ASEAN Regulatory Brief: Indonesia Transfer Pricing Rules, Singapore-Laos Cooperation, and Thailand 4.0 Strategies for SOEs

Indonesia: New rules for transfer pricing

The Indonesian government approved a new Minister of Finance regulation, MoF 213/2016, on new rules for transfer pricing documentation, effective January 2017. The new decree stipulates that firms doing cross-border transactions with affiliates must prepare transfer pricing documents detailing their global structure and payments. The move aims to match global standards and curb tax avoidance. Multinationals with annual turnover of at least US$822.74 million (IDR 11 trillion) must prepare a country-by-country (CbC) report with information about their affiliates, revenue, profits, income tax paid in different jurisdictions, retained earnings, and assets. The companies are also required to prepare a master file and a local file, which should include its Indonesian company details, structure, assets, and transactions.

Companies with annual gross revenue of more than US$377,000 (IDR 50 billion) or accumulated transactions of more than US$150,800 (IDR 20 billion) for tangible assets and US$37,700 (IDR 5 billion) for intangible assets need to prepare only the master and local files. Transactions with tax residents in countries with a lower statuary rate than that of Indonesia’s 25 percent are also required to prepare the master and local files. The government is also offering companies to settle previous tax disputes by paying a penalty under an amnesty program until March 2017.

 RELATED: Tax Compliance Services from Dezan Shira & Associates

Singapore, Laos to enhance cooperation

During the recent visit of the President of the Republic of Singapore, Dr. Tony Tan Keng Yam, to Laos on January 12, both countries agreed to enhance cooperation both bilaterally and with other ASEAN countries to broaden their relationship further. Cooperation between both countries has grown since the signing of Singapore’s Silk Air agreement with Lao Airlines to commence flights between Vientiane and Luang Prabang in 2016. Singapore has also assisted Laos in human resource development by providing scholarships for students to undertake courses in both countries.  

Since 2008, the Singapore government has sent volunteers to Laos to promote English, IT, and environmental studies along with doctors to support local hospitals. Singapore is currently the 11^th largest investor in Laos with 70 investment projects in the handicrafts, services, consulting, and commerce industries. The total value of Singaporean investment in Laos is estimated at US$175 million. Around 33 projects worth US$97 million are 100 percent foreign-owned, along with 37 joint venture projects.

Thailand: State enterprises to move towards Thailand 4.0

Thailand’s State Enterprise Policy Commission, also known as “Superboard”, has recommended strategies for state-owned enterprises to move towards Thailand 4.0, a new economic model seeking to pull Thailand out of the middle income trap. As per the strategies, state enterprises need to separate themselves as regulators and service providers and promote investments and resource sharing to improve their financials. Increasing the use of ICT to minimize costs and strengthen public services have also been proposed. The government also asked seven state-owned enterprises to improve their financial performances, namely: the TOT (Telephone Organization of Thailand), CAT Telecom, the Small and Medium Enterprise (SME) Development Bank, the Islamic Bank of Thailand, Thai Airways International, the Bangkok Mass Transit Authority, and the State Railway of Thailand.

The commission plans to merge the Internet data-center businesses and international Internet gateway businesses of TOT and CAT Telecom into Neutral Gateway & Data Centre Co and their broadband Internet businesses into National Broadband Network Co. under the guidance of the Ministry of Digital Economy and Society. The Transport Ministry was asked to consider the State Railway of Thailand’s proposal to operate the Red Line mass transit serving the Bangkok Metropolitan Region on its own. SME Development Bank was recognized for improving its financial performance and has been ordered to provide more loan packages worth up to US$423,480 (THB 15 million) and keeping its non-performing loans at no more than US$464.8 million (THB 16.6 billion).

Annual Audit and Compliance in ASEAN
For the first issue of our ASEAN Briefing Magazine, we look at the different audit and compliance regulations of five of the main economies in ASEAN. We firstly focus on the accounting standards, filing processes, and requirements for Indonesia, Malaysia, Thailand and the Philippines. We then provide similar information on Singapore, and offer a closer examination of the city-state’s generous audit exemptions for small-and-medium sized enterprises.

Human Resources in ASEAN
In this issue of ASEAN Briefing, we discuss the prevailing structure of ASEAN’s labor markets and outline key considerations regarding wages and compliance at all levels of the value chain. We highlight comparative sentiment on labor markets within the region, showcase differences in cost and compliance between markets, and provide insight on the state of statutory social insurance obligations throughout the bloc.

The Guide to Manufacturing in Indonesia
Choosing if, where, and how to establish foreign manufacturing operations in Indonesia can be a significant challenge. While the archipelago’s vast diversity may initially seem daunting, a number of options are available which will allow entry and operations to be conducted in a seamless manner. In this issue of ASEAN Briefing, we discuss Indonesia as a hub for manufacturing within Southeast Asia, and provide guidance on how to select and establish operations within the country.

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