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Welcome to the latest edition of your Asia-Pacific Focus ezine!
Three articles which have appeared on the site in the last few weeks are shown below, but to see everything, just log into the site – this link will take subscribers to the log in page. If you need a reminder of your user name and password, or want to discuss a subscription, please e-mail customerservice@bnai.com.
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Lillian Adams
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Japan: new triangular merger rules
W. Huss, M. Osawa and Y. Iwanaga
Pillsbury Winthrop Shaw Pittman LLP,Tokyo/US
With effect from May 1, 2007, Japan’s new Company Law rules allow foreign companies to use their shares in acquiring Japanese companies. While the new law and related regulatory changes are intended to facilitate cross-border M&A activity, non-Japanese acquirers interested in using triangular mergers will need to consider various business, tax and other legal issues when planning to pursue this type of transaction.
The new form of acquisition is called “triangular mergers” (sankaku gappei). As the name suggests, this transaction scheme will allow a non-Japanese company (“Foreign Acquirer”) with a Japanese subsidiary (“Japanese Subsidiary”) to acquire a Japanese target company (“Target”) by having such Target merge with and into the Japanese Subsidiary. In such mergers, the consideration given to the shareholders of the Target can be in the form of cash or other assets, including shares of the Foreign Acquirer.
[FULL STORY]
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India: dependent agent PE vs. arm’s length remuneration
Karishma Popat and Abhay Kumar
Grant Thornton India, Mumbai
This article has been written in the backdrop of a recent ruling of Income Tax Appellate Tribunal (ITAI) of Mumbai Bench in the case of DDIT v. SET Satellite (Singapore) Pte Ltd. ITA No. 535/Mum/04. (hereinafter referred to as SET Satellite case).
The case in question deals with taxability of the Foreign Telecasting Companies (FTC) in India particularly when it has a Dependent Agent Permanent Establishment (DAPE) in India by virtue of people functions carried out by the Dependent Agent (DA) in India. Before we go into the details of the said ruling, the ensuing paragraphs describe the approach adopted in India for assessing the FTCs.
[FULL STORY]
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China: planning implications of new EIT Law
Mario Petriccione and William Zhang
KPMG, London and Shanghai
China’s new Enterprise Income Tax Law, promulgated by the National People’s Congress on March 16, 2007, and which will apply from January 1, 2008, represents a radical departure from the existing tax system. As many readers will be aware, the existing system comprises one set of rules applying to Foreign Investment Enterprises (“FIEs”, i.e., broadly, Chinese companies with 25 percent or higher foreign participation) and a different set of rules applying to ordinary, “domestic” Chinese companies. The split system is based on a policy of favouring the import of capital into China and so giving privileged tax treatment to FIEs. It would appear that China’s policy-makers feel such incentives are no longer necessary to attract foreign capital, and accordingly under the new tax code the same rules generally apply to FIEs and to domestic Chinese companies.
[FULL STORY]
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As a professional you are aware of the range of issues which must be addressed when operating in the Asia-Pacific region. Our aim is not only to keep you up to date with the latest developments but to offer you a new perspective on the topics that you meet most frequently in practice. If you would like to see particular issues covered in this service then please e-mail: bnaieditorial@bna.com and let us know.
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Coming Soon from BNA International
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Special Reports
Advance Pricing Agreements: Transfer pricing can be one of the most vexatious areas of tax planning, with many possible pitfalls, but Advance Pricing Agreements provide a method of gaining certainty before transactions are undertaken. All MNEs doing business with related parties should consider whether an APA is the way to ensure that there are no unexpected tax charges or penalties. This Special Report provides detailed information on the APA process in many major trading nations, written by experts in the jurisdiction.
Analysing Article 7: Impact on PEs in Nine Major Trading Nations: The issue of taxation of permanent establishments is, as every international tax expert knows, an important one. Divergent practices exist so it is imperative to have sufficient information at your fingertips. This Report effectively contains analysis on Article 7 of more than 600 international tax treaties, making it the essential business reference tool.
Taxation of Investment Funds: This Special Report looks at some significant decisions and opinions from the ECJ that have a direct bearing on the taxation of investment funds in Europe and beyond, examining property funds (including REITs), Private Equity funds, retail investment and hedge funds. A primary focus is given to the UK and Germany with other articles focusing on Austria and Luxembourg, plus consideration of the growth of investment funds offshore.
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