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Asia-Pacific regional interview: Deloitte

Rajeev Dimri

Head of Indirect Tax

Deloitte India

1. What is the most significant change to your region/jurisdiction's indirect tax legislation in the past 12 months?

Going live on 1 July 2017, the largest change was the Indian Goods and Services Tax (GST) Reform where they aimed to consolidate the different taxes across India. The latest change in Malaysia where GST is now zero-rated across the board sent a shock wave, and there are now after-shock tremors across the region, as an example, in India where they are assessing matters in view of the 2019 election.

2. What has been the most significant impact of that change?

In addition to ensuring that the new rules were actually clear, so that the pricing could be established, implementing an e-platform for all VAT reporting had the most significant impact. This was a significant change in India but after some initial teething problems, the system is up and running.

3. How do you anticipate that change impacting your work and the market moving forwards?

Deloitte in Asia Pacific (APAC) has anticipated a more intense move to data analytics and data mining by tax authorities, so the focus is to ensure correct implementation of the system and understanding and control of the big data by the taxpayer as they move to automate more and more. This is important where many companies have Shared Service Centres in this region.

4. How has this changed the way you offer tax advice?

Deloitte APAC had to design more automation solutions for clients including features such as data security and storage and links with the government. Once a prototype was built, as with all technology, Deloitte member firms in Asia Pacific started exploring more functionalities to be developed, and more advanced features for a consistent storefront across the region and global visibility for clients, thus delivering a seamless solution.

5. What potential other legislative changes are on the horizon that you think will have a big impact on your region/jurisdiction?

The launch of the China Value Added Tax Law in 2018-2019, evolving Malaysia and Indian regulations, Customs and Global Trade following the US and China's trade discussions, and the impact on the rest of APAC. Export control regulations will also have a big impact for the region for trade.

6. What are the potential outcomes that might occur if those changes are implemented?

A dramatic rethink of "where to build" which can impact supply chain structuring and overall tax planning. Considerable more focus on ownership of the big data to ensure that the taxpayer is aware of the data supplied to the tax authority.

7. Do you think that change will have a positive effect on both your practice and the wider regional/jurisdictional market?

Correctly and critically viewed, changes can always bring positive effect, but it can also cause disruption to the business which will need to be managed.

8. How are issues surrounding the taxation of the digital economy affecting your jurisdiction?

In China, where many companies are providing Business to Customer (B2C) sales in Europe, Deloitte China is seeing a peak of activities as they aim to be more VAT compliant especially due to the new UK rules imposed on the market place effective from 15 March 2018. For APAC, the entire digital economy needs a rethink as the tax rules need to be up to date to reflect new business models.

9. What legislative changes would you like to see be implemented that you think would have the most positive effect on your practice and the wider regional/jurisdictional market?

More advanced rulings and more time given to implement the more significant changes, as well as clear guidance on the taxation of digital supplies by non-residents into the region.

10. Do you think something like that is likely to be implemented in the near future? If not, what are the roadblocks to implementing such legislative changes; if so, how soon do you think they will be implemented and what do you anticipate will be the positive effect of those changes?

This is still under consideration, especially under the current Base Erosion and Profit Shifting (BEPS) environment, but there are matters that need to be considered before that. There is a need to have these issues resolved but a resolution will not be simple.

This document has been prepared solely for the purpose of publishing in the 2018 Indirect Tax Leaders guide and may not be used for any other purpose. This document and its contents may not be reproduced, redistributed or passed on, directly or indirectly, to any other person in whole or in part without Deloitte's prior written consent.

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