Legal Updates for Jul - 2019
Legal Certainty for VAT Treatment of Imported Goods used for Activities to Utilise Offshore Taxable Service
In 2017, the Minister of Finance issued Regulation No. 178/PMK.04/2017 on Temporary Import ("Temporary Import Regulation"), which stipulates two types of temporary imported goods:
- Temporary imported goods that are exempted from customs duty, where the customs authority would not collect value-added tax ("VAT") or value-added tax and luxury goods sales tax ("LST") and Article 22 Income Tax; and
2. temporary imported goods that can receive customs duty relief, where the customs authority would only collect VAT or VAT and LST and no Article 22 Income Tax will be collected.
- In relation to item 2 above, if the temporary imported goods relate to the utilisation of taxable service from outside the Indonesian customs area within the Indonesian customs area, i.e. in the form of asset rental, then the importer may apply for a statement letter (Surat Keterangan Pemanfaatan JKP dari luar Daerah Pabean di dalam Daerah Pabean or "SKJLN") to the Directorate General of Tax ("DGT"), which can then be used by the importer to claim non-collection facility for VAT or VAT and LST from the Directorate General of Customs and Excise.
After more than a year since the Temporary Import Regulation becomes effective, the DGT has now issued Regulation No. PER-12/PJ/2019 on Procedure to Obtain SKJLN (“SKJLN Regulation”), which applies not only for rental with temporary import mechanism, but also for rental without temporary import mechanism.15 Jul 2019 | Indonesia
The Cyberspace Administration of China recently released a series of draft measures and regulations pertaining to cybersecurity and data protection in China for public comments in quick succession. The measures and regulations will impose higher standards and strengthen China’s cybersecurity and data protection regime across various sectors and fields of application. This update will examine the measures and regulations, as well as their potential implications.11 Jul 2019 | China
The Federal Court judgment of JRI Resources Sdn. Bhd. v Kuwait Finance House (Malaysia) Bhd., issued on 10 April 2019, considered the constitutionality and the validity a ruling issued by the Shariah Advisory Council ("SAC") pursuant to a reference by the High Court. The question that arose was whether Sections 56 and 57 of the Central Bank of Malaysia Act 2009 ("CBMA"), which compelled the court or arbitrator to refer a dispute relating to Islamic finance to the SAC, whereupon any ruling of the SAC on the same, would be binding on that court or arbitrator, had the effect of usurping judicial power such that the judge was prevented from determining the issue and the parties' rights and liabilities at hand. In this article, we unravel the premise of the judgement, which sets the boundaries for judicial power and recognises whether the SAC emulated such power when it ascertains Islamic law in relation to Islamic finance and issues a ruling that is binding upon courts or arbitrators.08 Jul 2019 | Malaysia
Active Income Excluded from the Calculation of Deemed Dividends under the Controlled Foreign Company Rules
To encourage transparency, provide legal certainty and fairness in the imposition of tax to Indonesian resident taxpayers for their equity participation in a foreign business entity other than business entities listed on a foreign stock exchange, the Ministry of Finance recently amended Minister of Finance Regulation No. 107/PMK.03/2017 ("2017 CFC Rules") by issuing Minister of Finance Regulation No. 93/PMK.03/2019 on Controlled Foreign Company ("CFC") Rules ("New CFC Rules"). The New CFC Rules will apply for fiscal year 2019.
The New CFC Rules reflect the exclusion of active income and provide a definition for 'certain income' (penghasilan tertentu) from the calculation of deemed dividends for a directly- and indirectly-owned CFC.04 Jul 2019 | Indonesia
A newly issued Ministerial Regulation, published in the Royal Gazette on 25 June 2019, has lifted the constraint on majority foreign-owned companies providing services to other members of their group without first obtaining a Foreign Business License. Until recently, this meant that a majority foreign-owned company could not lend funds domestically or sub-lease office space to a related company within its group – essentially it could not set up as a “back-office service provider” - without first obtaining a Foreign Business License. The newly issued Ministerial Regulation will allow majority-owned foreign companies to reconsider how services are provided amongst group members.04 Jul 2019 | Thailand