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Deloitte survey highlights tax predictability as key to attracting business in Asia Pacific

by April 25, 2017 General

MIL OSI Economics

Source: Media Outreach

Headline: Deloitte survey highlights tax predictability as key to attracting business in Asia Pacific

HONG KONG, CHINA – Media OutReach – April 25, 2017 – Predictability and consistency of
tax regimes is the most important factor in business decision-making, according to Deloitte, who today
released the third edition of their Asia Pacific Tax Complexity Survey report. However, the report shows that in
the current uncertain tax landscape, tax regimes remain complex and
predictability and consistency is elusive. This is especially the case in China
and India, who have the most complicated requirements of all jurisdictions in
Asia Pacific, according to survey respondents. In 2010, complexity was the most
important factor for surveyed tax executives in the region, and in 2014,
consistency was most important.


Alan Tsoi, Deputy Regional Managing Director and
Tax & Legal Leader, Deloitte Asia Pacific
progression from complexity to consistency to predictability may be explained
by tax regimes in the region maturing over the past 10 years. As tax regimes
have matured, tax complexity has improved and corporates now seek tax
predictability to ensure smooth tax management. There is currently a general
climate of uncertainty where Governments are trying to balance the tension
between creating an environment that attracts investment whilst at the same
time protecting their tax bases and raising needed tax revenues, which could
also be contributing to a sense of unpredictability in regional tax regimes


Tax regimes in larger
countries have increased complexity

the external environment becomes more unpredictable, companies may be acting
more cautiously when managing tax affairs. Companies see that the largest
developing economies — China, India and Indonesia — still have much progress to
make before they can meet investors’ expectations in this regard. Japan,
Australia, Indonesia and South Korea also rank highly in terms of tax
complexity. In contrast, Hong Kong, Singapore, Macau and Mauritius have the
simplest requirements, which is not surprising given their relatively
straightforward tax regimes.


of the reforms needed to improve tax predictability and consistency include
improving the training of tax officials and increasing public consultation on
tax policy. However, there is added complication with the implementation of
OECD’s Base Erosion Profit Shift (BEPS) Actions taking place at the moment,
with governments in many countries updating existing rules and developing new
rules. Companies that trade or invest in the countries along the “One Belt
One Road” will need to pay extra attention in this regard,” said Pauline Zhang,
Vice Chairman, Tax Partner, Deloitte China.  


BEPS implementation is a
top priority for governments and companies

It is widely accepted that
BEPS will drive significant change in the global tax landscape as governments introduce
new policies in line with global standards. Multinationals are finding
themselves preparing for this impending change by changing their business
models or adapting their resources so they are able to comply with enhanced reporting


Alan Tsoi, Deputy Regional Managing Director and
Lead Partner Tax & Legal, Deloitte Asia Pacific
implementation is becoming top of mind for tax professionals with regards to
tax reform, and how each jurisdiction approaches BEPS is of concern for finance
and tax executives. It is widely accepted that BEPS changes are a positive sign
for tax development in the region, but many countries in Asia Pacific need to
update and modernize their tax regimes to ensure consistency of approaches,
which will ultimately lead to greater tax predictability, a current concern for
businesses operating in the region.”


Company tax strategies becoming increasingly

In light of the uncertain
tax landscape, companies are less likely to pursue aggressive tax strategies
than in the past. Three-quarters of respondents indicated they would not enter
into a tax planning strategy if perceived by some to be aggressive. Only 40
percent of respondents in 2014 expressed the same sentiment. In the three years
since the last Deloitte survey, the social responsibility of companies as
taxpayers has come under close public scrutiny, particularly as some
multinational enterprises have been embroiled in controversy in several larger
jurisdictions. The enormous potential for detrimental reputational risk has
prompted company executives and boards of directors to acknowledge the need to
consider such risk when determining the company’s tax strategy.


The report surveyed over
300 financial and tax executives on their views of the current and anticipated
tax environment of 20 jurisdictions across Asia Pacific.
For more analysis and details on Shifting
sands: risk and reform in uncertain times
, please visit


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