Asia Pacific Indirect Tax

Description
Asia Pacific is a dynamic and diverse region of increasing importance to world trade. That diversity is reflected in the indirect tax regimes and their local application across the region.

GLOBAL INDIRECT TAX SERVICES
2015 Asia Paci?c
Indirect Tax
Country Guide

kpmg.com

KPMG INTERNATIONAL
II | Asia Paci?c Indirect Tax Country Guide
Asia Paci?c is a dynamic and diverse region
of increasing importance to world trade.
That diversity is re?ected in the indirect
tax regimes and their local application
across the region. For businesses seeking
to operate across the region it can be
a signi?cant challenge in seeking to
establish tax ef?cient supply chains
and ensuring compliance with
the variety of local requirements.
KPMG’s network of Indirect Tax
specialists across the region are
available to assist businesses
navigate a path through that
complexity.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
Asia Paci?c Indirect Tax Country Guide | 1
Contents
The future of indirect taxes – 2020 and beyond! 2
Australia 10
Cambodia 12
China (VAT) 14
China (business tax) 18
Fiji 20
India (VAT) 22
India (service tax) 24
Indonesia 26
Japan 28
Korea (Republic of) 30
Laos 32
Malaysia (GST) 34
Mongolia 36
Myanmar 38
New Zealand 40
Papua New Guinea 42
Philippines 44
Singapore 46
Sri Lanka 48
Taiwan (VAT) 50
Taiwan (gross business receipts tax) 52
Thailand 54
Vietnam 56
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
2 | Asia Paci?c Indirect Tax Country Guide
The future of indirect taxes –
2020 and beyond!
Welcome to the latest edition of KPMG’s Global Indirect Tax Services’ Asia
Paci?c Indirect Tax Country Guide
Over the next 5-10 years, the direction of indirect
taxes in Asia Paci?c is reasonably predictable.
China will continue its Value Added Tax (“VAT”)
reform program, which will eventually result in
VAT being applied to all goods and services across
its economy, including potentially being amongst
the ?rst countries to apply VAT to the ?nancial
services sector. Malaysia will commence its
new Goods and Services Tax (“GST”) with effect
from 1 April 2015, and thereafter the debate will
undoubtedly shift to increasing its rate from
6 percent. The introduction of GST in India is also
now well and truly on the horizon, with previous
political obstacles seemingly now removed, and
a suggestion that a new GST may commence as
early as 2016. Japan and Australia will continue to
debate increases in their rates of indirect taxes,
potentially triggering other governments in the
region to follow suit.
Very shortly, VAT or GST will apply in all major
economies of the world, with the exception of the
United States. A staggering growth of a tax ?rst
introduced in France in 1954; applied in only 48
countries by 1989; and then expanded to over 160
countries around the world by 2015.
But what happens from 2020 and beyond? In this
article we engage in crystal-ball gazing and predict
two global mega trends which affect indirect taxes,
and then most importantly, how each of those
mega trends will impact on global developments
in the use of data and analytics – more speci?cally,
the Big Data phenomenon.
First trend – more comprehensive
VAT/GST bases
The ?rst global trend is the anticipated shift
towards more comprehensive VAT and GST bases.
The Organisation for Economic Co-operation
and Development’s (“OECD”) recently released
‘Consumption Tax Trends 2014’
1
highlights the
fact that 21 out of 34 OECD member countries
increased their VAT/GST rates at least once over
the period from 2009-2014, with the average VAT/
GST rate amongst OECD member countries now
exceeding 19 percent. The obvious opportunity
now is for governments to broaden the base,
either because their rates may be starting to
reach a natural ceiling; to plug revenue gaps; or to
continue the shift from corporate taxes to indirect
taxes given the latter’s relative ease of collection
and stability in times of economic uncertainty.
The uncertainty is whether policy-makers can
navigate often treacherous political waters to
achieve this policy outcome. The patchwork
systems in place in countries like Australia and
Malaysia, with broad categories of zero rating
and exemptions, is testament to the political
compromises often needed to get a new tax
initially enacted.
Interestingly, the OECD recently concluded
2
that
reduced rates and other concessions were not an
ef?cient way to protect lower income individuals
and address the so-called regress nature of
indirect taxes, which is the oft-cited reason given
by policy-makers for providing such concessions
in the ?rst place. A recent OECD study shows
that many of these reduced rates actually bene?t
higher income households more than lower
income households. This is particularly the case
for reduced VAT rates on restaurant meals, hotel
rooms and cultural goods, like books, theatre and
cinema tickets. This suggests that a better way
to achieve equity and social objectives would be
to remove these reduced rates and provide more
targeted relief measures, such as income-tested
bene?ts and tax credits.
1 OECD (2014), ‘Consumption Tax Trends 2014’, OECD Publishing.
2 OECD/Korea Institute of Public Finance (2014), “The Distributional Effects of Consumption Taxes in OECD Countries”,
OECD Tax Policy Studies, No.22, OECD Publishing.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
Asia Paci?c Indirect Tax Country Guide | 3
Another ‘concessionary’ area which will be
watched closely is ?nancial services. Historically,
?nancial services were exempted from indirect
taxes on the basis that it was considered
too dif?cult to measure the value added on a
transaction-by-transaction basis. However, the
goalposts gradually shifted when countries such as
South Africa recognized the ease with which VAT
could be applied to ?nancial services remunerated
on a explicit fee or commission basis. General
insurance policies also became subject to GST/
VAT in countries such as Australia, New Zealand,
Singapore, and South Africa; and even in Europe,
the exemption from VAT has been substituted by
insurance premium taxes.
Now countries such as China are experimenting
with the idea of taxing all, or nearly all, ?nancial
services under a VAT. With governmental
regulation over their ?nancial services sector
being progressively relaxed, it provides a good
testing ground for other countries to observe. If
the Chinese do it successfully, expect the debate
about reforming ?nancial services to be reignited
in Europe and elsewhere. With the entry of market
disruptors such as high-tech companies and
traditional retailers into ?nancial services; the rise
of fee based products; and more sophisticated
pricing models used by ?nancial institutions,
many of the traditional arguments used to rebut
the application of VAT or GST to ?nancial services
now appear weakened. The mantra of some
governments seems to be that applying indirect
taxes to ?nancial services may not produce
perfectly pure policy outcomes, but sometimes
‘near enough is good enough’.
3

A related trend is the shift from multiple rate
VAT and GST systems to single rate systems.
Countries such as China with its multiple rates of
3 percent, 6 percent, 11 percent, 13 percent and
17 percent, should inevitably consolidate into
a single rate. A similar change may occur in
India where the GST is expected to be initially
introduced with multiple rates for different goods
and services, but which should ultimately be
rationalized after a settling in period.
By far and away the country with the most
comprehensive indirect tax base is New Zealand.
