Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Ask the Authorities
How Officials Can Establish Better
Trust With Taxpayers
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Speakers
Dr Veerinderjeet Singh – Chairman, Taxand Malaysia
Chinchie Killfoil – Tax Attaché, IRS, US Embassy Beijing
Rabi Narayan Dash – Former Director General of
International Taxation for India
Mrs Lim-Leow Lay Hwa – Tax Director-Medium
Corporations Corporate Tax Division, IRAS
Miss Yong Sing Yuan – Senior Tax Specialist,
Tax Policy & International Tax Division, IRAS
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Agenda
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Main Tax Developments / Issues Globally
New Legislation / Proposals & Interpretation
Tax Audit Scrutiny – New Focus / Developments
Anti-Avoidance Initiatives
Learning from Other Tax Agencies / information Sharing /
Cooperation
Competent Authority – Effectiveness
Tax Treaty Policy – Changes?
US issues for MNCs in Asia – FACTA
Conclusion
Q&A
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Main Tax Developments /
Issues Globally
Dr. Veerinderjeet Singh
Taxand Malaysia
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Main Tax Developments / Issues Globally
Economic outlook/recession/deficit budgets
Pressure to increase tax revenue
Enhanced tax audit scrutiny/TP audits/ Challenging tax avoidance
schemes
Penalties being increased, deductions being curtailed, plugging
‘loopholes’, retrospective law changes…
Greater cooperation e.g. Forum on Tax Administration, JITSIC,
SGATAR…..joint tax audits
Disclosure of uncertain tax positions/attack on offshore tax abuse
Scope of taxes being expanded
Growing compliance & regulatory burden
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
New Legislation /
Proposals & Interpretation
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Tax Audit Scrutiny – New
Focus / Developments
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Anti-Avoidance Initiatives
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Learning from Other Tax
Agencies/Information
Sharing/Cooperation
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Competent Authority –
Effectiveness
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Competent Authority – IRS
Update
Chinchie Killfoil
Tax Attaché, IRS, US Embassy Beijing
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Contents
From our Competent Authority
Latest Developments
Large Business & International (LB&I)-- International Function
What did the realignment accomplish?
So what is our strategy?
International strategy ties into LB&I’s areas of core emphasis
Maximizing compliance impact
Our outbound strategy must track how U.S.- based MNEs plan
So why is ETR planning important to an outbound strategy?
Transfer pricing practice--APMA
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
From Our Competent Authority
•LB&I is in a “knowledge business”
− International tax is a vast specialty tax area
− International specialists must have a solid
understanding of “the big picture” of international
tax
− To succeed as a knowledge-based organization,
we must develop, nurture, and leverage our
collective expertise
1
3
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Latest Developments
•Realignment of LB&I transfer pricing operations
− To increase efficiency & Effectiveness
− Reduce lapse time for APA/MAP cases
− Recruit talents from outside IRS
− Number of case closed dropped for 2011 but
improved results expected for 2012 and beyond.
1
4
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
IRS Commissioner
IRS Deputy
Commissioner for
Services & Enforcement
1
5
Commissioner
Large Business &
International
Deputy
Commissioner
(International)
Director, Competent
Authority & International
Coordination (CA&IC)
lllllllll
Director, International
Business Compliance
(IBC)
Director, International
Individual Compliance
(IIC)
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
4
IRS Commissioner
IRS Deputy
Commissioner for
Services & Enforcement
Commissioner
Large Business &
International
EOI Program
Treaty Unit
Deputy Commissioner
International
(Michael Danilack)
Assistant Deputy Comm’r
Int’l
(Doug O’Donnell)
Direct, International
Business Compliance
(Kathy Robbins)
1
6
Director, Transfer
Pricing Operations
(Sam Maruca)
JITSIC
Foreign Posts
Service-wide
Strategy
Director, International
Individual Compliance
(Rosemary Sereti)
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
EOI Program
Treaty Unit
Deputy Commissioner
(International)
JITSIC
Foreign Posts
Assistant Deputy
Comm’r (Int’l)
Service-wide
Strategy
Director, Transfer
Pricing Operations
(Sam Maruca)
Director, APMA
(Richard McAlonan)
Field-focused team
Deputy Directors
Combined MAP/APA team
17
1
7
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
What did the realignment accomplish?
• The realignment positioned LB&I’s international
specialists to operate as a single program
• Integrated all international functions and
operations to the fullest extent possible
• Now function as a cohesive practice
• Now operate off a strategic platform
• Now working as a team
1
8
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
So what is our strategy?
