EY tax practitioners urge Asean to work together on tax matters
Singapore
ASEAN countries can benefit from collaborating more closely on tax matters, especially in the face of rising protectionism, tax practitioners from EY have said.
They say that as multinational firms re-organise global supply chains to cope with trade barriers, more investment and manufacturing activity could find its way to Asean.
The authorities in the region should also work towards harmonising tax rules for digital businesses, to help small and medium-sized enterprises to tap opportunities in e-commerce.
EY Asean tax leader Yeo Eng Ping said that, with Asean's ambitions to become a single market and production base, more stands to be done to improve the flow of goods and services in the region - including on the tax front.
Speaking at a media briefing held in conjunction with the EY Asean Tax Forum 2018, she noted that countries in the grouping have committed to exchanging more tax information in a bid to guard against money laundering and tax evasion, but there is still scope for further harmonisation.
For example, companies with a presence in multiple countries across the region often face double taxation - where taxes are paid twice on the same source of income.
"More can be done to reduce tax frictions in intra-Asean trade. That will put Asean in a powerful position to capture more direct investment," Ms Yeo said.
This is becoming increasingly pertinent amid ongoing global trade tensions, said Soh Pui Ming, EY's in-coming Singapore head of tax.
"(Some global companies) will be forced to look at reorganising their manufacturing and other operations. If Asean is united (in terms of removing trade barriers) we could potentially benefit from that," she said.
The rise of the digital economy has also put e-commerce taxes in the spotlight. This is another area Asean countries can work closely together on, the tax experts said.
Countries in the region should agree on what to tax, how much to tax and the tax filing process, said in-coming EY Asean international tax services leader Chester Wee.
The international tax landscape has been changing rapidly as tax authorities grapple with the rise of the digital economy. For instance, the United States Supreme Court ruled earlier this month that Internet retailers can be required to collect sales taxes, even in states where they have no physical presence.
Such developments can impact Singapore companies with business abroad, noted Ms Soh.
Still, tax harmonisation "is easier said than done" and it might be some time yet before Asean-wide agreement is reached, she added.
With the tax landscape becoming increasingly complex and fast-changing, companies have to stay on their toes when it comes to monitoring developments, said the tax practitioners.
Ms Yeo said: "Companies should be paying attention to taxes and employing the right resources to help them comply and pay the right amount of tax - not too much, not too little."
Tax authorities around the world have been investing in technology to improve tax collection processes and exchange information between jurisdictions. "Companies need to catch up - or the tax authorities might know more about them than they know about themselves," said Ms Soh.
