Embed Size (px)
Citation preview
Asset Management Tax Highlights – Asia Pacific
April to June 2015In this edition’s asset management tax highlights for the Asia Pacific region, we highlight industry developments from Australia, China, Hong Kong, India, Korea, and Singapore, which may impact your asset management business. We hope you find these updates of interest, and will be pleased to discuss these developments and issues with you further.
AustraliaInvestment Manager Regime
The final element of the Investment Manager Regime (IMR) received Royal Assent on 25 June 2015 (with some late changes to the original Bill) and is now law.
The IMR measures are aimed at encouraging widely held foreign entities to invest into Australia and also to encourage the use of Australian fund managers. These two areas faced tax uncertainty as foreign funds could technically trigger inadvertent material tax liabilities in Australia. The uncertainty was acting as a deterrent to foreign funds and the IMR provides a safe harbour where foreign funds can invest in certain Australian investments, with the certainty that adverse tax outcomes will not arise.
Broadly, where the IMR applies, either:
• gains in respect of certain Australian investments are not subject to tax (the “direct investment concession”) and/or
• related income which would otherwise be attributed to a permanent establishment in Australia would not be subject to tax (the “indirect investment concession”).
The late changes to the original Bill improves the operation of the indirect investment concession (including taking account of sub-underwriting fees earned). The changes also ensure that an independent fund manager’s interests or rights that reflect its fund management role are not taken into account in the widely held test for the purposes of the direct investment concession.
The final element of the IMR applies from 1 July 2015 and if the foreign entity chooses, can also apply to prior income years.
2 Asset Management Tax Highlights – Asia Pacific
New tax system for Managed Investment Trusts
On 12 May 2015, the Government announced it will proceed with the implementation of the new tax system for Managed Investment Trusts (MITs). Final legislation has not been released yet with only an exposure draft released for public consultation on 9 April 2015. Under the draft legislation, the proposed rules (in whatever form) will start from 1 July 2016.
Irrespective of the rules not being law, MITs can elect to apply the rules from 1 July 2015. It is not foreshadowed that many trustees will elect for this early start date. Many custodians – and indeed the Australian Taxation Office (ATO) – will require time to change their tax reporting systems for the new regime. From a commercial perspective, to begin the necessary projects, the new rules must have commenced with legislative effect and are then expected to take at least 12 months to complete. Hence on the basis that the new rules commence from 1 July 2015, systems are expected to be upgraded for a 1 July 2016 start time.
In the meantime, it remains theoretically possible for a trustee to elect into the new regime from 1 July 2015. The obvious practical issue for trustees so electing for the rules to retrospectively apply from this date is that the rules have yet to be enacted.
Accordingly, on 3 July 2015 the ATO issued a statement to provide guidance on the risks of applying law which has not been enacted and its general approach to retrospective law. This guidance covers situations where the trustee has under or over withheld tax from payments in anticipation of the new regime.
Two other areas covered are:
1.Post balance date variances in members’ entitlements – “unders and overs”
2.Distributions in excess of beneficiaries’ shares of net income – tax deferred distributions (TDDs)
Unders and overs
• For MITs applying the proposed rules from 1 July 2015 or 1 July 2016, the ATO will not generally apply compliance resources to specifically review prior year under and over amounts.
• For MITs not electing into the new rules from these dates, the ATO expects trustees to advise unitholders of their net income entitlements based on the trust taxation rules set out in Division 6. However, while the ATO reserves the right to focus on this issue in specific cases, it will not be treating unders and overs generally as a focus area in allocating compliance resources for income years ending before 1 July 2017.
• From then on, the ATO will be monitoring the treatment of unders and overs by trusts not electing into the new rules and allocating compliance resources based on overall risk management principles.
Tax deferred distributions
The ATO will generally not apply compliance resources to seek to assess TDDs as ordinary income where taxpayers hold interests in trusts:
• as investments either on capital account, or subject to the capital gains tax (CGT) primary code rules applying to superannuation entities, MITs and the superannuation business of life insurance companies, and have consistently reduced the CGT cost base of their units.