1
9
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
International strategy ties into LB&I’s areas of core
emphasis
•
Identify the highest compliance risks among our
taxpayer base
• Work cases effectively and efficiently
• Find appropriate ways to resolve cases as soon
as possible
2
0
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
2
1
Maximizing Compliance Impact
•Focus on cases/issues where taxpayers engage in
aggressive planning
•Invest in high profile cases
•Focus on cases/issues where the planning can be
replicated
•Move into high-risk areas not receiving sufficient
attention
•Pursue strategy with discipline; be willing to let go
of less important issues/cases
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
2
2
Our Outbound Strategy Must Track How US-Based MNEs
Plan
•Agents must have a basic understanding of U.S. GAAP
accounting for income taxes
•Agents must understand that a lower tax expense results in
higher earnings per share (EPS) and higher shareholder
value
•Agents must understand the concept of “permanent
reinvestment” (suspension of residual US tax on PRI)
•So low ETR is not per se “wrong”
− Companies try to manage costs efficiently (including
taxes) to produce shareholder value
− Taxpayers may manage tax expense through
legitimate planning
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
2
3
So Why is ETR Planning Important to an Outbound
Strategy?
•If an MNE will derive benefits from achieving certain results,
it will likely be aggressive in striving for those results
•Agents must understand a taxpayer’s motivations to
understand why they adopt structures and undertake
transactions
•Agents must be able to look at international transactions in
context and evaluate technical issues with not only absolute
understanding (what and how) but also relational
understanding (why and when)
Transfer Pricing Practice – APMA
Asia Tax Forum
Transfer pricing practice - APMA
May 9-10, 2012 – Raffles, Singapore
Transfer Pricing Practice- APMA
•Added approximately 30 new staff and 5 new
managers
•New branch in San Francisco
•Added additional economists to the team
•Key hires:
− Managers – Patricia Fouts, John Hughes, Fred
Johnson, Ken Wood
− Economists – Hareesh Dhawale, Bill Morgan
2
4
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Tax Treaty Policy—
Changes?
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
US Issues for MNCs in
Asia – FACTA
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
FATCA
Chinchie Killfoil
Tax Attaché, IRS, US Embassy Beijing
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
IRS International Operations
U.S. Embassy Beijing
Chinchie Killfoil, Tax Attaché
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Contents
Recent Developments - FATCA
FATCA
Transitional Rules
Due Diligence
Deemed Compliant
FATCA—Moving Forward
FATCA—Making Use of the Information
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Recent Developments - FATCA
Why FATCA?
Information reporting is the bedrock of voluntary
compliance
Most “audits” are done by computer information
matching
Offshore information reporting is needed in
addition to U.S. information reporting
FATCA will improve tax compliance
globally
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Recent Developments - FATCA
Two components
Foreign Financial Institutions (FFI) Identify United
States Accounts and report directly to the IRS on
Form 1099-FFI
U.S. taxpayers report foreign financial asset
holdings on Form 8938 starting with 2011
tax return if certain thresholds are met
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Recent Developments - FATCA
Foreign Financial Institutions (FFI)
Identify United States Accounts and
report directly to the IRS on Form 1099FFI
FFI to register on-line starting 1-1-2013 and become
PFFI; registration ends 6-30-2013;
PFFI to report Name, Address, TIN & Account Balance
(reporting starts in 2014 with respect to 2013)
Income Amount (reporting starts in 2016)
Gross Proceeds (reporting starts in 2017)
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
FATCA
Compliance & Enforcement
Proposed Regulations Issued 2-8-2012
Large volume of comments regarding due diligence
obligations
Proposed Regulations took into consideration input
and reduced burden
Additional comments and public hearing
30% W/H on Gross U.S. Source Income
to FFI failing to comply
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Transitional Rules
FFI in jurisdiction with legal prohibition on
compliance has until 1-1-2016
These FFI must agree to perform due diligence to
ID accounts and maintain records.
Only FFI in “restricted” jurisdiction get additional
time. The rest of affiliated group must comply and
become PFFI.
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Due Diligence
• Electronic Search conducted on pre-existing
accounts:
 Over $50,000 USD
 Cash value of insurance or annuity contracts over $250,000 USD
• Accounts under $50,000 are exempt
• Cash value of insurance or annuity contracts under
$250,000 USD are exempt.
• Accounts with balance over $1 million USD
requires additional due diligence - in additional to
electronic review, there must be a manual review of non-electronic
files
maintained, including inquiry made to the relationship
manager or account manager for the account
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Due Diligence
Review and identify “U.S. Indicia”
1.