It is the model for countries seeking to implement
‘modern VAT/GST’ systems. It would not be a
surprise to see other countries following the New
Zealand lead in 2020 and beyond.
Second trend – global framework for cross-
border services and intangibles
The second trend, though perhaps likely to
eclipse a 2020 target, is the shift towards a global
framework for applying VAT or GST to cross-border
?ows of services and intangibles. That global
framework is expected to result in a high level of
consistency between countries in the VAT/GST
treatment of international trade ?ows, based on
the ‘destination principle’. This is the principle
that VAT or GST should be levied in the place
where goods and services are consumed, not the
place from which they originate. The ‘destination
principle’ provides a very powerful response, in an
indirect tax context, to the base erosion and pro?t
shifting (“BEPS”) debate which is ongoing in a
corporate tax context.
As Professor Rebecca Millar recently noted
4

there is a real contrast in the challenge for policy-
makers in taxing cross-border transactions under
corporate taxes as compared with indirect taxes:
3 See, for example, Singapore and Malaysia, both of which have a ‘?xed input tax credit recovery’ system for ?nancial institutions to overcome the compliance
problems of partial exemption methodologies.
4 Millar, R. (2014). Looking ahead: potential global solutions and the framework to make them work. The Future of VAT in a Digital Global Economy 2014,
Vienna, Austria: Presentation.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
4 | Asia Paci?c Indirect Tax Country Guide
“Yet the conclusion that “something needs
to be done” simply does not have the same
signi?cance for VAT as it does for income
tax. This is not because VAT on global digital
transactions is easy to collect: it is not. Nor
is it because VAT raises different collection
problems than income tax: for the most
part, it does not. What is different about
VAT is the almost universal agreement on
the substantive jurisdictional principle that
should be used to determine the tax base.
Some countries might pay lip service to the
destination principle, particularly countries
with limited tax collection capacity and a high
reliance on VAT to meet their revenue needs.
Other countries – or their tax administrations
and/or courts – might disagree about what
the destination principle requires in particular
circumstances. Nonetheless, there is
little or no signi?cant disagreement on the
fundamental principle. Nor is there any
signi?cant disagreement about the most
important aspect of the neutrality principle,
which entails the notion that there should
generally be no tax burden on business-to-
business (B2B) transactions under a VAT.
Thus, whatever it is that needs to be done, it
is unlikely to involve a fundamental re-think of
the jurisdictional basis upon which decisions
are made about which country has the right to
tax consumption.”
While a single set of rules to be applied globally
may be a pipedream, agreement on framework
principles is not. As the OECD has recently
recommended
5
,

supplies of services and
intangibles in a business-to-consumer (“B2C”)
context should be taxed based on the place of
performance where they are consumed ‘on-the-
spot’, such as with services physically performed
on a person, accommodation, restaurant and
catering services, entertainment and sporting
events, exhibitions and trade fairs. B2C supplies
should be taxed based on the ‘usual residence’
of the customer for other supplies of services
and intangibles, such as with consultancy,
accounting and legal services, ?nancial and
insurance services, long-term rental of movable
property, telecommunications and broadcasting
services, and online supplies of content, storage
and gaming. And B2B rules, where the emphasis
is on achieving neutrality, should focus not only
on where the business customer will use its
purchases that ?nal consumers will acquire, but
also on facilitating the ?ow-through of the tax
burden to the ?nal consumer.
The logical consequence of this approach is the
need for simpli?ed registration and compliance
regimes to enable suppliers without a physical
presence in that jurisdiction to properly account for
VAT/GST. Governments will be incentivized to do
so, given that they otherwise run the risk of having
to rely on more dif?cult and costly enforcement
and collection mechanisms.
Already we have seen movement towards the
implementation of these principles with the
adoption from 1 January 2015 of the European
Union’s (EU) ‘mini-one stop shop’, which not
only invokes the destination principle for B2C
transactions, but also seeks to simplify the
compliance burden for business across EU
member states. Similar measures have also
recently been implemented in Norway and South
Africa, with proposals also being considered in
Japan. It would not be surprising to see trading
blocks, such as the Association of Southeast Asian
Nations (“ASEAN”) economic community, banding
together to administer collection systems on a
more simpli?ed basis.
Big Data
This decade has seen a seismic awakening in
the business world to the power of data and
analytics. What was historically the domain of the
IT expert, data and analytics is now harnessed to
drive business growth; to enter new markets; to
drive change across operations, supply chain and
?nance; to understand and anticipate customer
needs; and to implement new business models.
5 OECD (2014), Discussion Drafts for Public Consultation – International VAT/GST Guidelines, Guidelines on Place of Taxation for Business-to-Consumer Supplies of
Services and Intangibles, 18 December 2014.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
Asia Paci?c Indirect Tax Country Guide | 5
In a series of articles published by Bloomberg
BNA
6
, KPMG experts noted the transformative
powers of Big Data and analytics in an indirect tax
context, and how this phenomenon is reshaping
the way businesses, and tax authorities, operate.
The ?rst article showed how tax authorities are
increasingly understanding the importance and
availability of data from business. The second
article examined the impact of Big Data on the
formulation and application of indirect tax policy
and administration. Here we examine the impact
of Big Data on indirect taxes in 2020 and beyond.
At a recent KPMG Global Indirect Tax Services
event held in Hampshire, United Kingdom,
participants from many of the largest multinational
companies around the world debated eight
key statements around the future impact of
Big Data on indirect taxes. These statements,
while deliberately provocative, paint a picture of
the potential of Big Data post-2020. The eight
propositions are:
1. No more periodic returns – tax will be
settled in real-time. Already we have seen
innovation in countries such as Brazil, which
recently implemented a public system of
digital accounting used to approve, store
and certify commercial and tax bookkeeping
documents, to enable tax authorities to make
a complete assessment of their tax accounting
information. Similarly, in countries such as
China, its Golden Tax System provides a data
download of transaction level information to the
tax authorities on a monthly basis. While not
yet ‘real-time’, that solution is not far away. The
experiences in these developing countries beg
the question – if Brazil and China can do it, then
why not more fully developed economies?
2. Big data will close the VAT/GST gap. While
there is an abundance of anecdotal evidence
supporting increased requests for data by tax
authorities from business, thus far much of that
data has not been harnessed. This will change.
Data analytics enables tax authorities to develop
sophisticated risk pro?les and conduct trend
analysis, ?ag potential audit issues, and screen
out higher risk cases for deeper investigation –
cutting off avenues for fraud before they even
occur. By analogy, just as we expect immigration
of?cials to use data to pre-screen passengers
before arriving at their destination, so too will
tax authorities. ‘Random’ audits will become a
contradiction of terms.