• as revenue assets (not subject to CGT primary code rules), and have fully taken into account TDDs in working out revenue gains and losses on those interests.
TDDs will be treated as ordinary income in situations:
• of the type referred to in Taxation Ruling IT 2512 for ‘Financing unit trusts’, and similar arrangements involving the use of a trust structure to raise finance where TDDs are received in lieu of interest or similar amounts that would normally form part of assessable income
• of the type referred to in Taxation Ruling TR 2014/D1, which involves the use of trusts to make distributions to persons as a reward for the performance of services, whether as an employee or otherwise
• where there may have been tax planning to maximise the extent to which trust distributions are characterised as TDDs.
The assessability of TDDs will also be considered where they relate to trust interests:
• subject to the Taxation of Financial Arrangements (TOFA) regime, where they are treated as assessable income under TOFA rules
• held as trading stock – in these situations a corresponding closing stock adjustment may also be appropriate in some situations when a cost basis is being used.
OECD Common Reporting Standards
Australia signed the Organisation for Economic Cooperation and Development’s (OECD) common reporting standard multilateral competent authority agreement on 3 June 2015. The agreement enables the automatic exchange of certain account holder information between countries in order to combat the evasion of tax. Australia intends to implement the agreement from 1 January 2017 with the first exchange of information in 2018.
Foreign currency hedging transactions
The ATO released on 24 June 2015 a Notice of Partial Withdrawal (TR 2014/7PW) in respect of a previously released Taxation Ruling TR 2014/7 dealing with foreign currency (FX) hedging transactions entered into as part of a FX currency overlay or portfolio hedge.
In the Notice, the ATO removed references to how the “source” of foreign currency hedging gains (as to whether “domestic” or “foreign” sourced) is determined for tax purposes, acknowledging that the previous statements in TR 2014/7 raised a number of concerns by the industry. The Commissioner reiterated his view that source is always a practical matter of fact, and that the place where the hedge contract is formed is likely to be the most important factor in determining source for such gains.
Asset Management Tax Highlights – Asia Pacific 3
ChinaRMB fund developments – introducing the pilot RMB fund foreign market in Qingdao after the Shanghai pilot scheme
In early 2015, the Qingdao Financial Office and the other principal governments jointly promulgated “The Implementation Measures on the Pilot Programme for Domestic-invested Equity Investment Enterprises” (the Qingdao Pilot Measures). Under the Qingdao Pilot Measures, foreign investors are entitled to set up investment institutions in Qingdao as general partners and launch Qualified Domestic Investment Funds (the RMB Fund), which target investments in secondary overseas markets, and explores M&A businesses in primary markets and supervised commodities markets (overseas markets), albeit prudently. Qingdao has made significant efforts to relax restrictions on RMB foreign investment and broaden the investment scope, representing a breakthrough in the fund industry in China.
• Under the Qingdao Pilot Measures, the RMB Fund can be established in the form of a limited partnership, whereas the Fund Management Company (FMC) can be either established in the form of corporation or partnership. Qingdao has yet to specify any clear requirements on the registered capital and the contribution due date of FMCs, which is one of the primary differences between Qingdao and the other pilot areas.
• Under the Qingdao Pilot Measures, the RMB Fund can use its own capital to invest in the overseas markets. This indicates that RMB Fund is required to delegate a qualified commercial bank in Qingdao as the capital trustee. RMB and foreign exchange settlement businesses should operate under the quota permitted by the Qingdao Cross-border Wealth Management Group (the Working Group).
• The Qingdao Pilot Measures stipulates that RMB Fund can directly invest into the overseas market or make investments via overseas funds. However, they are not allowed to make direct investments in China or through any qualified foreign institutional investor (QFII), qualified foreign limited partner (QFLP) or other channels. In addition, the RMB Fund is authorised to use RMB and foreign currencies to make overseas investments within the foreign exchange quota permitted by the Working Group.
• Except for the requirements on foreign investors’ qualification and statutory representatives’ past investment performance, the Qingdao Pilot Measures also impose requirements on the trustee bank and fund managers of RMB Fund.
