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Transcript of Tax trends and issues for financial services - Deloitte US · PDF fileTax trends and issues...
Tax trends and issues for financial
services
Michael Velten, Southeast Asia Financial Services Industry Tax Leader
Agenda
• Overview: Tax as a risk
• BEPS: A changing tax landscape
• CRS: Status in the region
• Tax Management: A framework
© 2016 Deloitte & Touche LLP 2
Overview
Tax as a risk
© 2016 Deloitte & Touche LLP 3
2013 Lloyd's Risk Index: Taxation is now the highest risk priority
globally
13
1
12
7
10
2013Rank in
2011 2011
High taxationLoss of customers /
cancelled orders
Loss of customers /
cancelled orders
Talent and skills
shortage
Cyber risk Reputational loss
Price of material
inputsCurrency fluctuation
Excessively strict
regulationChanging legislation
1
2
3
4
5
1
2
3
4
5
1 A global survey of over 500 C-suite and board level executives conducted by Ipsos MORI for Lloyd’s during April and May 2013
According to the Lloyd’s Risk Index 20131, tax uncertainty is the greatest fear for global businesses following more recent
public and political exposure and debate
Top 5 business risks overall
© 2016 Deloitte & Touche LLP 4
Current themes in taxation globally
Current themes in tax
Focus on tax compliance and risk management (incl.
reputational risk)
Tax and transfer pricing audits and enforcement;
increase in tax disputes (and consideration of alternative
despite resolution – e.g. APAs)
Tax reform (e.g. China VAT) and changes in law (e.g.
MAAL, India GAAR)
Focus on transparency; esp. in view of Panama Papers (e.g.
drive on BO registers). Financial Secrecy index in
focus. CRS a key pillar of tax transparency
Focus on international tax avoidance and tax system
integrity (e.g. BEPS)
Continued revenue pressures on Government; pressure to
pay increased tax (incl. tax as a “moral” issue)
© 2016 Deloitte & Touche LLP 5
BEPS
A changing tax landscape
© 2016 Deloitte & Touche LLP 6
Implementation approach
BEPS recap
Domestic law change
Recommendations for
national law, regulations, or
administrative practice
Transfer Pricing
Changes to the OECD’s
Transfer Pricing Guidelines
Treaties
Signing of multilateral
instrument, and changes to
the OECD Model Treaty &
Commentary
Monitoring
Monitoring / reporting by
OECD / Global Forum
• Action 1: Digital Economy
• Action 2: Hybrid mis-
matches
• Action 3: CFCs
• Action 4: Limiting interest
deductions
• Action 5: Harmful tax
practices
• Action 12: Mandatory
disclosure
• Action 13: TP documentation
(incl CbC)
• Actions 8 – 10: Assure that
transfer pricing outcomes are
in line with value creation
• Action 2: Hybrid mis-
matches
• Action 6: Treaty abuse
• Action 7: Permanent
establishments
• Action 14: Dispute resolution
• Action 15: Multilateral
instrument
• Action 5: Harmful tax
practices
• Action 11: BEPS information
• Action 13: TP documentation
(incl CbC)
• Action 14: Dispute
resolution
© 2016 Deloitte & Touche LLP 7
BEPS actions: Response in Asia
Country Type
Australia First mover
Peoples Republic of China First mover
Japan First mover
South Korea First mover
India Fast follower
Hong Kong Slow follower
Taiwan Slow follower
Singapore Slow follower
Indonesia Slow follower
Malaysia Slow follower
Philippines Slow follower
Thailand Slow follower
Vietnam Slow follower
© 2016 Deloitte & Touche LLP 8
Singapore: Position on key actions
BEPS
© 2016 Deloitte & Touche LLP 9
Action Singapore’s position
1 Digital economy Unclear, may consider GST on e-services
2 Hybrids Not expected to adopt recommendations
3 CFC No change expected
4 Interest Unclear, unlikely to adopt in short-term
5 Harmful tax practices Singapore tax incentives to be examined as follow on work; although now unlikely that OECD will review
in 2016. Government believes incentives are all substance based, to be seen whether OECD agrees.
On transparency, taxpayer agreements may be shared spontaneously via AEOI in due course
6 Treaty abuse Minimum standard likely to be adopted. Singapore has preference for Principal Purpose Test
7 PE status Unlikely to actively push to adopt, but have indicated that the new version of the PE article may start to
find its way into Singapore’s treaties in the future over time
8-10 Transfer pricing To consider adoption of updates to OECD TP Guidelines on case-by-case basis
11 Monitoring Government considers this as important
12 Mandatory disclosure Unclear
Singapore: Position on key actions (cont.)
