Asset Management Tax Highlights - Asia Pacific

Cross border investment funds initiatives across the region - a round up

1. The ASEAN collective investment scheme (CIS) framework is now just over a year old. It has had a modest beginning, with only 11 funds in application with the home regulator from just three asset management houses already in existence in the region. Of these 11 funds, 5 are from Singapore, 5 from Malaysia and 1 from Thailand. Only 5 have received approval from the host regulator as yet. There

Asset Management Tax Highlights - Asia PacificIn this edition’s asset management tax highlights for the Asia Pacific region, we round up the cross border investment funds initiatives across the region and highlight industry developments from Australia, China, Hong Kong, India, Japan and Korea 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.

July to September 2015

is very limited incentive for foreign asset managers to distribute in these three countries only, and the Western managers are more inclined to participate in the Asia Region Fund Passport (ARFP), a larger fund passport scheme with greater reach and AUM gathering capability. One of the reasons for its slow start other than tax harmonisation, is that that Thailand and Malaysia’s foreign exchange is still tightly controlled, which poses a challenge to distribute multi-currency share classes (non Thai Baht and non Malaysian Ringit respectively) in these countries.

2 Asset Management Tax Highlights – Asia Pacific

2. In respect of the China Hong Kong Mutual Recognition Fund scheme, shortly after is announcement in May, as of 1 July 2015, the China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission (SFC), have started accepting applications for registration. To date, there have been 16 north bound applications with the CSRC and 13 south bound applications with the SFC. The scheme is silent on the potential China tax implications on non-resident investors deriving income from a China fund recognised by SFC. With reference to taxation on non-resident investors deriving income from QFII/RQFII or Shanghai- Hong Kong Stock Connect, it is reasonable to expect that similar taxation rules may be announced later to grant similar tax treatment, on mutually recognised funds. Qualified Hong Kong domiciled funds authorised by SFC under section 104 of Hong Kong Securities and Futures Ordinance are statutorily exempted from Hong Kong profits tax. There is no Hong Kong profits tax on any distributions made by such an authorised fund to its investors (whether resident, non-resident, corporate or individual). The scheme also has a requirement to distribute no more than 50% of its assets under management in the corresponding markets. This might prove to be a limitation to north bound funds as the Hong Kong market is relatively smaller and Hong Kong based funds would only be able to distribute to the same extent as its distribution in Hong Kong. That being said, the south bound funds, might also face similar limitations. The south bound funds, which would typically be China-focused funds and thus single country focused funds might not meet the “suitability” criteria for retail investors in Hong Kong and therefore be classified in the risk category. However, notwithstanding the above limitations, within a few months, the scheme has received relatively more applications as compared to the ASEAN CIS scheme.

Australia

Foreign resident capital gains withholding tax

On 8 July 2015, the Australian Treasury released exposure draft legislation to implement the Government’s announcement on 6 November 2013 that it would proceed with a 10% non-final withholding tax on the disposal, by foreign residents, of certain taxable Australian property (i.e. Australian real property and interests in “land-rich” companies). The purpose of the regime is to assist in the collection of capital gains tax (CGT) liabilities from foreign residents.

With proposed effect from 1 July 2016, where the seller of certain taxable Australian property is a foreign resident, the buyer will be required to pay 10% of the purchase price to the Australian Taxation Office (ATO) as withholding tax. This withholding obligation will not apply to residential property valued under AU$2.5 million and transactions on an approved stock exchange where the CGT asset is an interest listed for quotation on that exchange. The foreign resident can apply to have the rate of withholding tax reduced in certain circumstances.

Multinational integrity measures

Following the release on 5 October 2015 of the Organisation for Economic Cooperation and Development (OECD) package of reports on Base Erosion and Profit Shifting (BEPS) covering fifteen action items, the Government reaffirmed its commitment to the process, and outlined its response to the OECD actions.