Comparison between the Qingdao Pilot Measures and the Shanghai Pilot Measures
Compared to the “The Implementation Measures on the Pilot Program for Domestic-invested Equity Investment Enterprises” (Shanghai Pilot Measures) enacted in April 2012, the newly-introduced Qingdao Pilot Measures shares many similarities, though with less restrictions on the registered capital of FMCs as well as the contribution quota of investors.
• Another channel for domestic capital to invest foreign market – The Qingdao Pilot Measures explores a new path for domestic capital to flow into overseas markets, which we believe will be warmly welcomed by Chinese institutional investors and high net-wealth individuals.
• Related China tax issues – As the income tax law for partnership firms has not been released, the relevant tax issues are not clear and may vary under different practical situations. For instance, since the current China tax policies are formulated for incorporated enterprises, the foreign tax credit policies for the RMB Fund and FMCs are uncertain.
• Wealth Management – After Qingdao gets the green light to build the first comprehensive financial reform pilot area, the theme of wealth management has become the driver to promote the development of the Qingdao Financial industry. We are closely following the development of the implementation of the Qingdao Pilot Measures and will provide updates as they arise.
4 Asset Management Tax Highlights – Asia Pacific
Hong KongHow does the standard for automatic exchange of information impact financial institutions’ compliance plans?
With the global trend of moving towards greater tax transparency, the HKSAR Government is committed to adopting the Common Reporting Standard (CRS) and will put in place a legal framework and system platform for implementing automatic exchange of information (AEoI). On 24 April 2015, the Financial Services and the Treasury Bureau (FSTB) issued the “Consultation Paper on Automatic Exchange of Financial Account Information in Tax Matters in Hong Kong”, setting out the government’s thoughts on the legislative regime and operational framework of the Hong Kong AEoI model, and seeking views on a number of aspects concerning the model.
In view of the upcoming adoption of the CRS in Hong Kong together with the provisions of the Foreign Account Tax Compliance Act (FATCA), which became effective in July 2014, financial institutions will likely have to put additional efforts into account due diligence and reporting procedures in order to fulfil their compliance obligations. The consultation paper proposes that financial institutions should have certain account due diligence procedures in place by January 2017 with first reporting to the IRD in May 2018.
For further details, please refer to http://www.pwchk.com.hk/home/eng/crs_apr2015.html
Hong Kong as the ‘Going Global’ platform for Chinese MNCs
Proposals announced by the HKSAR Government in its 2015/16 Budget look to provide a more commercial friendly environment for operating a corporate treasury centre (CTC) or an intellectual property (IP) hub in Hong Kong. The proposals seek to attract multinational enterprises (MNEs), including Chinese MNEs, to manage their regional treasury activities or to hold their IPs in Hong Kong by removing ineffective Hong Kong tax treatments in these areas.
In particular, the proposals on CTC aim to remove the mismatch in the Hong Kongtax treatments for interest expenses and interest income, which are the major concerns for CTCs. For IP hubs, the scope of tax deduction for capital expenditure incurred on the purchase of IP rights would be extended to cover more types of IP rights as appropriate. Coupled with the expanding Hong Kong tax treaty network, these proposals aim to enhance the tax effectiveness of using a Hong Kong company as a regional CTC or IP holding company.
The proposals would be welcomed by Chinese MNEs, many of which are taking advantage of the state strategy of ‘Going Global’ adopted by the Chinese Government.
On 1 April 2015, Hong Kong and Mainland China signed the Fourth Protocol (the Protocol) to the comprehensive double tax arrangement between China and Hong Kong (the CDTA). The most important benefit to Hong Kong taxpayers from the amendments set out in the Protocol is to provide a tax exemption in China for gains derived by Hong Kong residents and “Hong Kong resident funds” (as specifically defined in the Protocol) from the disposal of shares listed on recognised Chinese stock exchanges, provided certain conditions are met. Additionally, the withholding tax rate for rentals from aircraft leasing (as well as ship chartering) is reduced to 5% from the current 7%.
