Thailand Issues New Incentives to Attract Foreign Investors, Professionals, and Retirees & Amendments to Thailand’s Public Limited Companies Act

1. Foreign investors, professionals, and retirees will be able to enjoy a number of new incentives in Thailand, as the government seeks to attract high-earning overseas residents to help the country’s COVID-19 recovery.

2. Thailand’s cabinet passed a resolution on September 14, 2021, introducing immigration, tax, and land ownership incentives aimed at foreign investors and skilled professionals. The incentives are part of an effort to stimulate Thailand’s economy which has been badly impacted by the COVID-19 pandemic.

3. According to a government spokesperson, the government expects the incentives to attract over a million foreign investors and professionals within five years, contributing over 1 trillion baht (US$30 billion) to the economy.

4. The incentives come in three categories: immigration, tax, and real estate.

5.  In May 2021, Thailand’s Cabinet approved the draft amendments to the country’s Public Limited Companies Act in a bid to modernize the corporate process.

The Philippines Amends its Foreign Investment Act & Retail Trade Liberalization Act to Attract Foreign Investment

1. On March 2, 2022, President Rodrigo Duterte signed Republic Act No. 11647 (Act 11647), which amends the Foreign Investment Act (FIA), also known as Republic Act No. 7042. The amendments aim to promote and attract foreign investments by allowing, for the first time, international investors to set up and fully own domestic enterprises (including micro and small enterprises) in the Philippines.

2. Further, another amendment includes the establishment of an Inter-Agency Investment Promotion Coordination Committee (IIPCC) tasked with integrating the promotion activities to encourage foreign investment.

3. On December 10, 2021, the President of the Philippines approved the final amendments to the Retail Trade Liberalization Act (RTLA), or Republic Act No. 11595. The bill reduces the minimum paid-up capital requirements for foreign retail enterprises, removes the requirement for a certificate of pre-qualification to the Philippine Board of Investments (BOI), and lowers the investment requirements for each store owned by a foreign enterprise.

4. These measures are aimed at attracting greater foreign investment in the retail sector, which before the pandemic, accounted for 23 percent of the total services industry with a total gross value added of PHP 1 trillion (US$ 20 billion). Full recovery of the Philippines consumer and retail sector is expected to occur in 2022, with growth predicted in 2023.

The Impact of the RCEP on Singapore 2022 Inbound Investment Flows via Special Purpose Acquisition Company (SPAC)

1. The RCEP (Regional Comprehensive Economic Partnership) is a free trade area that includes China, all ten ASEAN nations, Japan, South Korea, Australia, and New Zealand. Collectively, this includes 30 percent of the world’s population and 30 percent of its GDP. The agreement came into effect on January 1, this year.

2. There were in fact extraordinary developments in the country during Q4 2021, prior to the January RCEP launch. Singapore introduced a number of actual and planned changes to its stock exchange, saw numerous leading financial services players form hubs, the formation of a regional COVID vaccine JV launched, and its regulators tested in the crypto segment. 

Rules for Tax Incentive for Manufacturers of Pharmaceutical Products Scheme Gazetted

1. The Income Tax (The Incentive for Manufacturers of Pharmaceutical Products Scheme) Rules 2022 [P.U.(A) 34/2022] (‘Rules’) were gazetted on 17 February 2022 and are deemed to have effect from the year of assessment 2021.

2. https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/1723693/PUA34_2022.pdf

Predictions for the Manufacturing Industry in 2022 by OpenText, IFS, & Themanufacturer

Manufacturing predictions for 2022 from OpenText, IFS, & Themanufacturer.

Establishing a Representative Office in Malaysia & Indonesia

1. In Indonesia, Opening a representative office (RO) is the fastest and simplest way of establishing a legal entity in the country. This setup is a temporary arrangement – ROs are not allowed to engage in any commercial activities, issue invoices, sign contracts, or earn any revenue. Foreign investors, however, can own 100 percent of this business entity and don’t have to contribute the same paid-up capital required by PT PMAs.

2. Establishing a representative office (RO) in Malaysia is often the fastest and most cost-effective way to have a legal entity and study the local market before determining viable opportunities. However, the RO is prohibited from earning any revenue and is limited to mainly market research, information gathering, and developing trade contacts in Malaysia.