Notably, the Australian Government released draft legislation on 16 September 2015 designed to combat tax avoidance by multinational enterprises - which includes the following aspects:

• new multinational anti-avoidance law designed to counter the erosion of the Australian tax base by multinational entities using artificial or contrived arrangements to avoid the attribution of business profits to Australia through a taxable presence in Australia. These measures will generally apply in relation to schemes where a taxpayer derives a benefit on or after 1 January 2016,

3. The ARFP Statement of Understanding, a multilateral agreement that will facilitate the cross-border offering of eligible collective investment schemes in participating economies, was signed at the APEC Finance Ministers’ Meeting on 11 September 2015. Six APEC member economies: Australia, South Korea, New Zealand, Japan, Philippines and Thailand signed the ARFP Statement of Understanding. Singapore did not sign but indicated their continued commitment to the ARFP and is expected to sign later this year. The Statement of Understanding expresses the keen interest of the member economies to pursue the ARFP. Singapore pulled out as tax harmonisation, which is one of the key to the passport’s success, was not tabled on the agenda at Cebu and a few APEC members had not accepted it as priority. It is rumoured that APEC is looking for more countries to participate in this passport scheme and we expect to hear of more entrants in months to come. The particulars and specifications of this scheme have not been made public but from inferences to the previous two consultation papers, its modus operandi and the fund’s investment and diversification requirements have been inspired by the UCITS directive. Therefore, one could coin ARFP as the “Asia Pacific UCITS”.

Asset Management Tax Highlights – Asia Pacific 3

• doubling the penalties imposed on significant global entities that enter into tax avoidance or profit shifting schemes (to apply in relation to an income year commencing on or after 1 July 2015), and

• implementation of Action 13 of the G20 and OECD Action Plan on BEPS, which concerns transfer pricing documentation and Country-by-Country (CbC) reporting, into Australian domestic law (to apply in relation to income years starting on or after 1 January 2016).

These measures are proposed to apply to entities with annual global revenue of AU$1 billion or more.

OECD Common Reporting Standard

On 18 September 2015, Treasury released exposure draft legislation in relation to the implementation of the OECD’s Common Reporting Standard (CRS) for the automatic exchange of financial account information.

The CRS is intended to reduce international tax evasion but imposing new reporting and due diligence obligations on Australian financial institutions in respect of certain account holders. The CRS will apply to Australian financial institutions from 1 January 2017, with a first reporting deadline of 31 July 2018. There is an option to defer due diligence and reporting obligations for 12 months by written notice to the ATO.

Comments on the exposure draft were due by 9 October 2015.

Tax clearance on the QFII / RQFII gains is still in progress. From our observations, the same few questions have been raised between the various tax bureaus and the industry. Some of these concern:

• Treaty benefit applicant - Certain tax treaties grant tax exemptions on capital gains derived by non-land rich companies from their equity disposals, and the Beijing and Shanghai tax authorities allow the QFII/RQFII to apply for such treaty benefits, if available. However, who the treaty benefit applicant should be is heavily debated, especially for “QFII plus fund” accounts. The Shanghai tax bureau confirmed that the fund as the investment owner should be the treaty applicant while the Beijing tax bureau originally hesitated between QFII license holder and the fund before finally adopting the same approach as Shanghai.

• Tax settlement certificate on dividend and interest - the Beijing tax bureau has requested for the original tax settlement certificate from the listed companies / bond issuers at the very beginning of the tax clearance, creating a heavy work load for the taxpayers. Considering the practical difficulties in obtaining the original certificates, the Beijing tax bureau now accepts public announcements on dividend distributions.