2.
3.
4.
5.
U.S. Passport or other U.S. ID
U.S. Place of Birth
U.S. Address
U.S. Phone Number
Standing instruction to transfer funds to an account
maintained in the U.S.
6. POA or signatory authority granted to a person with
U.S. Address
7. An U.S. c/o address that is the sole address
used by the account holder
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Deemed Compliant
Registered Deemed Compliant FFI
1.
2.
3.
4.
5.
Local FFI
Non-reporting Member of PFFI
Qualified Investment Vehicle
Restricted Funds (sale to U.S. persons is prohibited)
FFI under Gov-to-Gov agreements
These FFI will register and receive a FFI EIN and be
recognized as “deemed compliant” if they meet
the requirements set out in the regulations.
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Deemed Compliant
Certified Deem Compliant FFI:
1. Non registering local banks (very small local banks
with only local clients)
2. Retirement Plans
3. Non-Profit Organizations
4. Certain Owner documented FFI (reporting already
done thru withholding agent)
5. FFI with only low value accounts
These FFI do not register but self-certify with IRS via
W-8 every 3 years.
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
FATCA
February 8 Joint Statement
Treasury Department recognized legal barrier with
respect to requiring banks to report to the IRS
Significant challenges, i.e., Data Privacy laws
Alternative Approach – United States, France,
Germany, Italy, Spain & UK to develop alternative
arrangements
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
FATCA
February 8 Joint Statement - Impact
Automatic Sharing - Gov to Gov
Reciprocal information sharing
Transparent Approach – Reporting of
Accounts reduces evasion opportunities
in both countries
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
FATCA – Moving Forward
• Significant movement in collaboration and
transparency
• FATCA Alternative Approach (Reciprocity) has
global impact
• Impact upon United States citizens and residents is
substantial
• Implementation of FATCA will be resource
intensive!
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
FATCA – Making use of the Information
Much Work to be Done in • International Individual Compliance
(Resident Income Reporting)
• International Business Compliance (W/H
Agent Compliance)
• Improving automatic exchange
• Substantial Collaboration with foreign
countries!
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Conclusion– Taxand’s Take
MNCs –take initiative to plan for change
Need to be more agile and flexible in structuring
There must be real substance- be ready to invest time
and effort to defend your tax plan
Utilise compliance assistance programmes—enhanced
relationship, etc
Ensure that internal tax processes and controls are robust
“It is not the strongest of the species who survives nor the
most intelligent but the one most responsive to change”
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Thank you
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Ask the Authorities Panel
Presenter Profiles
www.taxand.com
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Presenter Profile
E. vs@taxand.com.my
T. +603 (2032) 2799
Dr. Veerinderjeet Singh
Taxand Malaysia
Dr. Veerinderjeet Singh is a member of the Taxand Board which comprises nine
Taxand country Managing Partners from around the world. Veerinderjeet is the
Managing Director of Taxand Malaysia. Veerinderjeet has extensive experience
in tax matters. He has served with the Malaysian Inland Revenue Department,
been a Tax Partner in international accounting firms and has held the position of
Associate Professor in Taxation at the University of Malaya. He was a visiting
Associate Professor at the University of Newcastle in Australia, and a Visiting
Scholar at the International Tax Program, at Harvard University, USA. He is a
Council Member of the Malaysian Institute of Certified Public Accountants, the
Immediate Past President of the Chartered Tax Institute of Malaysia and a
member of various local and international organisations. He is also the Chairman
of the IFA – Malaysia Branch and a member of the Board of Trustees of the IBFD
in the Netherlands.
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Presenter Profile
Chinchie Killfoil
Tax Attaché
IRS
US Embassy Beijing
Chinchie is the first IRS Tax Attaché assigned to the U.S. Embassy in Beijing,
China. She interfaces with foreign taxing authorities and manages an active
Exchange of Information program as the representative of the U.S. Competent
Authority. She has regional responsibility covering China, Japan, Korea, India,
and a dozen other Asian countries. Before coming to China, she served as a Tax
Treaty Manager in Washington DC, responsible for resolving tax treaty related
disputes with European countries. Prior to her assignment to the area of
international tax, Chinchie served as the Director of Tax Policy and Procedure for
Collection Programs in the Office of Chief Appeals in Washington D.C. In this
position, Chinchie and her team was responsible for providing written guidance to
Appeals Settlement Officers on policy and procedural matters. During her 20 plus
year career with IRS, Chinchie has held a wide range of technical and
management positions. Chinchie started her IRS career as a revenue officer in
Texas. She grew up in Taiwan and is fluent in Mandarin Chinese.