3. The tax transparency debate will shift to
indirect taxes. Several recent high pro?le
media cases have highlighted a disconnect
between community expectations around the
contribution multinational companies should
make to tax collections in the countries in which
they operate, and their actual contributions.
This has led to mandated disclosure obligations
in a number of countries, as well as many
companies also voluntarily reporting their tax
payments. The role of indirect taxes in that
debate has been somewhat muted to date,
raising issues such as: (1) whether indirect
taxes should be reported as part of a company’s
total tax obligations; and (2) does a multinational
company bear some responsibility if it is
legitimately able to provide goods or services
into a country without VAT or GST? Arguably the
consumer is the winner, but equally it may be
contended that the supplier has played a crucial
role in securing a competitive advantage over
locally-based businesses.
4. Data quality and analysis will be the
new audit battleground. The new audit
battleground will be around the testing
of business systems and processes, to
better understand controls around manual
interventions, and to see how those systems
respond to changes as a result of new products
or services, or new rates and indirect tax rules.
The debate in tax audits will be around whether
one data set is better than another – in other
words, whether tax authorities data which
shows a certain correlation or trend is more
accurate or robust than that of the company
being audited.
5. You won’t control all your own data
anymore. Banks and credit card processors
are already playing an increasing role as ‘de
facto’ tax collectors, with their data routinely
6 Timothy H. Gillis & Philippe Stephanny, “Going beyond the data: tax data is big data”, Bloomberg BNA, September 2014; Niall Campbell, “Tax Policy and
Administration in an Era of Big Data”, Bloomberg BNA, December 2014.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
6 | Asia Paci?c Indirect Tax Country Guide
being requested for analysis and to validate
transaction level data. Interestingly, that same
transaction level data which is so critical in
an indirect tax context, will increasingly be
leveraged by tax authorities in a corporate or
personal income tax context.
6. Your data will become very interesting to
others. Increased information exchanges
between governments will facilitate multi-
country tax authority audits. Additionally,
indirect tax systems will increasingly rely on the
VAT/GST registration status of parties, or their
address details, and that information will likely
become publicly available.
7. Indirect tax rules will be written with data
analytics in mind. For example, place of
supply rules will cease to be based on vague
or uncertain concepts such as ‘residency’ for
tax purposes, but instead will use proxies such
as the consumer’s IP address or credit card
information. Interestingly, this could shift the
capacity for VAT/GST avoidance into the hands
of tech-savvy consumers, able to shop around
for the lowest VAT/GST rate using geoblockers.
Non-resident or tourist refund schemes could,
at least in theory, be abolished in favour of point
of sale discounts, although it may be more
convenient for governments to continue with
inef?cient practices to mitigate the ?nancial
impact.
8. You [the tax manager] will be redundant by
2020! This was a tongue-in-cheek suggestion
designed to highlight the changing roles and
responsibilities of tax managers as a result
of the Big Data phenomenon. In the future
tax managers will be more focused on issues
such as how systems respond to changes in
products, services and technology; testing
the integrity of systems; and analysing trends
and exception reporting. Big Data demand
is expected to reach 4.4 million jobs globally,
with two-thirds of these positions remaining
un?lled.
7
The point is simple – business needs
to retrain, recruit or upskill their tax staff to
respond to the Big Data challenge.
What does it all mean?
The truly fascinating issue is to consider how
these mega-trends will interact? If we have a shift
towards a more comprehensive VAT/GST base
together with the adoption of a global framework
for applying VAT or GST to cross border ?ows of
services and intangibles, what happens when this
is overlaid with the Big Data phenomenon?
Consider the following:
1. The place of taxation for cross-border ?ows of
services and intangibles will, in the near future,
be based around proxies such as the customer’s
IP address, their credit card information, or the
address they use as part of an ordering process.
What this highlights is that data collection will
drive the direction of the tax rules, rather than
tax rules framing businesses’ data collection
needs. Put another way, tax rules will need
to respond to business needs, rather than
business responding to tax rules.
2. The convergence of traditional ?nancial services
with the digital economy is likely to compel a
broadening of countries’ VAT/GST base, at least
in the ?nancial services sector. Debates as
to the boundaries of exemptions for ?nancial
services (such as whether something is or is not
a ‘payment system’), the problems of cascading
of VAT/GST in B2B transactions, and disputes
about partial exemption or apportionment
methodologies would be rendered obsolete.
3. Real time tax collection potentially represents a
‘win-win’ for both governments and business –
while output tax may be paid more quickly, input
taxes should similarly be refunded on a real time
basis, and problems such as ‘carousel fraud’
or ‘missing trader fraud’ would disappear. In
theory this should lead to VAT or GST systems
operating in practice more like single layer ‘retail
sales taxes’.
7 Gartner (2012), “Gartner says Big Data creates big jobs: 4.4 million IT jobs globally to support Big Data by 2015”, Press Release at www.gartner.com
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
Asia Paci?c Indirect Tax Country Guide | 7
Tim Gillis
KPMG’s Head of Global Indirect Tax
[email protected]
Lachlan Wolfers
KPMG’s Asia Pacific Regional Leader,
Indirect Tax Services
Leader of the Indirect Taxes Centre
of Excellence for China,
KPMG in China
[email protected]
4. The more comprehensive the VAT/
GST systems used throughout
the world, and the more globally
consistent the framework for dealing
with cross-border ?ows of services
and intangibles under a VAT/GST, the
better able business is to implement
powerful tax engines. Auditing, both
by business and tax authorities,
will be focused on the quality and
integrity of their systems, rather than
technical detail.
5. Technological development will
allow developing countries to make
quantum leaps in their tax collection
and administration systems. Just
as mobile payments in many
parts of Africa are enabling more
sophisticated banking and ?nancing
transactions, so too will it enable
the gap between developing and
developed countries tax collections
to be bridged.
6. Increased volumes of goods now
cross borders in non-physical form
(for example, digital downloads), and
as a result, the focus of collection
and enforcement infrastructure
operated by tax authorities will
need to respond and adapt. With
technological developments we
could not have contemplated only a
few years ago, such as 3D printing
technology, over time the scope
of what we deliver electronically is
expected to substantially increase.
Only in the past 30 years have
computers entered commercial and
home use. Only in the past 15 years has
internet usage become widespread.
Smartphones have developed over the
past 10 years, and in the last ?ve years
we have become accustomed to doing
our banking and our shopping online.
Seemingly everywhere we go we
leave a digital footprint. Big Data is the
recognition of the power and value to
be gained in harnessing that data – it’s
not dif?cult to foresee its impact in the
world of indirect taxes.
Kok Shang Lam
Head of Indirect Tax
KPMG in Singapore
[email protected]
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
8 | Asia Paci?c Indirect Tax Country Guide
Asia Paci?c indirect tax overview
Type of indirect tax Standard rate Reduced rates, zero rates, or exemptions Voluntary
registration possible
for an overseas
company?