• Retroactive period - The tax authorities required the QFII/RQFII to settle tax on the capital gains realised in the latest 5 years, i.e. for the period from 17 November 17 to 16 November 2014 in this round of clearance. However, the 5 year period may not apply on passive income obtained by QFII/RQFII, including dividend and interest. Recently, a tax audit case was reported by the media, in which the Beijing tax bureau challenged an Australia QFII to settle income tax on dividend income it earned early from 2006, before the effective date of the new Corporate Income Tax Law. The case was closed by the QFII settling the tax and late payment interest. This tax audit case signals that the tax authority may look into the tax related to dividend and interest income obtained by the QFII/RQFII retrospectively from the day the QFII/RQFII got approval to trade in the China market, regardless of whether the time of obtaining the income is before 2008 (as the effective date of the income tax law) or not.

Observations

Although the target deadline of tax clearance on QFII/RQFII has passed, the tax clearance practice is still in process. A number of practical issues remain unclear, for example, how to determine whether an A share company is a “land-rich” company or not for tax treaty purposes. Hopefully, the tax authorities in Beijing and Shanghai can quickly form their own practices for taxpayers to follow.

Change of Tax Treaty Benefit Application Procedure

On 27 August 2015, the State Administration of Taxation issued Public Notice [2015] No.60 (PN 60), which will take effect from 1 November 2015, to replace the existing Circular Guoshuifa [2009] No.124 (Circular 124) and introduce a new set of procedures for claiming benefits under the tax treaties of China.

Key changes made in PN60 compared with Circular 124:

• Removing the pre-approval and record filing requirement under Circular 124 and instead introducing a self-assessment or withholding agent assessment mechanism

• The new procedure requires the taxpayers or their withholding agents to self-assess the eligibility for the tax treaty benefits claimed and file certain forms and supporting documents to the tax authority in respect of such self-assessment, including the tax resident certificate issued by the tax authority in the treaty countries/districts in the latest year

China

Tax clearance on QFII / RQFII gains

In November 2014, the State Administration of Taxation (SAT) released Circular Caishui [2014] No.79 (Circular 79) to temporarily exempt income tax on capital gains from equity investments made by QFIIs and RQFIIs after 17 November 2014, while capital gains derived before 17 November 2014 should be taxable. However, Circular 79 did not provide detailed implementation guidance on the taxation rules, such as the calculation methodology, how many years to look back, how to claim tax treaty benefits, etc. Following the issuance of Circular 79, some tax authorities (i.e., Beijing, Shanghai and Shenzhen) have initiated their own QFII/RQFII tax reporting practices and set tax filing deadlines (31 July 2015 in Beijing and 30 September 2015 in Shanghai).


The above changes will mean increased burden and responsibility as well as less certainty for Hong Kong tax residents claiming a benefit under the double tax arrangement between China and Hong Kong (China-HK CDTA). Such treaty benefit claims will also be subject to the close scrutiny by the Chinese tax authorities afterwards. The IRD will also tighten the Hong Kong tax residency assessment to make sure that the applicants do not abuse the China-HK CDTA.

Hong Kong companies making a treaty benefit claim under the China-HK CDTA should review whether, in addition to being a Hong Kong tax resident, other conditions (e.g. sufficient substance, reasonable commercial purpose and being the beneficial owner of the income received) for enjoying the treaty benefits under the China-HK CDTA are fulfilled. They should also plan ahead and take into account the likely increase in time for applying and getting a HKTRC as a result of the above changes.

For further details, please refer to: http://www.pwccn.com/home/printeng/hktax_news_sep2015_8.html

• Like Circular 124, PN60 also provides relief from repetitive submission of documentation for the same type of income for which treaty benefits are sought. However, the relief rules have changed

Observations

PN60 is in response to the State Council’s decision to simplify the tax administration procedures. While the procedures are actually simplified, this new self-assessment mechanism demands the non-resident taxpayers as well as their withholding agents to possess profound knowledge of tax treaty clauses and tax filing procedures to make an appropriate assessment. In addition, the change from pre-approval methodology to post-filing examination would likely bring certain uncertainties and challenges to taxpayers.

