China
Q1 2024 Brief on Transfer Pricing in Asia
Indonesia’s Ministry of Finance released Regulation No. 172 of 2023 on transfer pricing, consolidating various guidelines. The Directorate General of Taxes focuses on compliance, expanded arm’s length principle, and substance checks. Singapore’s Budget 2024 addresses economic challenges, operational costs, and sustainability, implementing global tax reforms like the Income Inclusion Rule and Domestic Top-up Tax.
Indonesia’s Ministry of Finance (MoF) has released Regulation No. 172 of 2023 (“PMK-172”), which prevails as a unified transfer pricing guideline. PMK-172 consolidates various transfer pricing matters that were previously covered under separate regulations, including the application of the arm’s length principle, transfer pricing documentation requirements, transfer pricing adjustments, Mutual Agreement Procedure (“MAP”), and Advance Pricing Agreements (“APA”).
The Indonesian Directorate General of Taxes (DGT) has continued to focus on compliance with the ex-ante principle, the expanded scope of transactions subject to the arm’s length principle, and the reinforcement of substance checks as part of the preliminary stage, indicating the DGT’s expectation of meticulous and well-supported transfer pricing analyses conducted by taxpayers.
In conclusion, PMK-172 reflects the Indonesian government’s commitment to addressing some of the most controversial transfer pricing issues and promoting clarity and certainty. While it brings new opportunities, it also presents challenges. Taxpayers are strongly advised to evaluate the implications of these new guidelines on their businesses in Indonesia to navigate this transformative regulatory landscape successfully.
In a significant move to bolster economic resilience and sustainability, Singapore’s Deputy Prime Minister and Minister for Finance, Mr. Lawrence Wong, unveiled the ambitious Singapore Budget 2024 on February 16, 2024. Amidst global economic fluctuations and a pressing climate crisis, the Budget strategically addresses the dual challenges of rising operational costs and the imperative for sustainable development, marking a pivotal step towards fortifying Singapore’s position as a competitive and green economy.
In anticipation of global tax reforms, Singapore’s proactive steps to implement the Income Inclusion Rule (IIR) and Domestic Top-up Tax (DTT) under the BEPS 2.0 framework demonstrate a forward-looking approach to ensure tax compliance and fairness. These measures reaffirm Singapore’s commitment to international tax standards while safeguarding its economic interests.
Transfer pricing highlights from the Singapore Budget 2024 include:
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Business
China and the UK Resume Economic and Financial Discussions After Six-Year Break
China and Britain resumed economic talks after six years, aiming to improve relations. Chancellor Reeves seeks cooperation but raises concerns over Russia’s support and Hong Kong’s civil liberties.
Resumption of Talks
Taipei, Taiwan (AP) — China and the United Kingdom have reignited economic discussions after a six-year pause, spurred by British Treasury Chief Rachel Reeves’ recent visit to Beijing. The Labour government aims to mend strained relations with China, the world’s second-largest economy. Reeves met with Chinese leaders and underscored the necessity for a "stable, pragmatic" partnership, emphasizing collaboration on mutual interests while maintaining transparency in disagreements.
Economic Collaboration
During her talks, Reeves sought to address key issues such as reducing economic support to Russia and advocating for basic rights in Hong Kong. Both nations signed agreements expected to infuse £600 million ($732 million) into the U.K. economy over the next five years. These agreements target crucial sectors including finance, with Reeves emphasizing that this renewed engagement may generate up to £1 billion for the U.K.
National Security Concerns
While seeking better ties, there are mounting concerns regarding national security and human rights abuses in China. Critics from the opposition have questioned the balance between economic opportunities and safeguarding Britain’s interests. Reeves acknowledged the importance of national security but highlighted the need for pragmatic relations with global partners, stating that ignoring China is not a viable option for the U.K.’s economic future.
Source : China and the UK restart economic and financial talks after a 6-year hiatus
China
Indonesia Needs to Take a Critical Stance on China’s Global Order Vision
During his visit to China, Indonesian President Prabowo secured $10 billion in investments and issued a Joint Statement, raising concerns about Indonesia’s neutrality amid China’s global vision and territorial claims.
Indonesian President’s Visit to China
During his visit to China from November 8 to 10, 2024, Indonesian President Prabowo Subianto secured a remarkable US$10 billion in investments and issued the Joint Statement on Advancing the Comprehensive Strategic Partnership. This document has raised eyebrows as it suggests alignment with China’s global vision, potentially undermining Indonesia’s traditionally impartial stance among major powers. Notably, it includes discussions on joint development in areas with overlapping territorial claims, despite Indonesia being a non-claimant in the contentious South China Sea.
Strengthening Bilateral Relations
President Prabowo considers China a significant partner, reflecting on centuries of bilateral collaboration. This visit highlights Indonesia’s commitment to enhancing cooperation across various sectors, including technology and green energy. China also pledged support for Prabowo’s free meal program, which is part of Indonesia’s larger Food Supplementation and School Feeding initiative, reinforcing the ties between the two nations.
Implications of the Joint Statement
The Joint Statement emphasized shared aspirations for the future but also raised concerns about Indonesia’s strategic positioning. By commending China’s narrative, particularly the concept of a "community with a shared future," Indonesia may inadvertently compromise its neutrality amid major power rivalries. Given the complexities surrounding this language, it is crucial for Indonesia to approach such statements carefully to uphold its independent foreign policy.
Source : Indonesia must be critical of China’s global order vision
China
Cross-Border Data Transfers: New Draft Guidelines Clarify Certification for Personal Information Protection
China’s draft measures for personal information protection in cross-border data transfers clarify certification procedures, eligibility, and requirements. Released by the Cyberspace Administration, they aim to enhance data governance and privacy, ensuring compliance and safeguarding personal information in international exchanges.
China’s new draft measures provide clarity on the certification process for personal information protection in cross-border data transfers (CBDT). Aimed at enhancing data governance, safeguarding privacy, and ensuring regulatory compliance, the draft measures outline eligibility criteria for applying the certification mechanism, specify the requirements, and detail the certification procedures.
On January 3, 2025, the Cyberspace Administration of China (CAC) issued a draft document titled Measures for the Certification of Personal Information Protection for Cross-Border Data Transfers (hereinafter, draft measures) for public consultation. The draft measures, comprising 20 detailed articles, outline a comprehensive framework for certifying the security and compliance of personal data transfers beyond China’s borders.
With the feedback deadline set for February 3, 2025, the draft measures represent a crucial step in China’s broader strategy to strengthen data governance, ensure cybersecurity, and address global concerns over the safety of cross-border information flows.
Article 3 of the draft measures defines “PI protection certification” in cross-border data transfers as the formal evaluation process carried out by bodies authorized by the State Administration for Market Regulation (SAMR).
These certification bodies are responsible for assessing the compliance of personal information processors with the requirements of secure cross-border data transfers. The certification ensures that processors—whether domestic or foreign—adhere to the stringent criteria set out in the regulations, thereby protecting individuals’ personal information while enabling international data exchanges. Certified entities must demonstrate their capacity to manage cross-border data transfers in compliance with the standards laid out by the CAC and SAMR.
The certification process not only verifies compliance but also serves as an assurance to the public and regulatory authorities that the certified processors meet the required data protection measures.
Moreover, the scope of “cross-border data transfers” encompasses several scenarios where personal information moves across national boundaries. These include:
This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
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