For further details, please refer to http://www.pwchk.com.hk/home/eng/hktax_news_may2015_5.html
The FSTB paper on proposed tax measures for corporate treasury centres in Hong Kong
Further to the 2015/16 Budget announced by the HKSAR Government in February this year, which mentioned that the IRO will be amended to provide a more tax-friendly environment for operating CTCs in Hong Kong, the FSTB issued a paper setting out the related legislative proposals for discussion in a briefing session for the Legislative Council Panel on Financial Affairs held on 1 June 2015.
The paper can be accessed via the link: http://www.legco.gov.hk/yr14-15/english/panels/fa/papers/fa20150601cb1-870-4-e.pdf
Hong Kong is NOT a non-cooperative tax jurisdiction
On 17 June 2015, the European Commission (EC) published a list of third country (i.e. those countries not in the European Union or EU) non-cooperative tax jurisdictions (the pan-EU blacklist) together with its Action Plan as part of its 2015 Work Programme to fundamentally reform the corporate taxation in the EU. The pan-EU blacklist consists of 30 jurisdictions, including Hong Kong. However, it is not absolutely clear as to the criteria upon which Hong Kong is included in the pan-EU blacklist and what the consequences are for being included in the list.
Indeed, there are various grounds to support that Hong Kong is not a non-cooperative jurisdiction or a harmful tax regime. The OECD has regarded Hong Kong as a largely compliant jurisdiction in Peer Reviews conducted by the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) and acknowledged Hong Kong’s commitment to implement the AEoI. In addition, many of the factors identified by the previous work of the OECD on harmful preferential tax regime are not present in the Hong Kong tax regime.
The above, together with Hong Kong’s continuous effort in expanding its networks of tax treaty or tax information exchange agreement (TIEA) and maintaining an ongoing communication with the international community to keep them abreast of Hong Kong’s commitments and efforts on tax cooperation, should help defend Hong Kong as a tax cooperative jurisdiction.
International investors / multinational companies using Hong Kong as an investment holding / financing / licensing location should review and assess their current structures / arrangements and be prepared to demonstrate that the Hong Kong company is set up with commercially justifiable reasons, there is sufficient substance in the Hong Kong company, and adequate supporting documentation is in place to substantiate the proper transfer pricing policies for the related party transactions conducted by the Hong Kong company.
For further details, please refer to http://www.pwchk.com/webmedia/doc/635708473527949444_hktax_news_jun2015_7.pdf
Asset Management Tax Highlights – Asia Pacific 5
IndiaRegulatory updates
• On 7 April 2015, the Reserve Bank of India (RBI) released the first bi-monthly policy statement for the financial year 2015-2016. The major highlights include:
– A proposal to expand the scope of bond issues by international financial institutions and to permit eligible Indian corporates to raise external commercial borrowings through the issuance of rupee bonds in overseas centres with an appropriate regulatory framework. The draft framework on the issuance of rupee linked bonds was issued on 9 June 2015.
– To encourage the hedging of forex exposures and enhance the liquidity of the currency options market, a proposal was announced to permit Indian exporters and importers to write covered options based on the actual contracted forex exposure, subject to certain conditions. Detailed operating instructions will follow.
– A proposal to allow non-banking finance companies (NBFCs) infrastructure debt funds to provide takeout finance for infrastructure projects that have been in operation for one year in the public private partnership (PPP) segment without a tripartite agreement, and to the non-PPP segment, subject to certain conditions. Detailed guidelines will follow.
• On 30 April 2015, RBI issued a circular dispensing with the requirement of prior approval as well as the minimum eligibility criteria such as minimum owned funds, profitability etc. for NBFCs to distribute mutual fund products.
• On 6 May 2015, the Government of India (GOI) issued a press release giving its approval to allow the REITs as an eligible financial instrument / structure under the Foreign Exchange Management Act (FEMA) 1999. The approval is expected to enable foreign investment inflows into the real estate projects, which were earlier, prohibited under the FEMA Regulations.