Mainland China and Taiwan signs a double tax agreement

On 25 August 2015, the representatives from Mainland China and Taiwan signed the Agreement between the Mainland of China and Taiwan for the Avoidance of Double Taxation and Enhanced Collaboration in Tax Matters (the China / Taiwan DTA) after six years of negotiations between the two parties.

The China / Taiwan DTA follows the OECD Model Tax Convention in general. However, given the special investment structure, and economic and trade relations between mainland China and Taiwan, the China / Taiwan DTA provides more favourable treatments compared with other DTAs signed by mainland China. For instance, the allocation of taxing rights on capital gains, the applicability of the China / Taiwan DTA to investments in mainland China via a third jurisdiction, among others. With the improvement of the cross-strait direct investment, Taiwan and China investors may review their current investment structure and consider the possibility of restructuring to optimise their structures.

The China / Taiwan DTA will enter into force after the completion of the ratification procedures by both parties and apply to income derived on or after 1 January of the year following its entry into force.

For further details, please refer to: http://www.pwccn.com/home/eng/chinatax_news_aug2015_37.html

Hong Kong

Profits tax exemption for private equity funds

The Hong Kong Government has extended the profits tax exemption for offshore funds to private equity funds. The new exemption will take retrospective effect from 1 April 2015, subject to certain conditions. Private equity funds should consider positioning themselves for this exemption.

For further details, please refer to http://www.pwchk.com/home/eng/pe_tax_news_jul2015.html

The Hong Kong / Italy tax treaty entered into force on 10 August 2015

The Hong Kong / Italy comprehensive double tax agreement entered into force on 10 August 2015. It will be effective from 1 April 2016 in Hong Kong and from 1 January 2016 in Italy. Having this tax treaty in place demonstrates Hong Kong’s commitment to enhancing tax transparency and combatting cross-border tax evasion, and it is expected that Hong Kong can be removed from the Italian blacklist in the near future.

Challenges to Hong Kong tax residents under the new tax treaty benefit claim procedures in China

The China SAT’s issuance of PN60 has presented various to Hong Kong tax residents. In addition to replacing the pre-approval and record filing requirements with a self-assessment made by taxpayers or their withholding agents on the eligibility for the treaty benefits claimed, a Hong Kong tax resident certificate (HKTRC) is required as a proof of Hong Kong tax residency regardless of whether the treaty benefit applicant is a company incorporated in or outside Hong Kong. However, the requirement of obtaining a referral letter from the Chinese tax authorities for the purposes of applying a HKTRC is removed.


would now enable an Indian company to issue warrants and partly-paid shares to non-residents without any approval provided conditions specified by the RBI are met. Prior to this, the Consolidated FDI policy had stipulated that these instruments can be issued to a non-resident only after approval through the government route.

• Fourth Bi-monthly Policy 2015-2016 - On 29 September 2015, RBI released the Fourth Bi-monthly Policy statement for the financial year 2015-2016. The RBI has worked out a medium term framework (MTF) for FPI limits in debt securities in consultation with the government. The objective of this framework is to have a more predictable regime for investments by FPIs.

A summary of key MTF proposals announced by RBI are stated below:

1. The FPI debt investment limit is currently denominated in US dollars i.e. USD 30 billion for Government debt and USD 51 billion for corporate debt. Going forward, the limits for FPI investment in debt securities will be denominated in INR.

2. The limit for FPI investment in Central Government Securities (CGS) will be increased in phases to 5% of the outstanding stock by March 2018. This move is expected to open room for additional investment in CGS amounting to INR 1,200 billion by March 2018. This is over and above the existing limit of INR 1,535 billion available for investment in all government securities (G-secs).

3. In addition to the above, a separate limit for FPI investment in State Development Loans (SDL) will be available. This limit will be increased in phases to reach 2% of the outstanding stock by March 2018. An additional limit of about INR 500 billion by March 2018 is expected to be generated by this change.

4. RBI shall announce incremental limits every half year in March and September, which would be released every quarter.

5. The existing requirement of minimum residual maturity of three years for investment in G-Secs (including SDLs) shall continue to apply.

