ASEAN Market Watch: Philippine Tourism, Indonesian Tax Amnesty, and Tax Rules in Thailand

  • October 10, 2016

Philippines: Increase in Chinese Tourists Expected

China’s ambassador to the Philippines Zhao Jianhua stated that more than 1 million Chinese tourists should be expected to the Philippines by the end of 2017. This is followed by an increase in the number or Chinese tourists by 79 percent in the first half of 2016. The development comes as both countries prepare for bilateral talks scheduled to be held in October. After South Korea, Chinese tourists have marked the second largest arrivals into the Philippines.

The Department of Tourism (DOT) stated that around 2,000 Chinese tourists arrived on Boracay Island in September. Two more cruise ships are due to arrive in October and November. Chinese tourist numbers dipped in August after a UN tribunal ruled that that the Philippines had sovereign rights over disputed portions of the South China Sea; however the tourist numbers was recovering. Philippine’s president Rodrigo Duterte is open to bilateral talks and keen to settle the territorial dispute. With relations between Philippines and China expected to get cozier, an increase in tourists is likely to continue.

Indonesia: Tax Amnesty Proves Successful

The Indonesian government began implementing a tax amnesty program to increase revenue and investment. Under the terms, repatriated assets will enjoy a reduced tax rate between 2 and 10 percent depending on how quickly participants sign up for the program and if they just repatriate funds or assets. Repatriated funds must stay within Indonesia for at least three years and must be invested via banks, investment managers and securities companies. Eight permissible investment instruments have been introduced, with a minimum three-year maturity, including government and state-owned enterprise bonds and real estate investment trusts.

Locals have declared assets worth almost US$ 200 billion in the program’s nine-month scheme. Around US$ 5.7 billion in proceeds are expected to ease pressure on the public purse. The declaration of assets is significant. By comparison, Italy was able to convince citizens to declare around US$ 67 billion while Argentina recouped around US$ 80 billion. A low penalty rate is one reason why the tax amnesty program has performed well. Another is that, this is the first amnesty in a long time with the last being almost a decade ago. One reason such a scheme has performed badly in other places like India is because it occurs too frequently. Analysts also hope that following this Indonesia will reduce its corporate income tax from 25 percent to something around 17 percent which is offered by Singapore. Such factors along with information exchange is making it harder for people to hide from the law, which has helped Indonesia make the tax amnesty program successful.

Thailand: Authorities Mull Tougher Tax Rules for Internet, Tech Firms

Tax authorities in Thailand are looking to toughen tax collection rules for internet and technology firms such as Google. The plans will cover mobile transfers and the internet payment sector. Tax authorities are focused on changing existing regulations and have prepared a committee to look over the issue in the past two months. Officials say that some laws are outdated and have not been used for more than 50 years.

The development is similar to other ASEAN countries such as Indonesia which is seeking back taxes from companies like Google. Trade groups have warned that such a crackdown in ASEAN countries risks slowing down planned investment by US companies.

This article was first published October 2016.
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