GROWTH, STABILIZE, GLOBAL JURISDICTIONS, REGULATORTORY ... GROWTH, STABILIZE, GLOBAL JURISDICTIONS,

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Transcript of GROWTH, STABILIZE, GLOBAL JURISDICTIONS, REGULATORTORY ... GROWTH, STABILIZE, GLOBAL JURISDICTIONS,

VAT / GST, POLICY, INDIRECT,ONSHIPS, NETWORK

TAX REFORM,ICIENCY, GROWTH, STABILIZE, GLOBAL JURISDICTIONS, REGULATORTORY

CHALLENGES, M&A, INC, APA, ADVO ACX MERGERS, ACQUISITIONS, CONTROLS, MERGERS,

REVENUE ONS, OUTSOURCING, CONTROLS RITY, FILINGS, FOREIGNSFERENCIAFINANCIAL SERVICESJJGGGY, GLOBAL MOBILITY, INTEGRATIONH TREATIES,

REWARD, DISPUTTION,T ENTRY,

PAYROL CSL T GRANTS, INFORMA OUTBOUND INVESTM MOBILITY, EFFICIENT, DUE DILIGENCEY, DUE DILIGENCE,

RESOLUTIONDOS FISCALES, DISCLOSURE, SUBSTANCE,

INCENTI, GRANTS, INFORMATIONGE SUPPLY CHAIN, GLOBAL IMPACT,

TAX COARENCYREVENU\E, REFORMS,

CROSSBFINS

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KPMG Global Tax

Future Focus

Tax and Transformation in Asia Pacifics New

Business Reality

November 2011

kpmg.com

http://www.kpmg.com

2011 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.

07 19 29KPMG Corporate and

Indirect Tax Survey (2011)KPMG Global Transfer Pricing

Review (2011)Good, Better, Best: The race

to set global standards in tax management

Welcome to the new business reality 3

Rising development and regional trade drive complexity and change 4

In brief 7

Global shift from corporate to indirect taxes: 7 ASPAC on trend

Investing beyond borders: 10 Regional variety yields advantages

Australia, China and India: Tax uncertainty 12 rattles M&A markets

Chinas Five-Year Plan: Five steps 16 for managing the impact

Transfer pricing: Diversity, dynamism and scrutiny 19

Road to recovery: 21 Japans 2011 disaster relief and tax reforms

Australia pursues sovereign wealth fund investment 23

Energy needs and green agenda fuel resource tax changes 24

Achieving a world-class tax function: Changing regulatory 28 landscape opens the door

Leap ahead 32

Keeping tabs on short-term business travellers 33

Managing rising VAT/GST compliance burdens 37

Cloud computing: Clearing up the tax risks 40

Transfer pricing issues on business restructurings 42

Shared service centres: More complex functions = more tax complexity 44

Contents

2011 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.

ContributorsMany KPMG member firm partners and practitioners contributed to the production of this magazine. In particular, we would like to thank:

Warrick CleineKPMGs Head of Tax for Asia PacificKPMG in Vietnam

Chris AbbissASPAC Regional Lead PartnerFinancial Services TaxationKPMG in Hong Kong

Rick AsquiniPartner KPMG in Australia

Vaughn BarberAsia Pacific Regional Leader, Mergers & Acquisitions TaxHead of China OutboundTax PartnerKPMG in China

David DrummondNational Leader, Tax Management ServicesKPMG in Australia

Steven EconomidesASPAC Lead Partner, International Corporate TaxKPMG in Australia

David GelbGlobal Head of R&D Tax IncentivesKPMG in Australia

James GordonManager, Tax Management ServicesKPMG in Australia

John GuTax PartnerKPMG in China

Rod HendersonAsia Pacific Regional Tax Leader, Energy & Natural ResourcesTax PartnerKPMG in Australia

Khoonming HoPartner in Charge, TaxChina and Hong Kong SARKPMG in China

Tay Hong BengPartner, Head of TaxKPMG in Singapore

Andy W. HuttTax Partner, International Executive ServicesKPMG in Australia

Glenn JacksonSenior Manager, Tax Management ServicesKPMG in Australia

Deborah JenkinsIndirect Tax PartnerIndirect Tax Asia Pacific Regional Co-LeaderKPMG in Australia