• Investments in entities listed on the ITP by Alternative Investment Funds (AIFs) - On 14 August 2015, SEBI issued a Circular amending the SEBI (AIF) Regulations, 2012: investments by Category I and II AIFs in shares of entities listed on the ITP would be considered as investment in unlisted securities.

• SEBI Board Meeting - On 24 August 2015, the SEBI Board meeting was held and highlights of the business conducted by the SEBI Board are as follows:

1. The Board approved the amendments to Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 and SEBI (Stock Broker and Sub-Broker) Regulations, 1992 to make way for the merger of Forward Market Commission (FMC) with SEBI.

2. Major amendments to the above Regulations include norms related to net-worth, shareholding norms, composition of board, corporatisation and demutualisation and the setting up of various committees, turnover, infrastructure etc.

3. The Board approved the increase in maximum number of anchor investors in a public issue for anchor allocation of above Rs. 250 crores from 25 to 35. This is subject to minimum allotment of Rs. 5 crore per anchor investor.

SEBI-FMC Merger

4. The SEBI was entrusted with an additional task of regulation of commodity derivatives, as the FMC formally merged with the SEBI on 28 September 2015. In the Union Budget for 2015-16, the Hon’ble Union Finance Minister had proposed merger of FMC with the SEBI “to strengthen regulation of commodity forward markets and reduce wild speculation”. To enable the same, the Finance Act, 2015 provided for amending the Securities Contracts (Regulation) Act, 1956 (SCRA) and the Forward Contracts (Regulation) Act, 1952 (FCRA). SEBI in order to effect the merger, has amended necessary laws or regulations.

• Partly paid shares and warrants to be treated as an eligible capital instruments under FDI policy -On 15 September 2015, Government of India issued a press note no.9 (2015 series) allowing partly paid shares and warrants as eligible capital instruments for the purposes of FDI policy. This

India

Regulatory updates

• Listing on the Institutional Trading Platform (ITP) - On 14 August 2015, SEBI issued a Circular on the framework for tech startups and other company listings on the ITP pursuant to the decision taken in its Board Meeting held on 23 June 2015. Per the Circular, companies which intensively use technology, IT, intellectual property, data analytics, bio-tech, nano-tech can access this route provided that at least 25% of the pre-issued capital is held by a Qualified Institutional Buyer (QIB) or any other company with at least 50% of pre-issue capital held by QIB; and no person or person acting in concert shall hold more than 25% or more in the post-issued share capital of such a company. Companies intending to list on the ITP may list with or without a public issue subject to norms prescribed in the Circular. The minimum application size and trading lot should be INR 10 lacs and the minimum number of allottees should be 200. 75% of the allocation reserved for institutional investors. There should be a lock-in period of six months from the date of allotment. There is an option to migrate to the main board of the stock exchange after 3 years subject to compliance with requirements of the stock exchange.


Japan

Supreme Court case on Delaware LPs and Bermuda LPs

On 17 July 2015, the Japanese Supreme Court determined that a particular Delaware limited partnership (LP) was to be treated as a foreign corporation under Japanese tax law. On the same date, the Supreme Court dismissed the final appeal by the Japanese tax authorities that a particular Bermuda limited partnership (LP) should be considered as foreign corporation for Japanese tax purposes.

Basic criteria applied by the Supreme Court for Delaware LPs

Under the Supreme Court decision on how it approached the fiscal classification of this Delaware LPs, the following basic criteria should be used to determine if an entity is a foreign corporation:

1. An entity should be examined under that foreign country’s laws and regulations or operation thereof to establish whether it would receive the status of a ‘legal person’ (equivalent to a corporation) under Japanese laws. If this cannot be determined, then:-

6. Limits for the residual period of the current financial year would be increased in two tranches from 12 October 2015 and 1 January 2016. Each tranche would entail an increase in limits as under:

a. INR 130 billion for CGS composed of INR 75 billion for long term investors and INR 55 billion for others

b. INR 35 billion for SDL open to all FPI investors.