Typical frequency of
returns
Can an overseas
company recover
VAT/GST if it is not
registered?
Typical time taken to
obtain a refund?
Are there speci?c
requirements for the
content of invoices
to be considered
valid?
Does a reverse
charge or indirect
tax withholding
mechanism apply?
Australia GST 10% Zero rated supplies; Exempt supplies Yes Quarterly* No 1 month Yes Yes
Cambodia VAT 10% Zero rated supplies; Exempt supplies No Monthly No Differs Yes No
China VAT 17% Reduced rates; Zero rated supplies; Exempt supplies No Monthly* No Typically, excess credits
must be carried forward
Yes Yes
Business tax 3%–5% Increased rates; Exempt supplies N/A Monthly* N/A N/A No Yes
Fiji Islands VAT 15% Zero rated supplies; Exempt supplies No Monthly* No 2–6 months Yes Yes
India VAT 4%–15% Reduced rates; Increased rates; Zero rated supplies; Exempt supplies Yes Varies at a State level,
and also depending on
turnover or tax liability
No 1–2 years Yes Yes
Service tax 12.36% Zero rated supplies; Certain abatements in calculating the taxable
value of services
Yes Twice annually No 1–2 years Yes Yes
Indonesia VAT 10% Zero rated supplies; Exempt supplies No Monthly No Many months, can be
years
Yes Yes
Japan Consumption tax 8% Exempt supplies; Non-taxable supplies Yes Annually* No 1–2 months Yes No
Korea VAT 10% Zero rated supplies; Exempt supplies No Quarterly No 1 month Yes Yes
Laos VAT 10% Zero rated supplies; Exempt supplies No Monthly No 6 weeks Yes Yes
Malaysia GST 6% Zero rated supplies; Exempt supplies Yes Quarterly No 14–16 days Yes Yes
Mongolia VAT 10% Zero rated supplies; Exempt supplies No Monthly No Officially 69 working
days, often difficult in
practice
Yes Yes
Myanmar Commercial tax 5% Exempt supplies No Quarterly No 1 year Yes No
New Zealand GST 15% Reduced rate; Zero rated supplies; Exempt supplies Yes Two monthly* No 2–3 weeks Yes Yes
Papua New Guinea GST 10% Zero rated supplies; Exempt supplies Yes Monthly No 1–4 months Yes Yes
Philippines VAT 12% Zero rated supplies; Exempt supplies No Monthly and quarterly No Many months – years,
difficult process
Yes Yes
Singapore GST 7% Zero rated supplies; Exempt supplies Yes Quarterly* No Aligned with the
frequency of returns
Yes No
Sri Lanka VAT 11% Zero rated supplies; Exempt supplies Yes Quarterly* No Within 3 years Yes No
Taiwan VAT 5% Zero rated supplies; Exempt supplies No Two monthly* Yes, in limited
circumstances
2 months Yes Yes
Gross business receipts tax
(GBRT)
0.1%–25% None No Two monthly No N/A Yes Yes
Thailand VAT 7%*** Zero rated supplies; Exempt supplies Yes Monthly No 3–6 months Yes Yes
Vietnam VAT 10% Reduced rates; Zero rated supplies; Exempt supplies Yes Monthly or quarterly No Officially 6–40 days,
often longer
Yes Yes
*Return frequency can differ electively or mandatorily, depending on the circumstances.
***Temporary rate value until 30 September 2015.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
Asia Paci?c Indirect Tax Country Guide | 9
Type of indirect tax Standard rate Reduced rates, zero rates, or exemptions Voluntary
registration possible
for an overseas
company?
Typical frequency of
returns
Can an overseas
company recover
VAT/GST if it is not
registered?
Typical time taken to
obtain a refund?
Are there speci?c
requirements for the
content of invoices
to be considered
valid?
Does a reverse
charge or indirect
tax withholding
mechanism apply?
Yes Quarterly* No 1 month Yes Yes
No Monthly No Differs Yes No
No Monthly* No Typically, excess credits
must be carried forward
Yes Yes
N/A Monthly* N/A N/A No Yes
No Monthly* No 2–6 months Yes Yes
Yes Varies at a State level,
and also depending on
turnover or tax liability
No 1–2 years Yes Yes
Yes Twice annually No 1–2 years Yes Yes
No Monthly No Many months, can be
years
Yes Yes
Yes Annually* No 1–2 months Yes No
No Quarterly No 1 month Yes Yes
No Monthly No 6 weeks Yes Yes
Yes Quarterly No 14–16 days Yes Yes
No Monthly No Officially 69 working
days, often difficult in
practice
Yes Yes
No Quarterly No 1 year Yes No
Yes Two monthly* No 2–3 weeks Yes Yes
Yes Monthly No 1–4 months Yes Yes
No Monthly and quarterly No Many months – years,
difficult process
Yes Yes
Yes Quarterly* No Aligned with the
frequency of returns
Yes No
Yes Quarterly* No Within 3 years Yes No
No Two monthly* Yes, in limited
circumstances
2 months Yes Yes
No Two monthly No N/A Yes Yes
Yes Monthly No 3–6 months Yes Yes
Yes Monthly or quarterly No Officially 6–40 days,
often longer
Yes Yes
Australia GST 10% Zero rated supplies; Exempt supplies
Cambodia VAT 10% Zero rated supplies; Exempt supplies
China VAT 17% Reduced rates; Zero rated supplies; Exempt supplies
Business tax 3%–5% Increased rates; Exempt supplies
Fiji Islands VAT 15% Zero rated supplies; Exempt supplies
India VAT 4%–15% Reduced rates; Increased rates; Zero rated supplies; Exempt supplies
Service tax 12.36% Zero rated supplies; Certain abatements in calculating the taxable
value of services
Indonesia VAT 10% Zero rated supplies; Exempt supplies
Japan Consumption tax 8% Exempt supplies; Non-taxable supplies
Korea VAT 10% Zero rated supplies; Exempt supplies
Laos VAT 10% Zero rated supplies; Exempt supplies
Malaysia GST 6% Zero rated supplies; Exempt supplies
Mongolia VAT 10% Zero rated supplies; Exempt supplies
Myanmar Commercial tax 5% Exempt supplies
New Zealand GST 15% Reduced rate; Zero rated supplies; Exempt supplies
Papua New Guinea GST 10% Zero rated supplies; Exempt supplies
Philippines VAT 12% Zero rated supplies; Exempt supplies
Singapore GST 7% Zero rated supplies; Exempt supplies
Sri Lanka VAT 11% Zero rated supplies; Exempt supplies
Taiwan VAT 5% Zero rated supplies; Exempt supplies
Gross business receipts tax
(GBRT)
0.1%–25% None
Thailand VAT 7%*** Zero rated supplies; Exempt supplies
Vietnam VAT 10% Reduced rates; Zero rated supplies; Exempt supplies
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10 | Asia Paci?c Indirect Tax Country Guide
Australia
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Type of indirect tax Goods and services tax (GST).