Holger LampeAsia Pacific COO, Mergers & Acquisitions TaxSenior ManagerKPMG in China

David LinkeTax PartnerKPMG in Australia

Dennis McEvoyPartner, International Executive Services (IES)ASPAC Regional Leader, IESKPMG in Singapore

Miyuki MurataTax Technical CenterKPMG in Japan

Kari PahlmanKPMGs Regional Head of Transfer Pricing ServicesKPMG in Hong Kong

Graeme M. ReidASPAC Regional Tax PartnerKPMG in Singapore

Girish VanvariExecutive DirectorKPMG in India

Garry VoigtPartner KPMG in Australia

Grant Wardell-JohnsonTax PartnerKPMG in Australia

2011 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.

Welcome to the new business reality

Economic uncertainty, technological innovation, climate change, tax and regulatory reform: Faced with these complex challenges, tax directors need to take forward-thinking approaches to re-imagine their operations and re-shape their long-term strategies in response.

As many of the articles in these pages show, companies doing business in the Asia Pacific region need to make transformation and innovation their highest priorities, and KPMG can help guide the way. For example, KPMGs web-enabled collaboration and reporting tool, the Global Tax Management System (see page 11), was developed in light of KPMG member firms experience of the functionality businesses need while working in a complex global tax and compliance environment. The system provides a secure, collaborative platform, allowing real-time visibility over the entire compliance program across multiple entities in multiple jurisdictions. With this system, companies can follow progress and have access to key data and documents at anytime.

Similarly, we have developed solutions to help leading international organisations with far-flung operations win control over compliance problems and take advantage of opportunities. We help your company put in place centralised, automated mechanisms for managing global programs in specialty tax areas such as VAT/GST (page 37), transfer pricing (page 42), and short-term employee business travel (page33), among others.

KPMG member firms aim to help you adapt and respond quickly to new risks and opportunities and help give you a competitive edge. Our member firms goal is to cut through the complexity of the new business and economic reality and deliver practical ideas and forward-thinking approaches to help you position your business for future success.

Greg WiebeGlobal Head of TaxKPMG International

2011 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.

Future Focus 3

Rising development and regional trade drive complexity and change

Businesses in the region are increasingly challenged to keep

pace with the speed and complexity ofchange.

Across the Asia Pacific region, development is proceeding at a rapid pace. As China and India step into higher end manufacturing and service sectors, developing countries like Indonesia and Vietnam are stepping up their manufacturing capabilities at the lower end. The Southeast Asian free trade zone, with its huge consumer market and a rapidly expanding middle class, is becoming more important as a centre for economic activity. Businesses are taking advantage of this diversity by taking a more regional approach to where they locate their various activities and functions.

2011 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.

4 Future Focus

Warrick CleineRegional Leader, Asia Pacific Tax

The focus on tax risk continues to climb in an environment where non-compliance can threaten an organisations reputation and its prospects for future success.

All this activity is straining infrastructure, and countries like India, China and Australia are investing heavily in upgrading their transportation systems, utilities and other facilities. These investments, combined with rising populations and living standards, are creating moredemand for raw materials and power.

Regional trade in these commodities is increasing, and countries like Australia and China are imposing higher taxes on resource profits. At the same time, governments are adopting tax policies that encourage investment in sustainability projects to decrease energy use and harmful emissions. A generous array of grants and tax incentives is becoming available for innovations in renewable energy, energy efficiency and low pollution technologies.

The cross-border activity is catching the eye of tax authorities in the region. From transfer pricing audits to short-term

businesstravellers to challenges of offshore holding structures, tax authorities are looking at taxpayers cross-border activities to shore up their governments finances andprevent revenue leakage. The focus on tax riskcontinues to climb in an environment where non-compliance can threaten an organisations reputation and its prospects for future success.

Businesses in the region are increasingly challenged to keep pace with the speed and complexity of change. The articles in the following pages highlight some of the most dynamic tax and busi