1. What is the most significant change to your region/jurisdiction’s tax legislation or regulations in the past 12 months?
In the past 12 months, many tax authorities in the Asia-Pacific (APAC) region have announced plans to introduce e-invoicing mandates that apply to sales of goods and services within their country. In some cases, the timelines have been short and, in some cases, the tax authorities have introduced the rules in stages to allow businesses to prepare. But in all cases, the rules differ from country to country.
2. What has been the most significant impact of that change?
Because there is no overarching standard for GST/VAT in the APAC region, the most significant impact is, therefore, an increase in complexity in operating in the APAC region. Businesses must navigate different data requirements, standards, and e-invoicing methods across the countries in which they operate so that they can be compliant. When considering compliance implementation, businesses need to stay ahead of any implementation dates to avoid unintentionally breaching an implementation deadline.
3. How do you anticipate that change impacting your work and the market moving forward?
There are both short- and long-term impacts. In the short term, businesses need to understand the rules and mandates in each relevant country, which drives opportunities for Deloitte to advise on the approach, platform, and data processes for businesses to stay compliant.
In the long term, tax authorities are likely to gain strong insights into business transactions given the data collected on e-invoicing and e-filing of returns. Thus, the tax environment is changing, and the nature of an indirect tax adviser’s role will also need to change.
4. How has this changed the way you offer tax advice?
Deloitte has recognised that it is not enough to be a specialist in the technical aspects of GST/VAT. In addition, our practitioners need to have an awareness of our clients’ systems and processes, as well as the tools available in the marketplace, so that we can help our clients stay compliant across the region. For example, Deloitte has developed alliance relationships with several key technology platforms and SaaS [software as a service] providers in the region.
5. What potential other legislative/regulatory changes are on the horizon that you think will have a big impact on your region/jurisdiction?
The other significant change we are watching closely relates to pending unilateral and multilateral free trade agreements. These agreements could well lead to realigned supply chain flows and new opportunities for businesses within the APAC region and internationally.
6. What are the potential outcomes that might occur if those changes are implemented?
Changes in trade flows mean impacts on our GST/VAT and customs businesses. We see the need for a more aligned customs brokerage offering that gives clients the confidence of accurately declared transactions and that provides a seamless service from classification, valuation, declaration, GST reporting, and disputes and controversy support. This sort of offering complements our multidisciplinary model in which we can bring other functions to support the client.
7. Do you think that change will have a positive effect on both your practice and the wider regional/jurisdictional market?
We certainly expect that these sorts of changes will bring opportunities for our indirect tax practices across the region. As noted above, we are exploring the broader cross-region impact of the change and how we can bring our multidisciplinary model to support the client in other adjacencies as well.
8. Are there any regulatory/legislative changes you believe should be implemented in your region/jurisdiction?
One area in which we have not seen much activity in the APAC region is environmental and sustainability taxation. This area of tax is one that governments in other regions have been using to effect change in business and consumer behaviours. Given the size of the region and the need to focus on managing the environment in a more sustainable way, it would be timely for governments to look at how effectively taxes can support this objective.
9. How do you believe those changes would help improve the tax landscape in your market?
We are not focusing so much on how these taxes would improve the tax landscape, but rather on how they would help to improve the general environment by focusing on negative externalities and shifting these external costs back to the source.
10. How are issues surrounding the taxation of the digital economy affecting your work?
Governments in the region have been focusing on digital taxation as we are seeing the enactment of electronic supplies of services rules (i.e., taxing low-value goods sold through e-commerce platforms) and electronic invoicing rules. These changes give rise to many challenges for our clients, from the need to understand the new rules, to system and process changes to meet compliance and reporting obligations. In such cases, clients need our help to navigate the changes and put in place their processes so that they can stay compliant, all of which create more opportunities for our business.
11. How would you describe the tax authorities’ approach in your region/jurisdiction?
One issue we encounter is that there is no overarching legislative body in the APAC region (unlike the European Union) and, as a result, the enactment of rules is specific to each jurisdiction within the region. Even if there are similarities, the rules differ in material ways from country to country.
The tax authorities in the APAC region have very different approaches to managing the compliance of taxpayers. Some tax authorities are more focused on processes and controls; others focus on forms and documents. The differences mean that, from a regional perspective, it is still essential to pay close attention to each local jurisdiction.
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