She is a Certified Public Accountant and has a Masters degree in
Counseling from University of Southern California. Before IRS,
Chinchie worked for DOD for 3 years as a Guidance Counselor
in Brussels, Belgium. She is proficient in French.
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Presenter Profile
Rabi Narayan Dash
Advocate & Independent
Tax Advisor in India
Former Indian Revenue
Service & Director
General of International
Taxation for India (20102012)
Mr. Rabi Narayan Dash is currently working as an Advocate and Independent Tax
Advisor in India after serving 36 years in the Indian Revenue Service. He was
formerly the Director General of International Taxation for India (2010-2012)
where he was head of the tax administration for International Tax and Transfer
Pricing. He has worked with organizations ranging from the African Development
Bank, the European Union (EU), the Ministry of Civil Aviation and the Indian Tax
Department & Department of Revenue. Rabi Dash has a Ph.D in Business
Management (Corporate Governance), a Law Degree and Dual Masters.
Rabi Dash has expertise in corporate taxation involving large corporations in
Mumbai and Delhi, with extensive knowledge of national and international tax law,
corporate law, and compliance issues. He is known for his work on Transfer
Pricing and is credited with spearheading the preparatory work for India's first
Advance Pricing Agreement program.
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Mrs Lim-Leow Lay Hwa
Presenter Profile
Tax Director-Medium
Corporations
Corporate Tax Division
IRAS
Mrs Lim is the Tax Director of the Medium Corporations Branch in the Corporate
Tax Division in IRAS. She is responsible for planning and implementing strategies
to manage the compliance risks of medium-sized corporations in Singapore. Prior
to this, she was the Tax Director of Small Corporations Branch where the
emphasis is on education and providing excellent service to encourage voluntary
compliance. She has also spent almost 14 years in the banking and financial
industry in Large Corporations Branch.
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
Miss Yong Sing Yuan
Presenter Profile
Senior Tax Specialist
Tax Policy &
International Tax
Division
IRAS
Sing Yuan is currently a Senior Tax Specialist in the Inland Revenue Authority of
Singapore, where she handles a spectrum of international tax work ranging from
tax treaty negotiations to transfer pricing issues. Sing Yuan holds a Bachelor of
Accountancy with Honours from the Nanyang Technological University and a
Master of Advanced Studies in International Tax Law with Honours from Leiden
University. She is also an Accredited Tax Advisor with the Singapore Institute of
Accredited Tax Practitioners. Sing Yuan lectures for some courses conducted by
the Tax Academy.
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
ABOUT TAXAND
Taxand provides high quality, integrated tax advice worldwide. Our tax professionals, nearly 400 tax partners and over
2,000 tax advisors in nearly 50 countries - grasp both the fine points of tax and the broader strategic implications, helping
you mitigate risk, manage your tax burden and drive the performance of your business.
We're passionate about tax. We collaborate and share knowledge, capitalising on our collective expertise to provide you
with high quality, tailored advice that helps relieve the pressures associated with making complex tax decisions.
We're also independent—ensuring that you adhere both to best practice and to tax law and that we remain free from timeconsuming audit-based conflict checks. This enables us to deliver practical advice, responsively.
Taxand is a global organisation of tax advisory firms. Each firm in each country is a separate and independent legal entity responsible for
delivering client services.
© Copyright Taxand Economic Interest Grouping 2011
Registered office: 1B Heienhaff, L-1736 Senningerberg – RCS Luxembourg C68
Asia Tax Forum
May 9-10, 2012 – Raffles, Singapore
ABOUT TAXAND
Taxand provides high quality, integrated tax advice worldwide. Our tax professionals, nearly 400 tax partners and over
2,000 tax advisors in nearly 50 countries - grasp both the fine points of tax and the broader strategic implications, helping
you mitigate risk, manage your tax burden and drive the performance of your business.
We're passionate about tax. We collaborate and share knowledge, capitalising on our collective expertise to provide you
with high quality, tailored advice that helps relieve the pressures associated with making complex tax decisions.
We're also independent—ensuring that you adhere both to best practice and to tax law and that we remain free from timeconsuming audit-based conflict checks. This enables us to deliver practical advice, responsively.
Taxand is a global organisation of tax advisory firms. Each firm in each country is a separate and independent legal entity responsible for
delivering client services.
© Copyright Taxand Economic Interest Grouping 2011
Registered office: 1B Heienhaff, L-1736 Senningerberg – RCS Luxembourg C68