BEPS
© 2016 Deloitte & Touche LLP 10
Action Singapore’s position
13 CbC, master / local file No public announcement on CBCR yet, but Government is consulting widely and appears to generally
be in favour of adoption. Local HQ companies seem to favour adoption
Possible that a consultation document may be released following private/closed consultations. Assuming
consultation proceeds as expected, Singapore would likely look to adopt CBCR in OECD prescribed
format once sufficient OECD/G20 countries adopt
Concerns about use of taxpayer data by other tax authorities to initiate “profit grabs” / disputes
TP documentation requirements updated in January 2015
14 Dispute resolution Will adhere to minimum standard, considering mandatory binding arbitration
15 Multilateral instrument Actively participating
In general, an increased focus on BEPS in Singapore:
• Proactive interactions from Government with taxpayers and interested parties
• Ministry of Finance has taken an active role at the OECD (Singapore has observer status)
• Media interest growing
CRS
Status in the region
© 2016 Deloitte & Touche LLP 11
More than 90 countries to implement AEOI…
2017
Signed (54)
Committed (2)
Anguilla Germany Mauritius
Argentina Gibraltar Mexico
Barbados Greece Montserrat
Belgium Greenland Netherlands
Bermuda Guernsey Niue
British Virgin Islands Hungary Norway
Bulgaria Iceland Poland
Cayman Islands India Portugal
Colombia Ireland Romania
Croatia Isle of Man San Marino
Curacao Italy Seychelles
Cyprus Jersey Slovak Republic
Czech Republic Korea Slovenia
Denmark Latvia South Africa
Estonia Liechtenstein Spain
Faroe Islands Lithuania Sweden
Finland Luxembourg Turks & Caicos
France Malta UK
Dominica
Trinidad & Tobago
2018
Signed (26)Committed (14)
Albania Cook Islands Saint Kitts & Nevis
Andorra Costa Rica Saint Lucia
Antigua & Barbuda GhanaSaint Vincent &
Grenadines
Aruba Grenada Samoa
Australia Indonesia Sint Maarten
Austria Japan Switzerland
Belize Malaysia
Canada Marshall Islands
Chile Monaco
China New Zealand
Bahamas Qatar
Brazil Russia
Brunei Darussalam Saudi Arabia
Hong Kong (China) Singapore
Israel TurkeyKuwait United Arab EmiratesMacau (China) Uruguay
© 2016 Deloitte & Touche LLP 12
CRS Implementation: Areas of focus
• Review classification of legal entities within their group according to CRS statuses
CRS classification
• Review products and payments from CRS Financial Account definition standpoint
Products / payments analysis
• Implement due diligence procedures described in CRS
CRS due diligence
Processes
• Draft new policies and procedures to comply with CRS
Policies & procedures
• Establish a compliance program specific for CRS
Compliance program
• New Self-certifications and documentation requirements
New CRS documentation
• Implement due diligence procedures described in CRS
CRS remediation
• Design a communication program to provide the information required by CRS to account holders
CRS communication
program
From a group perspective From a business perspective
Monitor country developments
Monitor local regulations and local reporting requirements
© 2016 Deloitte & Touche LLP 13
Tax Management
A Framework
© 2016 Deloitte & Touche LLP 14
Tax management: A framework
Tax data
and
systems
Tax
strategy,
policy and
risk
Tax operating models© 2016 Deloitte & Touche LLP 15
Michael Velten
SEA Financial Services Industry Tax Leader
Michael is a Financial Services Tax Partner with Deloitte in Singapore and the firm’s SEA FSI Tax Leader. Michael covers
all area of Singapore tax (including GST and stamp duty) and specialises in Asia banking and capital markets. Michael’s
focus includes financial services transfer pricing and FATCA. Michael is a recognised industry tax expert.
Michael has been advising on Singapore and Asia regional tax since the early 1990s, having held senior tax roles in Asia
with leading financial institutions and professional firms. Prior to joining Deloitte, Michael was Group Head of Tax at a
leading brokerage and investment house and before that he headed the Asia ex-Japan Tax Department of a leading
global investment bank. He was also a Tax Partner in a Big Four firm in Singapore and a Tax Partner in the Singapore
office of a leading international law firm. Michael was held appointments as an Adjunct Associate Professor of Law at the
National University of Singapore and Visiting Fellow to the University of Melbourne.
Speaker profile
17© 2016 Deloitte & Touche LLP
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