Standard rate 10 percent.
What supplies are liable to the
standard rate?
Any form of supply which is made for consideration, in the course or
furtherance of an enterprise, is connected with Australia; and the entity is
either registered or required to be registered.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
There are no reduced rates.
GST-free (zero rated) supplies include exports; some food products; most
medical and health products and services; most education courses; child
care; religious services; water, sewerage, and drainage services; and
international transport.
Input taxed (exempt) supplies include financial supplies; residential rent
and sales of residential premises; and fund-raising events conducted by
charitable institutions.
Who is required to register, and
what is the threshold?
An entity that is carrying on an enterprise, whose current or projected annual
turnover is 75,000 Australian Dollars (AUD) or more (excl. GST).
Non-profit bodies are not required to be registered unless their current or
projected annual turnover is AUD150,000 or more (excl. GST).
Taxi operators are required to be registered regardless of their annual turnover.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes.
Typical frequency of returns Usually quarterly. Where a business’ annual GST turnover exceeds AUD20
million, monthly returns are required. In very limited situations, an election
can be made to lodge annually.
Are there any items that a
registered business cannot recover
GST on?
An entity cannot recover GST on acquisitions of a private or domestic nature;
acquisitions that relate to making input taxed supplies such as financial
supplies or residential rent (although there are exceptions to this rule);
certain acquisitions where income tax deductions are not allowable (e.g.
entertainment expenses); and acquisitions of freehold interests in land,
stratum units, or long-term leases subject to the margin scheme.
Asia Paci?c Indirect Tax Country Guide | 11
Can an overseas company recover
GST if it is not registered?
No.
What is the typical time taken to
obtain a GST refund?
If all required information has been provided to, and lodgements are up-to-
date with, the Australian Taxation Office (ATO), the ATO will generally process
refunds within a month.
Are there specific requirements
for the content of invoices to be
considered valid for GST purposes?
Yes. Among other requirements, an invoice should broadly contain the
supplier’s identity and Australian Business Number (ABN); the recipient’s
identity or ABN (for supplies with a total price of AUD1,000 or more); a
description of the supply; the date the invoice was issued; and the amount
of GST payable. An invoice must satisfy the requirements in order to claim
input tax credits.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes, a non-resident supplier can, with the agreement of the Australian
resident recipient, elect to reverse charge the supply, subject to other
requirements. A compulsory reverse charge mechanism can also apply to
the supply of offshore intangible supplies to an enterprise which would not
be eligible for a full input tax credit (e.g. certain acquisitions from offshore by
banks).
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes, an entity may apply for a private binding ruling.
Informal rulings are not issued.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• customs duty
• state taxes, including stamp duty and land tax
• wine equalization tax
• luxury car tax
• fuel tax.
Further detail available online: For more detailed information, please refer to KPMG’s VAT/GST essentials
available on kpmg.com/indirecttax.
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12 | Asia Paci?c Indirect Tax Country Guide
Cambodia
Type of indirect tax Value-added tax (VAT).
Standard rate 10 percent.
What supplies are liable to the
standard rate?
Supplies of goods and services in Cambodia and imported goods.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rate – exported goods and services, and certain charges in relation
to international transportation of people and goods. Also, this zero rating
is applicable for any goods and services supplied by supporting industries
Qualified Investment Project/contractors to particular export industries.
Exempt supplies include public postal services; certain medical and dental
goods and services; wholly state-owned public transportation services;
insurance services; primary financial services; importation of articles for
personal use that are exempt from customs duties; and non-profit activities
in the public interest recognized by the Ministry of Economy and Finance.
Who is required to register, and
what is the threshold?
An enterprise which is making taxable supplies, if it falls under one of the
following criteria:
• all types of corporation, importer-exporter and investment enterprises
• any other enterprise with turnover in respect of goods sold exceeding
125 million Cambodian Riel (KHR), or in respect of services exceeding
KHR60 million for the preceding 3 consecutive months or in the next
3 consecutive months
• any enterprise which, at the beginning of any 3 consecutive months, has
any government contracts which will produce taxable turnover exceeding
KHR30 million.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
No.
Typical frequency of returns Monthly.
Are there any items that a
registered business cannot recover
VAT on?
Yes, VAT generally cannot be recovered – when incurred in making exempt
supplies; for non-business-related purposes, such as entertainment;
purchases or imports of automobiles; and purchases or imports of certain
petroleum products.
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Asia Paci?c Indirect Tax Country Guide | 13
Can an overseas company recover
VAT if it is not registered?
No.
Typical time taken to obtain VAT
refund following return filing
The VAT regulation provided a specific timeframe based on the amount of
refund and category of the taxpayer such as gold/silver/normal taxpayers. 
However, in practice, the time taken to obtain the VAT refund is very time
consuming as a VAT refund audit is required to be conducted by the Tax
Office first prior to approving the refund.
Are there specific requirements
for the content of invoices to be
considered valid for VAT purposes?
Yes, valid VAT invoices shall disclose the name and VAT number of both
the supplier and the customer, the invoice date, the invoice number, and a
description of the supplies including place/timing and the VAT amount.
Does a reverse charge or indirect
tax withholding mechanism apply?
No.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
No.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• accommodation tax
• specific tax on certain merchandises and
• tax for public lighting
services
Further detail available online: For more detailed information, please refer to KPMG’s VAT/GST essentials
available on kpmg.com/indirecttax.
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14 | Asia Paci?c Indirect Tax Country Guide
China (VAT)
Introduction There are three main forms of indirect taxes operating in mainland China:
VAT, business tax, and consumption tax.
The special administrative regions of Hong Kong and Macau operate
separate tax regimes from mainland China. There is currently no VAT or
equivalent indirect tax in these regions.
VAT Pilot Program In 2012 the Chinese Government embarked upon extensive indirect tax
reforms. The reforms introduced a VAT pilot program which replaces BT
with VAT for the transportation, asset leasing and modern services sectors.
‘Modern services’ includes research and development and technical
services, information technology services, cultural and creative services,
logistics and ancillary services, certification and consulting services, radio,
film and television services, postal and telecommunications services. It has
been foreshadowed that the VAT pilot program will be expanded to other
industries during 2015, with the expectation that by the end of 2015 BT will
have been wholly replaced by VAT.
Standard rate 17 percent (VAT)
What supplies are liable to the
standard rate?
• Sale and importation of goods;
• Provision of repair, replacement and processing services;
• Leasing of tangible and moveable assets subject to the VAT pilot program.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
• 3 percent – ‘Small scale taxpayers,’ being those without sophisticated
business, accounting and auditing systems, and whose turnover is below
certain thresholds (discussed below); and certain transactions subject to
simplified levy method.