Malaysia is top country in emerging Southeast Asia for foreign investment: Milken Institute

1. Malaysia ranks No. 1 in emerging Southeast Asia as the country with the most potential to attract foreign investors, according to the 2022 Milken Institute Global Opportunity Index. This annual assessment, created to help inform investor and policymaker global investment decisions, evaluates an economy’s investment landscape using variables such as macroeconomic outlook, access to financial services, the potential for future innovation and development, and more.

2. The 2022 Global Opportunity Index includes a report focusing on emerging Southeast Asia, a region where an influx of capital could lead to increased innovation, job creation, and competitiveness.

Boosting European Rail Freight - Part 1 - Transformation Required, Steady Decline in Western Europe

1. Europe’s big aspiration to reverse the decline of its rail freight industry will require significant effort, with substantial investment and smart thinking. Governments and industry players can help to achieve this goal, as there are examples of success to draw on and some key levers to pull.

2. The European freight rail industry has seen a steady decline over the past 70 years. Freight rail’s modal share has decreased from around 60 percent in the 1950s, and 30 percent in the 1980s, to roughly 15 percent today, driven mainly by large industry shifts.

3. This prompted a vicious circle of increasing fixed costs, leading to loss of competitiveness and loss of volume, and consequently increasing fixed costs again—with little hope for a thriving future. The rise of new small and agile entrants worsened the situation for freight rail incumbents that were left with unhealthy structures and often faced political pressure to maintain unprofitable businesses.

4. The European Union has set a bold ambition to reverse this trend. It plans to double freight rail’s modal share by 2030, both to reduce the transport sector’s CO2 emissions and to ease the congestion of major road connections.2 Achieving this ambition would see freight rail volumes grow by around six percent a year in ton-kilometers (tkm).

5. A massive shift in trajectory would be required to achieve this ambition. A European strategy to transfer a large proportion of transport from road to rail could focus on several key elements, including major long-distance freight flows, key connection points such as ports, and new industries that can replace volumes lost in declining sectors. Regulators and operators could also play a role in rethinking the regulatory model and reorienting the industry to become more customer focused, and more profitable.

Gain on Disposal of Real Property in Malaysia – Capital Receipt or Revenue Receipt?

1. Those real property owners who are looking at cashing out now will see a substantial gain upon disposal of their real property. Now the question is this: is the gain on disposal of real property a capital receipt or a revenue receipt?

2. A layman’s answer to that question would be capital receipt. Generally, Malaysia does not impose tax on capital receipts except in certain situations where the receipt arose from the disposal of real property or shares in a real property company, which is taxable under the Real Property Gains Tax 1976 (RPGTA), or where the capital receipt is treated as a revenue receipt.

3. Many of us are familiar with the RPGTA that imposes real property gains tax (RPGT) on gains arising from the disposal of real property in Malaysia or shares in a real property company. The RPGT rates vary from five per cent (5%) to thirty per cent (30%), depending on the holding period of the real property.

4. However, not many are aware that the gain on the disposal of real property in Malaysia could be treated as a revenue receipt and hence, subject to income tax under the Income Tax Act 1967 (ITA) at the prevailing individual income tax rate [i.e. up to twenty eight per cent (28%)] or corporate income tax rate [i.e. twenty four per cent (24%)]

5. Now, the next question is, under what situation will the gain on the disposal of real property be treated as a revenue receipt instead of a capital receipt.

Indonesia’s Omnibus Law: New Protection and Empowerment Measures for Small Businesses

1. Indonesia’s Government Regulation 7 of 2021 (GR 7/2021) — an implementing regulation of the Omnibus Law — looks to provide greater protection and empowerment to Indonesia’s cooperatives, micro, small, and medium-sized enterprises (MSMEs).

2. GR 7/2021 provides several facilities to encourage the growth of local MSMEs, such as mandating regional governments to provide at least 30 percent of the total land area for commercial areas for the promotion and development of MSMEs. In addition, the regulation has made it easier for MSMEs to obtain a business license, tax reductions, and reliefs, and are exempt from paying the provincial or the regency/city minimum wage.

3. MSMEs are considered the backbone of Indonesia’s economy, contributing to over 60 percent of GDP and employing more than 100 million people (97 percent of the domestic workforce). 

4. Developing these small businesses into scalable ones will be essential for Indonesia’s economic growth and achieve its goal as the world’s seventh-largest economy by 2030. 

5. However, the majority of MSMEs are in the informal sector and thus face major obstacles to access financing, and the managerial and operational capacities to grow.

Malaysia Issues Tax Exemption for Foreign Sourced Income

1. The Malaysian government has decided to provide a tax exemption on foreign-sourced income for individual taxpayers, backtracking from their earlier proposal made in the 2022 budget to tax Malaysian residents on their income sourced from abroad. 