7. Further, in order to facilitate direct hedging of foreign currencies and to permit execution of cross-currency strategies, exchange traded currency derivatives the RBI has decided to introduce trading in three cross-currency pairs: EUR-USD, GBP-USD and USD-JPY. Guidelines in this regard will be issued in mid-November.

• External Commercial Borrowing (ECB) Policy - Issue of rupee denominated bonds overseas - On 29 September 2015, the RBI issued a circular putting in place a framework for facilitating issuance of rupee denominated bonds overseas. The key points of the framework are:

1. Eligible borrowers: Any corporate or body corporate as well as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)

2. Recognised investors: Any investor from a Financial Action Task Force (FATF) compliant jurisdiction

3. Maturity: Minimum maturity period of 5 years

4. All-in-cost: All in cost should be commensurate with prevailing market conditions

5. Amount: As per extant ECB policy.

6. End-uses: No end-use restrictions except for a negative list

Tax updates

No Minimum alternative Tax (MAT) on Foreign Portfolio Investors (FPIs) / other foreign companies having no place of business / permanent establishment in India or who are required to seek registration under the Indian Companies Act

On 1 September 2015, the Government of India accepted the Justice AP Shah Committee’s recommendations relating to the levy of MAT on FPIs prior to 1 April 2015.

The recommendations were as follows:

• The Government should either amend the MAT provisions clarifying its inapplicability to FPIs; or

The Central Board of Direct Taxes (CBDT) should issue a circular clarifying the above.

To give effect to the above, the income tax law would be amended to state that MAT provisions would not be applicable to FIIs/FPIs not having a place of business/permanent establishment in India, for the period prior 1 April 2015.

In the meantime, the CBDT issued instructions to Revenue officers to hold any pending assessment proceedings relating to MAT on FIIs/FPIs and were advised not to pursue the recovery of outstanding demands.

On 24 September 2015, the Government of India issued a press release and stated that MAT provisions shall not be applicable to foreign companies having no place of business/permanent establishment in India or who are not required to seek registration under the Indian Companies Act.

Putting the above into practice, on 3o September 2015, case of Castleton Investments Ltd came for hearing before the Hon’ble Supreme Court. The Attorney General representing the Government stated before the Hon’ble Supreme Court that the Government will abide by its decision against he non-levy of MAT in case of FIIs/FPIs/Foreign Companies not having a permanent establishment in India and disposed the Special Leave Petition filed by Castleton Investments Ltd.

Foreign Account Tax Compliance Act (FATCA) updates

The Inter-Government Agreement between India and USA was signed on 9 July 2015 and India’s Income Tax Rules 1962 were amended accordingly.

Information relating to the 2014 calendar year needs to be reported for US reportable accounts and the statement should be furnished by the extended date of 10 September 2015. Information relating to 2015 calendar year also needs to be reported for US reportable accounts and the statement should be furnished by 31 May 2016.

The Government of India released Guidance Notes on 31 August 2015 for RFIs, Regulators and Revenue officers on the procedural aspects of the reporting requirements under the recently notified FATCA rules. The Guidance Notes sets out a ‘four point check’ to determine whether a person is a “RFI” and specifies due diligence procedures for pre-existing and new accounts, including alternate procedure in case of US reportable accounts.


2. The nature of the entity should be determined based on whether it has legal rights and obligations under the foreign country’s relevant laws and regulations by examining the legislative purpose or context of the governing law.

With respect to 1), the Supreme Court could not conclude definitively that this Delaware limited partnership should be considered as having the status of a legal person. With regards to 2), however, the Court concluded that Delaware LPs formed under this law have certain legal rights and obligations by referring to provisions of their relevant law.