• 6 percent – ‘Modern services’ subject to the VAT pilot program (defined
above).
• 11 percent – Transportation services and some telecommunication
services subject to the VAT pilot program.
• 13 percent – The sale of food grains and vegetable oils, heating, air-
conditioning, certain gas supplies, books, newspapers, and magazines.
• Zero rated – exported goods; and international transportation services,
exported research and development and design services subject to the
VAT pilot program.
• Exempt:
– agricultural products, contraceptive drugs and devices, antique books,
and other items declared by the State Council
– a number of exported services subject to the VAT pilot program.
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Asia Paci?c Indirect Tax Country Guide | 15
Who is required to register, and
what is the threshold?
Business taxpayers may register as a ‘general VAT taxpayer’ which entitles
them to claim input VAT credits and issue VAT invoices. All other businesses
are classified as ‘small scale taxpayers’ and pay VAT at 3 percent, with no
eligibility for input tax credits on purchases and no eligibility to issue VAT
invoices. A business will be classified as a small scale taxpayer if its turnover
of annual sales is not more than:
• 800,000 Chinese Yuan Renminbi (RMB); or
• RMB5 million if engaged solely or mainly in the production of goods or
provision of taxable services not subject to the VAT pilot program; or
• RMB5 million if providing services that are subject to the VAT pilot program.
The VAT liability threshold for individuals varies between regions and ranges
from sales of RMB5,000-20,000 per month or RMB300–500 per transaction.
Is voluntary registration possible? Yes.
It is possible for taxpayers that would otherwise be ‘small-scale taxpayers’ to
register as ‘general taxpayers.’ They need to demonstrate a sound accounting
system and provide accurate tax information, as well as having a fixed place
of business in China.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
No.
Typical frequency of returns Monthly. However, depending on the taxpayer’s activities, returns can be
required more frequently, in some cases as often as daily.
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16 | Asia Paci?c Indirect Tax Country Guide
Are there any items that a
registered business cannot recover
VAT on?
Yes.
There are a number of restrictions on the recovery of input tax credits, the
most significant of which is that only general VAT taxpayers are potentially
eligible to claim supported by VAT special invoices. As such, assuming the
taxpayer is a general VAT taxpayer and holds a special VAT invoice, then
further restrictions include an inability to claim for:
• inputs related to activities subject to BT
• inputs related to activities subject to simplified levy method
• inputs related to the sale of tax-exempt items
• inputs related to group welfare activities (e.g. employee canteens and
employee benefits)
• those for personal consumption
• inputs used in deriving extraordinary or abnormal losses.
For completeness, it should also be noted that many exports of goods do not
result in full recovery of VAT – that is, there may be a leakage in export VAT
recovery.
Can an overseas company recover
VAT if it is not registered?
No.
Typical time taken to obtain VAT
refund following return filing
Where input tax exceeds output tax in any given period, generally the
excessive input tax credit must be carried forward (potentially indefinitely)
rather than being refunded.
The main exceptions to this are for exported goods, and certain exported
services which are zero rated under the VAT pilot program, such as
international transport, research and development and design services.
First-time providers can be required to wait 6 months or greater before they
receive the refund.
Are there specific requirements
for the content of invoices, for the
invoice to be considered valid for
VAT purposes?
Yes.
China operates the ‘Golden Tax System,’ a nationwide e-tax system focused
on producing a more efficient tax and data collection system, while reducing
fraud. VAT invoices (known as ‘special VAT invoices’) must be issued on
government issued and regulated machines using government issued and
numbered invoicing paper. Businesses must obtain a ‘special VAT invoice’
and take it to the tax authority for verification before an input VAT credit can
be claimed.
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Asia Paci?c Indirect Tax Country Guide | 17
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes. A VAT withholding system applies where services are provided by an
overseas party to a business or individual (or an agent) in China.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
No.
However, the Chinese tax authorities are considering implementing an
advance tax rulings system by way of a pilot program. The pilot program is
initially expected to be limited to large enterprises that have entered into tax
compliance agreements with the tax authorities.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• business tax, which applies to the provision of all other services, the
transfer of intangible assets and the sale of immovable property
• consumption tax, which applies to the manufacturing, processing,
importation or selling of 14 different kinds of goods, principally
luxury goods
• customs duty
• stamp duty
• various local levies
• various real estate specific taxes, motor vehicle taxes, and mining
specific taxes.
Further detail available online: For more detailed information, please refer to KPMG’s VAT/GST essentials
available on kpmg.com/indirecttax.
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18 | Asia Paci?c Indirect Tax Country Guide
China (business tax)
Type of indirect tax Business tax (BT).
It is a turnover tax in the sense that it is not creditable in business-to-
business transactions; it applies in each stage of the supply chain.
As the VAT reforms in China progress, BT is gradually being replaced by VAT.
We anticipate that BT will be completely replaced by VAT by the end of 2015.
Standard rate 3 percent to 5 percent, with the exception of entertainment services which
can be as high as 20 percent.
What supplies are liable to the
standard rate?
Services not covered by the VAT pilot program.
• 3 percent – Construction, cultural activities, and sports.
• 5 percent – Finance and insurance services, hotels, restaurants, catering,
tourist, rental, leasing and transfer of immovable property.
• 5 percent to 20 percent – Entertainment services.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
The main exemptions are:
• services subject to the VAT pilot program (transportation, post,
telecommunication tangible and movable asset leasing and modern services)
• services provided by employees to their employers
• waste disposal services
• certain other services which are specifically exempt (e.g. nursing services,
medical services, educational services)
• certain offshore outsourcing services and technology transfers.
Who is required to register, and
what is the threshold?
Businesses and other ‘units’ automatically incur BT liability.
Individuals incur BT liability if one of the following thresholds is met or
exceeded:
• RMB300-500 per day, where tax is paid on a transaction basis
• RMB5,000-20,000 per month where tax is paid on a fixed basis.
Is voluntary registration possible? Not applicable.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Not applicable.
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Asia Paci?c Indirect Tax Country Guide | 19
Typical frequency of returns Monthly. However, depending on the taxpayer’s activities, returns can be
required more frequently, in some cases as often as every 5 days.
Are there any items that a
registered business cannot recover
BT on?
Not applicable.
BT is not creditable like a VAT.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes. A BT withholding system applies where services are provided by an
overseas party to a business or individual (or an agent) in China.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
No.
However, the Chinese tax authorities are considering implementing an
advance tax rulings system by way of a pilot program. The pilot program is
initially expected to be limited to large enterprises which have executed Tax
Compliance Agreements with the tax authorities.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• VAT (see preceding section)
• consumption tax applies principally to certain luxury goods
• customs duty
• stamp duty
• various local levies
• various real estate specific taxes, motor vehicle taxes, and
specific taxes.
mining
Further detail available online: For more detailed information, please refer to KPMG’s VAT/GST essentials
available on kpmg.com/indirecttax.