• On 13 May 2015, the Securities and Exchange Board of India (SEBI) came out with a circular setting out guidelines to be followed by the stock exchanges for provision of co-location/proximity hosting facilities. The circular provides guidelines to the stock exchanges to ensure fair and equitable access to the co-location facility to all the interested participants and that the facility of co-location / proximity hosting does not compromise the integrity and security of the data and trading systems.
The stock exchanges shall put in place systems for implementation to achieve the objectives within three months of the date of the circular.
6 Asset Management Tax Highlights – Asia Pacific
• On 9 June 2015, the RBI released the draft framework for issuance of Rupee linked bonds, which proposes to allow Indian corporates eligible to raise ECB to issue rupee bonds in overseas markets subject to the following conditions:
– Indian corporates eligible to raise ECB are permitted to issue Rupee linked bonds overseas. The corporates which, at present, are permitted to access ECB under the approval route will require prior permission of the Reserve Bank to issue such bonds and those coming under the automatic route can do so without prior permission of the Reserve Bank.
– The bonds may be floated in any jurisdiction that is Financial Action Task Force compliant.
– The subscription, coupon payments and redemption may be settled in foreign currency. The proceeds of the bonds can be parked as per the extant provisions on parking of ECB proceeds.
– The amount and average maturity period of such bonds should be per the ECB guidelines. The call and put option, if any, shall not be exercisable prior to completion of applicable minimum average maturity period.
– The coupon on the bonds should not be more than 500 basis points above the sovereign yield of the Government of India security of corresponding maturity as per the Fixed Income Money Market and Derivatives Association of India yield curve prevailing on the date of issue.
– End use restrictions will be as applicable under the extant ECB guidelines.
– For USD-INR conversion, the Reserve Bank’s reference rate on date of issue will be applicable.
– Further, any investor in these bonds can hedge the foreign currency risk and credit risk through permitted derivative products in the domestic market.
It is also clarified that banks incorporated in India will not have access to these bonds in any manner whatsoever.
• On 12 June 2015 SEBI clarified that an entity registered as FVCI can obtain registration as FPI, subject to the following conditions:
– the FVCI applicant must comply with the eligibility criteria as prescribed under the SEBI FPI Regulations, 2014;
– the funds raised, allocated and invested must be clearly segregated for both, FVCI and FPI registration;
– separate accounts must be maintained with the custodian for execution of trades. Same custodian however, should be appointed for FVCI and FPI activities;
– securities held under FVCI and FPI registrations must be segregated;
– reporting of transactions must be done separately according to conditions applicable under the respective registration;
– all the conditions applicable to the entity under the respective registrations must be complied with at the level of the segregated funds and activities with respect to the specific registrations;
– investments restrictions (including restrictions with respect to Offshore Derivative Instruments) applicable to a FPI shall be applicable to the FVCI entity as well;
– the FVCI applicant does not have an opaque structure.
Key decisions from SEBI’s board meeting on 23 June 2015
i. Streamlining process of public issues
• Reducing the listing timeline from T+12 days to T+6 days
• Making ASBA (Application Supported by Blocked Amount) mandatory
• All public issue post 1 January 2016 will have to follow this system
ii. Framework for capital raising by tech start ups and other companies on Institutional Trading Platform
• Companies which intensively use technology, IT, intellectual property, data analytics, bio-tech, nano-tech can access this route provided at least 25% of the pre-issue capital is held by Qualified Institutional Buyer (QIB) or any other company with at least 50% of pre-issue capital held by QIB
• Mininum application size and mininum trading lot size - 10 lakhs (keeps it out of reach of retail investors)
• Option to migrate to main board after 3 years subject to compliance with eligibility requirements
iii. Fast track issuance of FPO and Rights Issues
• Mininum public holding requirement reduced to Rs. 1,000 (for FPO) and Rs. 250 cr (for rights issue) from Rs. 3,000 cr subject to additional compliances
Asset Management Tax Highlights – Asia Pacific 7
iv. Offer for Sale (OFS) through stock exchange mechanism
• Reviewed the comments received on discussion paper and following changes are approved by the Board:
• OFS notice on T-2 days (which is as per the current procedure) however T-2 day shall be reckoned from banking day instead of trading day
• Retail investor to get option to place bids at cut-off price
v. Interim use of funds by Issuers
• In case of funds raised through public/ rights issue, net issue proceeds pending utilisation shall be deposited only in Scheduled Commercial Banks. For public/rights issue of Indian Depository Receipts (IDR) funds shall be kept in a bank having credit rating of ‘A’ or above by an international credit rating agency.