2. The categories of foreign-sourced income that are exempt from income tax are the following:
- Dividends received by companies and limited liability partnerships; and
- All types of income received by individual taxpayers.

3. The income tax exemption is effective from January 1, 2022, until December 31, 2026.

4. The Chartered Tax Institute of Malaysia has said that the tax exemption on dividends will encourage more investments to be remitted to Malaysia and improve the country’s standing as a destination for regional HQs.

Big Data Analytics: What It Is, How It Works, Benefits, And Challenges

1. Big data analytics describes the process of uncovering trends, patterns, and correlations in large amounts of raw data to help make data-informed decisions. These processes use familiar statistical analysis techniques—like clustering and regression—and apply them to more extensive datasets with the help of newer tools.

2. Big data has been a buzz word since the early 2000s, when software and hardware capabilities made it possible for organizations to handle large amounts of unstructured data. Since then, new technologies—from Amazon to smartphones—have contributed even more to the substantial amounts of data available to organizations.

3. With the explosion of data, early innovation projects like Hadoop, Spark, and NoSQL databases were created for the storage and processing of big data. This field continues to evolve as data engineers look for ways to integrate the vast amounts of complex information created by sensors, networks, transactions, smart devices, web usage, and more. 

4. Even now, big data analytics methods are being used with emerging technologies, like machine learning, to discover and scale more complex insights.

Indonesia’s Omnibus Law: New Provisions on Indonesia’s Trade Sector

1. The Indonesian government issued Government Regulation 29 of 2021 (GR 29/2021) in early 2021, an implementing regulation to the Omnibus Law and which makes changes on issues of trade, particularly in areas such as the distribution of goods, exports, and imports, and the activities of foreign investment companies in the retail sector, among others.

2. The government also introduced several implementing regulations to GR 29/2021, in the form of Ministry of Trade Regulation 24 of 2021 (MOT Reg 24/2021) and Ministry of Trade Regulation 17 of 2021 (MOT Reg 17/2021) which sets out the framework for the distribution of goods and the facilitation of import and export activities.

3. Companies engaged in the direct distribution of goods also require a business identification number and must meet the following criteria:
- Holds an exclusive distribution right for the products;
- Has adopted a code of conduct;
- Has a marketing plan;
- Sells directly to consumers via a marketing network approved by the sellers; and
- Recruits direct sellers.

4. Manufacturers are prohibited from distributing goods directly to consumers unless these manufacturers are classified as micro and small businesses.

Indonesia’s Omnibus Law: Provisions on Special Economic Zones

1. Indonesia’s Government Regulation No. 40 of 2021 (GR 40/2021) aims to implement the latest provisions for special economic zones (SEZ) in the country.

2. GR 40/2021 highlights the various tax incentives to attract foreign investors into operating in an SEZ. These include reductions in corporate income tax (CIT), the non-collection of value-added tax (VAT), and import duty exemptions.

3. With 12 operational SEZs in the country and another six currently in the developmental phase, Indonesia seeks to stimulate economic dynamism through investments in its economic zones.

4. Furthermore, these SEZs are spread throughout the archipelago to help address regional imbalances in economic development. For instance, Java island accounts for 60 percent of the population — making it the world’s most populous island — and 58 percent of total GDP.

The impact of BEPS on tax incentives in Hong Kong SAR

 1. As of November 4 2021, 137 out of 141 member jurisdictions of the G20/OECD Inclusive Framework on BEPS (IF) have agreed to the statement issued by the IF on October 8 2021, which set out the building blocks and key rates for pillar one and pillar two of the BEPS 2.0 reform.  

2. Many jurisdictions across the ASPAC region, including Hong Kong SAR, offer a range of tax incentives to attract business and investment. However, the introduction of a global minimum tax of 15% under pillar two raises questions as to the appeal and future of such tax incentives. 

3. The global minimum tax may reduce the effectiveness of tax incentives and disincentivise jurisdictions to introduce tax concessions if another jurisdiction can claw back that benefit.  

Ericsson IndustryLab Report Predicts Manufacturing Transformation & Enterprise Dematerialization By 2030

1. The latest Ericsson IndustryLab Future of Enterprises report predicts widespread transformation of manufacturing enterprises in the coming years, including a rapid rise in ICT-enabled production tools such as augmented reality, exoskeletons and remote control.