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20 | Asia Paci?c Indirect Tax Country Guide
Fiji
Type of indirect tax VAT.
Standard rate 15 percent.
What supplies are liable to the
standard rate?
Supplies of goods and services or the import of goods made by a registered
person.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
There are no reduced rates.
VAT exempt supplies include financial services; residential rent; education by
an educational institution; life and medical insurance; and goods and services
donated by a non-profit body.
Zero rated supplies include exports; some basic food products; water and
sewerage services; international transport services; and international inbound
telecommunication services.
Who is required to register, and
what is the threshold?
Every person who carries on a taxable activity with annual turnover
exceeding 100,000 Fijian Dollars (FJD).
Produce suppliers and persons providing exempt supplies are not required to
be registered.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
No, unless that overseas company is carrying on business in Fiji and making
taxable supplies.
Typical frequency of returns Entities with annual turnover exceeding FJD300,000 are required to file
monthly VAT returns. Entities with a turnover of less than FJD300,000 may
apply to the Commissioner for quarterly annual filing.
Are there any items that a
registered business cannot recover
VAT on?
Where VAT input credits are associated with non-taxable activity, a
corresponding VAT output adjustment is required to be made to offset the
initial VAT input claimed.
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Asia Paci?c Indirect Tax Country Guide | 21
Can an overseas company recover
VAT if it is not registered?
No.
Typical time taken to obtain VAT
refund following return filing
Two months to 6 months. The obtaining of VAT refunds needs to be
‘managed’ (i.e. followed up with the tax authority, as refunds are generally
not automatically/systematically approved).
Are there specific requirements
for content of invoices to be
considered valid for VAT purposes?
Yes. Invoices must include the words “tax invoice,” the name and Tax
Identification Number of the registered person; and, the VAT amount
charged. However where a supply is made by a retailer for an amount less
than FJD100, a statement on the Tax Invoice that the price is ‘VAT Inclusive
(VIP)’ is sufficient.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
No. While the law provides for the possibility of seeking a ruling, in practice it
has not been implemented and taxpayers are unlikely to obtain a ruling if an
application is made.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• stamp duty
• customs duty
• gambling turnover tax
• service turnover tax.
Further detail available online: For more detailed information, please refer to KPMG’s VAT/GST essentials
available on kpmg.com/indirecttax.
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22 | Asia Paci?c Indirect Tax Country Guide
India (VAT)
Introduction The Indian government is proposing to replace the current VAT, excise
duty and service tax with a comprehensive dual GST. The roadmap for the
implementation of the GST remains uncertain, and it is not expected to
commence before 2016. However, a white paper has been released by
the government, and it summarizes some aspects of the expected GST in
order to assist businesses in preparing their systems, supply chains, and
processes in readiness for the future introduction.
The proposals remain under discussion and can change.
Type of indirect tax VAT.
Standard rate Either 4/5 percent or 12.5/15 percent, depending upon the nature of the goods.
The rates of VAT vary across states and an additional surcharge ranging from
0.5 percent to 5 percent is levied in certain states.
What supplies are liable to the
standard rate?
The sale/purchase of goods made by a taxable person in the course of a
business carried on by that person.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
• Zero rated – export of goods.
• Exempt goods include various food products, agricultural products and
tools; books, periodicals, and journals; electric energy.
• 1 percent – Certain categories of goods, including gold, silver, precious
stones, and articles or ornaments made from them.
• Certain categories of goods are charged at higher rates of 20 percent or
above, including petroleum products; natural and other gases used as fuel;
liquor, and beer.
Who is required to register, and
what is the threshold?
The registration threshold varies across states and ranges between taxable
sales of approximately NIL–2 million Indian Rupees (INR). However, in most
states, if a person brings in goods from outside the state for sale in the
state, they are required to register, regardless of the quantum of sales.
Is voluntary registration possible? Yes, in most states.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes. However, most states require there to be a place of business within
that state.
Typical frequency of returns The frequency of filing of returns varies and may depend on the category
of taxable person/ turnover of sales/tax liability of the respective taxpayer in
preceding year or expected during the current year. VAT return filing could be
monthly, quarterly, or half-yearly. Most states also require the submission of
an additional annual return/VAT audit report.
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Asia Paci?c Indirect Tax Country Guide | 23
Are there any items that a
registered business cannot
recover VAT on?
Yes, inputs used in producing exempt products. In addition, some states
provide that VAT cannot be recovered on certain items including motor
vehicles, petroleum products, office equipment, consumables, and natural
gas. These provisions vary from state to state.
Can an overseas company recover
VAT if it is not registered?
No.
Typical time taken to obtain VAT
refund following return filing
At least 1 to 2 years depending upon the facts of the case.
Are there specific requirements
for content of invoices to be
considered valid for VAT purposes?
Yes.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes. There could be a levy of purchase tax in certain circumstances.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes in most states, subject to certain conditions being fulfilled.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• customs duty is levied on import/export of goods in/from India
• excise duty is levied on manufacture of excisable goods within India
• service tax on provision of services in India (see separate fact sheet on
Service tax)
• central sales tax is levied on the sale of goods occasioning movement
across states
• entry tax/Octroi is levied on the entry of goods within the municipal
territories of a particular state
• other local levies including stamp duty, entertainment tax, and luxury tax.
Further detail available online: For more detailed information, please refer to KPMG’s VAT/GST essentials:
kpmg.com/indirecttax.
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24 | Asia Paci?c Indirect Tax Country Guide
India (service tax)
Introduction The Indian government is proposing to replace the current VAT, excise
duty and service tax with a comprehensive dual GST. The roadmap for the
implementation of the GST remains uncertain, and it is not expected to
be introduced before 2016. However, a white paper has been released by
the government, and it summarizes some aspects of the expected GST in
order to assist businesses in preparing their systems, supply chains, and
processes in readiness for the future introduction.
The proposals remain under discussion and could change.
Type of indirect tax Service tax.
Standard rate 12.36 percent.
What supplies are liable to the
standard rate?
Supplies of all services in India are taxable, barring the ones mentioned
in the negative list (17 services) and the mega-exemption notification
(46 services).
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rated – export of services.
Certain abatements in calculating the ‘taxable value’ of services are available,
subject to various conditions.
Who is required to register, and
what is the threshold?
A person rendering taxable services in a financial year in excess of the
prescribed threshold level of INR1 million.
Also, in respect of the certain specified services, a service recipient who is
liable to pay service tax under the reverse charge mechanism is required to
register (the threshold limit does not apply).