Tax updates
• On 9 April 2015, SEBI issued a circular clarifying that roll-over of mutual funds schemes in accordance with the SEBI (Mutual Fund) Regulations, 1996, shall not amount to transfer as per the Income-tax Act, 1961 in the hands of the unit holders. Accordingly, no capital gains shall arise at the time of exercise of the roll-over option by the investors.
• On 20 May 2015, the Finance Minister of India constituted a High Level Committee headed by Justice A.P. Shah (Former Chief Justice of Delhi High Court and currently Chairman of Law Commission of India) and other 2 members, Dr.Girish Ahuja (Chartered Accountant) and Dr. Ashok Lahiri (Formerly Chief Economic Adviser and currently Chairman of High Level Committee to interact with Trade and Industry on tax laws) to examine legacy tax issues, including the issue of levy of Minimum Alternate Tax (MAT) on FPIs for the periods prior to 01 April 2015. The Committee is expected to examine all the legal provisions, judicial/quasi-judicial pronouncements and such other relevant aspects as it may consider appropriate and provide its recommendations to the Government.
• Initially the Committee would focus on the issue of MAT on FIIs for giving its report expeditiously; other issues to be referred to the Committee will be notified in due course. The Committee shall invite suggestions and representations from stakeholders, including industry associations by 22 June 2015 and shall have interactions with representatives, if need be between 29 June 2015 and 6 July 2015. The term of the Committee will be for one year or such period as may be notified by the Government from time to time.
KoreaKorea-US Agreement on Automatic Exchange of Tax Information ready to take effect
Korea and the US officially signed an agreement on the automatic exchange of tax information on 10 June 2015. The agreement is subject to ratification by the parliaments of both countries before taking effect. The agreement represents the first of its kind that Korea has signed with a foreign country.
Based on the agreement, the tax authorities of both countries will collect information on interest, dividends and other income sourced during a year from the financial accounts held by individuals or corporations of the other contracting state and exchange the collected information every September of the following year (the first exchange will occur in September 2015 for the information collected as of 31 December 2014). The agreement will apply to all financial accounts in the US related with US sourced income that are held by Korean corporations, regardless of amount. For the financial accounts in Korea held by US corporations, the coverage will include existing accounts where the outstanding balance exceeds USD250,000 (no limits for new accounts opened after the enforcement of the agreement).
The information exchange has so far been limited to specific US accounts requested by Korean tax authorities. Now however, due to the agreement, the tax authorities will automatically receive the information of all US accounts held by Korean corporations and may utilise them for tax assessment or investigation purposes. Also, Korean financial institutions will be regarded as participating foreign financial institutions under the US Foreign Account Tax Compliance Act (FATCA) and exempt from withholding tax as required in the FATCA.
Ruling Update – calculation of acquisition cost in the disposition by an umbrella fund of securities acquired at different prices
Where an umbrella fund is an offshore collective investment vehicle without having a principal office in Korea, disposes of the same type of securities (e.g. stocks issued by the same company) acquired at different prices, the acquisition cost to be deducted from the disposal proceeds shall be calculated by applying the moving average method. In connection with this, the acquisition cost shall be calculated by the umbrella fund based on the combination of sub-funds rather than by each sub-fund.
8 Asset Management Tax Highlights – Asia Pacific
SingaporeEnhancement to the Enhanced-Tier Fund Tax Incentive Scheme
In the previous tax highlights, we shared the Singapore Budget 2015 announcements on “umbrella” approvals for Singapore fund structures under the Enhanced-Tier Fund Incentive Scheme (the ETF Scheme). The Monetary Authority of Singapore (MAS) issued a circular FDD Cir 05/2015 dated 29 May 2015 which provides details and clarifications with regard to the enhancement (the 2015 ETF Enhancement).