2. The series of reports also predicts dematerialized enterprises expect to leverage cloud and mobile technology to become more productive and sustainable by 2030.

Product Spotlight - The Basics of Pressure Transducers

1. A pressure transducer is a sensor used to measure pressure. Depending on where you put it and how you connect it, a pressure transducer can tell you the pressure in a pipe or tank, the weight of an object, or even the depth of fluid above it. Most industrial pressure transducers are made of two technical parts, a transducer and a transmitter, inside a third, equally important part, the housing.

2. A transducer converts a physical action--often a vibration--into an electrical signal. Microphones and the pickups on an electric guitar, which both convert sound waves into electrical signals, are transducers. Pressure transducers, then, convert pressure--air pressure, fluid pressure, oil pressure, etc.--into electrical signals.

Global Minimum Tax (FAQ) - Part 2 - Jurisdiction, Industries & Tax Incentives

 1. On 10 July, the G20 endorsed the key components of the two pillar approach to international tax reform that was recently endorsed by 131 countries and jurisdictions, constituting the vast majority of the OECD/G20 Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS). Each of the two pillars addresses a separate concern.

2. Pillar One targets the largest multi-national groups focussing initially on those with EUR20 billion of consolidated revenue or more and net profits in excess of 10% (profit before tax/revenue) and will require them to pay tax in the locations where their customers and users are located. A formulaic approach will be used to allocate a percentage of profits between each jurisdiction. Pillar One should effectively require in scope multinationals to pay at least some tax in the markets they interact with. 

3. Pillar Two, the key components of which are commonly referred to as the "Global Minimum Tax" or "GloBE" and which is the focus of this FAQ, introduces a minimum effective tax rate of at least 15%, calculated based on a specific ruleset. Groups with an effective tax rate below the minimum in any particular jurisdiction would be required to pay top-up tax to their head office location. The tax would be applied to groups with revenue of EUR750 million or more, making it far more widely applicable than Pillar One.

4. The Global Minimum Tax attempts to limit tax competition by introducing a globally uniform floor, below which the effect of low tax rates or fiscal policy measures would be largely obviated.

Product Spotlight - Future of Printed Circuit Boards

1. Printed Circuit Boards (PCBs) today are tiny, multilayered, complex systems that hardly resemble their earliest ancestors. They're also produced at a much higher and more efficient rate than ever before thanks to sophisticated design software and manufacturing processes. Even 10 years ago, microvias, HDI and FPGAs were only seen in the most expensive designs, yet are now readily available to designers worldwide.

2. As technology and consumer demand grows and develops, however, so must PCBs. As the basis of all electronic devices, PCBs feel intense pressure for development and growth. With consumers pushing for slimmer and faster devices, and with industries seeking improved functionality, the PCB must continue developing into the future.

3. While modern PCBs are produced at incredible rates with astounding complexity, there is always room for development. Whether it's in the shape of the PCB itself or the accessories attached directly to the board, consumers are continuously pushing for new and different PCBs and PCB functions.

4. There's also plenty of room to grow in the manufacturing process itself as increased PCB complexity introduces new challenges for manufacturing companies. That's why most predictions for the printed circuit board's future focus strongly on the following areas.

Global Minimum Tax (FAQ) - Part 1 - IIR, UTPR, STTR, Rules, Affected Parties

 1. On 10 July, the G20 endorsed the key components of the two pillar approach to international tax reform that was recently endorsed by 131 countries and jurisdictions, constituting the vast majority of the OECD/G20 Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS). Each of the two pillars addresses a separate concern.

2. Pillar One targets the largest multi-national groups focussing initially on those with EUR20 billion of consolidated revenue or more and net profits in excess of 10% (profit before tax/revenue) and will require them to pay tax in the locations where their customers and users are located. A formulaic approach will be used to allocate a percentage of profits between each jurisdiction. Pillar One should effectively require in scope multinationals to pay at least some tax in the markets they interact with. 

3. Pillar Two, the key components of which are commonly referred to as the "Global Minimum Tax" or "GloBE" and which is the focus of this FAQ, introduces a minimum effective tax rate of at least 15%, calculated based on a specific ruleset. Groups with an effective tax rate below the minimum in any particular jurisdiction would be required to pay top-up tax to their head office location. The tax would be applied to groups with revenue of EUR750 million or more, making it far more widely applicable than Pillar One.

4. The Global Minimum Tax attempts to limit tax competition by introducing a globally uniform floor, below which the effect of low tax rates or fiscal policy measures would be largely obviated.