Basic criteria applied by the Supreme Court for Delaware LPs

Subsequent to the dismissal, Bermuda LPs should not be considered as foreign corporations under Japanese tax law although the Supreme Court did not provide any judgment as it only dismissed the final appeal. However, relevant Bermudan laws applied to Bermuda LPs under this court case have been revised and as the discussion was on a specific case, it is necessary to review the tax treatment of income generated by Bermuda LPs formed under its relevant laws on case by case basis.

Practical implications

The Court ruling will affect corporate and individual taxpayers who are currently reporting income from foreign LPs or foreign investors in Japan investing through foreign LPs. How any foreign partnerships or limited partnerships is treated for Japanese tax purposes will have significant consequences for any investor’s fiscal consequences, such as applicability of tax treaty with Japan, income recognition timing, tax credit, etc.

The Supreme Court Decision on Delaware LPs only indicated a basic approach for consideration. As such, other types of partnerships or limited partnerships established under foreign jurisdictions have to be considered on a case by case basis taking into account the basic approach as outlined by the Supreme Court.

Korea

Korea’s Tax Amnesty for Offshore Income and Assets effective on 1 October 2015

The Ministry of Strategy and Finance (MOSF) announced that a tax amnesty for offshore income and assets would become effective on 1 October 2015. The tax amnesty was passed by the National Assembly at the end of December 2014 as part of the amendments to the Law for Coordination of International Tax Affairs. In general, Korean residents or corporations are liable for penalties under the tax laws and foreign exchange regulations if they do not disclose certain offshore assets. The tax amnesty will provide benefits including the exemption from penalties (except the penalty for non-payment at the rate of 0.3% per day) to taxpayers who make a voluntary disclosure of undeclared offshore income and assets within a specified period.

Major points of the tax amnesty include:

• Those who want to avail themselves of tax amnesty must make a voluntary disclosure during the six-month period from 1 October 2015 through 31 March 2016.

• The tax amnesty shall apply to Korean resident individuals and domestic corporations, while it will not apply to non-residents and foreign corporations.

• Affected income and assets include undeclared income arising from cross-border transactions or foreign sources which have previously failed to be declared by the filing due date or have previously been underreported, unless their statute of limitations has expired. However, those which are already under tax audit or involved in criminal investigation will not be eligible for the tax amnesty.

• The voluntary declaration filings should be submitted to the concerned regional tax offices within the voluntary declaration period. Taxes due on the declared income along with the late payment penalty (0.03% per day) should also be paid within the voluntary declaration period.

For those taxpayers who make voluntary disclosures of undeclared offshore income and assets within the voluntary disclosure period, the tax amnesty will provide the exemption from tax penalties (except the penalty for non-payment) under tax laws as well as penalties under the Foreign Exchange Transaction Law. In addition, they will not subject to fines and certain sanctions such as the public disclosure of their personal information.

Investments in international stock funds

On 8 September 2015, the Ministry of Strategy and Finance of Korea released the finalised 2015 tax reform proposals. Under the new tax reform proposals, capital gains from the investment in new funds which invest 60% or more of their assets in listed securities traded in foreign stock exchanges (“international stock funds”) will not be taxed for ten years from the date of buying such funds. In addition, the finalized proposals will apply this benefit to new investments in existing funds acquiring such listed securities via an account exclusively for this new investment purposes. To enjoy non-taxation, taxpayers must buy such new funds or make new investments in existing funds via an exclusive account for a temporary period from 1 January 2016 through 31 December 2017.

For more information, please contact the following territory partners:

Country Partner Telephone Email address

Australia Ken Woo +61 2 8266 2948 [email protected]

China Oliver Kang +86 10 6533 3012 [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 +82 010 3370 9319 [email protected]

Malaysia Jennifer Chang +60 3 2173 1828 [email protected]

New Zealand Darry Eady +64 9 355 8215 [email protected]

Philippines Malou P. 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-20151028-3-C1

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Asset Management Tax Highlights - Asia Pacific