to ten years, allied with the development of its economy, it is safe to say that although India will collaborate with the BEPS project it will remain individualistic over many aspects of transfer pricing.
However, the Action Plan put forward by the OECD and currently in further development by its members aims to solve several issues at once.