Prior to the 2015 ETF Enhancement, each entity intending to rely on the ETF Scheme had to independently apply and meet the conditions under the ETF Scheme or other tax exemption scheme on a standalone basis. This causes additional costs and compliance burden to funds and fund managers, especially in the case of private equity and real estate fund structures where special purpose vehicles (SPVs) are commonly used to hold each investment. The 2015 ETF Enhancement seeks to address this issue.
With effect from 1 April 2015, master-feeder-SPV and master-SPV fund structures can submit a consolidated application for the ETF scheme and meet the economic commitments on a collective basis (referred to herein as the “umbrella ETF structure”).
The following additional conditions apply for applications for the umbrella ETF structure:
(1) the master fund must be a (i) Singapore-incorporated company which is tax resident in Singapore; (ii) Singapore-constituted trust whose trustee is a Singapore tax resident; or (iii) Singapore-registered limited partnership with all partners who are Singapore tax residents;
(2) the master fund must be tax resident in Singapore for each basis period;
(3) the SPVs must be set up as companies and are wholly owned by the master fund; and
(4) the economic commitments have to be met on a multiple-fold basis.
It is not surprising that many of us will be focusing our attention on the fourth condition being the quantum of economic commitments. To put it simply, each entity in an approved ETF structure (except feeder funds that do not carry on income-deriving activities) contributes to one set of economic commitment. For example, where a fund structure includes a master fund and two SPVs, the multiplier for the economic commitments is three (i.e. S$150 million fund size and S$600,000 annual local business spending).
The economic commitments can be met on a collective basis by entities in the approved fund structure. Private equity, real estate and infrastructure funds can continue to meet these economic commitments by way of committed capital (subject to existing conditions).
It is possible to add or withdraw SPV(s) to / from an approved umbrella ETF structure. Any subsequent additions of SPVs to an approved umbrella ETF structure will have to be approved by the MAS. The new economic commitments on a multiple-fold basis will have to be met at the point of addition of the new SPV(s). Similarly, an advance notice needs to be given to the MAS for any withdrawal of SPV(s) from an approved umbrella ETF structure. The economic commitments will be revised downwards accordingly.
For details of our observations on the 2015 ETF Enhancement, please refer to http://www.pwc.com/en_SG/sg/financial-services-tax-bulletin/assets/fstaxbul201506.pdf
Asset Management Tax Highlights – Asia Pacific 9
For more information, please contact the following territory tax partners:
Country Partner Telephone Email address
Australia Ken Woo +61 (2) 8266 2948 [email protected]
China Kenny Lam +86 (21) 2323 2595 [email protected]
Hong Kong Florence Yip +852 2289 1833 [email protected]
India Gautam Mehra +91 (22) 6689 1155 [email protected]
Indonesia Margie Margaret +62 (21) 5289 0862 [email protected]
Japan Akemi Kitou +81 (3) 5251 2461 [email protected]
Stuart Porter +81 (3) 5251 2944 [email protected]
Korea Kwang-Soo Kim +82 (0) 10 3370 9319 [email protected]
Malaysia Jennifer Chang +60 (3) 2173 1828 [email protected]
New Zealand Darryl Eady +64 (9) 355 8215 [email protected]
Philippines Malou Lim +63 2 845 2728 [email protected]
Singapore Anuj Kagalwala +65 6236 3822 [email protected]
Taiwan Richard Watanabe +886 (0) 2 2729 6666 26704 [email protected]
Thailand Prapasiri Kositthanakorn +66 (2) 344 1228 [email protected]
Vietnam Van Dinh Thi Quynh +84 (4) 3946 2231 [email protected]
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
© 2015 PricewaterhouseCoopers Limited. All rights reserved. PwC refers to the Hong Kong member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. HK-20150427-4-C1