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes, provided they have a place in India which can be registered with the
service tax authorities.
Typical frequency of returns Twice annually.
Are there any items that a
registered business cannot
recover service tax on?
Yes, taxes/duties paid on goods and services used in providing exempt
services.
In addition, a service provider cannot recover service tax paid on certain
specified services including services in relation to setting up a place of
business, car rental services, catering services, and services used for the
personal consumption of employees.
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Asia Paci?c Indirect Tax Country Guide | 25
Can an overseas company recover
service tax if it is not registered?
No.
Typical time taken to obtain
service tax refund following
return filing
Typically 1–2 years, depending on the facts of the case.
Are there specific requirements
for content of invoices to be
considered valid for service tax
purposes?
Yes.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes, for specified services from service providers outside India.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes, in certain circumstances.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• customs duty is levied on import/export of goods in/from India
• excise duty is levied on manufacture of excisable goods within India
• VAT is levied on sale of goods within an Indian state (see a separate fact
sheet on VAT)
• central sales tax is levied on the sale of goods occasioning movement
across the Indian states
• entry tax/Octroi is levied on the entry of goods within the municipal
territories of a particular state
• other local levies including stamp duty, entertainment tax, and luxury tax.
Further detail available online: For more detailed information, please refer to KPMG’s VAT/GST essentials
available on kpmg.com/indirecttax.
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26 | Asia Paci?c Indirect Tax Country Guide
Indonesia
Type of indirect tax VAT.
Standard rate 10 percent.
What supplies are liable to the
standard rate?
The delivery of taxable goods by an entity in Indonesia; the importation of
taxable goods; the rendering of taxable services in Indonesia; utilization in
Indonesia of intangible taxable goods from outside Indonesia; utilization
of offshore taxable services in Indonesia; export services by an entity in
Indonesia (except for exports of certain services, that are toll manufacturing
services, repair and maintenance services, and construction services); self-
construction activities; and the disposal of fixed assets.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rated – exports of goods; and exports of certain services, including toll
manufacturing services, repair and maintenance services, and construction
services.
Exempt – Deliveries and/or import of taxable goods designated as strategic
goods by the government; and certain goods or other services in order to
support the achievement of certain national objectives.
VAT not collected – a) deliveries of goods to a bonded zone and b) deliveries
of goods and services to a free trade zone
VAT free (not subject to VAT) – There are certain goods and services which
are not subject to VAT, for example: goods that are taken directly from their
source (e.g., crude oil, natural gas, coal), financial services (e.g., banking,
insurance and finance lease), etc.
Who is required to register, and
what is the threshold?
Indonesian taxpayers (companies and individuals) with turnover of more than
4.8 billion Indonesian Rupiah (IDR).
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
No.
Typical frequency of returns Monthly.
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Asia Paci?c Indirect Tax Country Guide | 27
Are there any items that a
registered business cannot
recover VAT on?
Such items include:
• goods and services from outside Indonesia, before the entrepreneur is
deemed a taxable entrepreneur
• goods and services unrelated to business activities or related to non-VAT-
able business activities
• acquisition and maintenance of certain motor vehicles, except as
commodities or rentals
• goods and services from outside Indonesia with invalid tax invoices
• goods or services where the input tax is collected by issuing a tax assessment
• acquisition of taxable goods or services where the input tax is not
reported in monthly VAT returns and is discovered during audit
• acquisition of taxable goods, other than capital items, before a taxable
entrepreneur starts production
• input VAT more than 3 months from the end of the period in which it is
incurred.
Can an overseas company recover
VAT if it is not registered?
No.
Typical time taken to obtain VAT
refund following return filing
VAT refunds can only be claimed in the December VAT return (except for
certain types of businesses). VAT refund claims usually result in a tax audit
being opened and can take many months, sometimes years, before they are
resolved and any refund payment is made.
Are there specific requirements
for content of invoices to be
considered valid for VAT purposes?
Yes, an invoice must show a code and serial number; details of the supplier;
details of the purchaser; details of the goods and services; price; discount (if any);
advanced payments (if any); the tax collection basis; the amount of VAT payable;
sales tax on luxury goods (if applicable); date; and name and signature.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes. It is possible to apply for a formal advance ruling from the tax authority.
However, there is no specific timeline when a ruling request will be formally
responded to.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• sales tax on luxury goods
• stamp duty
• excise and customs duty.
Further detail available online: For more detailed information, please refer to KPMG’s VAT/GST essentials
available on kpmg.com/indirecttax.
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28 | Asia Paci?c Indirect Tax Country Guide
Japan
Type of indirect tax Consumption tax.
Standard rate The current consumption tax rate is 8 percent that was increased from
5 percent on 1 April 2014.
By virtue of a bill passed in August 2012, the tax rate was slated to be
increased again to 10 percent on 1 October 2015. However, in November
2014, Prime Minister Sinzo Abe decided to postpone the additional increase
to 1 April 2017 and made more time to reexamine economic policy.
What supplies are liable to the
standard rate?
The sale or lease of an asset in Japan, or the supply of services in Japan,
when carried out for consideration as part of a business carried on by an
individual or company.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Non-taxable supplies include the sale or lease of land; certain sales of
securities and similar instruments; monetary transactions including loans,
guarantees, distributions from joint operation trusts or other investment
trusts and insurance premiums; medical treatment under public medical
insurance law; social welfare activities; school tuition and examination
services.
Exempt supplies include export supplies, including the transfer or lease of
goods representing an export from Japan as well as other export-related
activities such as international transportation.
Who is required to register, and
what is the threshold?
A business which makes taxable supplies in Japan, exceeding 10 million
Japanese Yen (JPY) in the base period, automatically becomes a taxpayer.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes.
Typical frequency of returns A final/annual tax return is due for all relevant taxpayers within 2 or 3 months
of the end of the fiscal period for companies or calendar year for individuals
respectively. Interim returns and payments may be required if the tax
payable exceeds certain thresholds. The tax payable can be based on the tax
payable for the prior year or on actual transactions for the current period. Any
remaining net balance is payable when the annual return is due.
Are there any items that a
registered business cannot recover
consumption tax on?
No.
However, the amount of creditable input tax can be restricted, based
on specified formulae. The input consumption tax which is identified to
correspond to non-taxable sales is not creditable.
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Asia Paci?c Indirect Tax Country Guide | 29
Can an overseas company recover
consumption tax if it is not
registered?
No.
Typical time taken to obtain
consumption tax refund following
return filing
Usually within 1 or 2 months of filing the return.
Are there specific requirements
for content of invoices to be
considered valid for consumption
tax purposes?
Yes. However, please note that Japan’s consumption tax law has not adopted
the VAT invoicing system, although Japan’s consumption tax works like a
credit method consumption tax. Instead Japan requires taxpayers to either
maintain books and records to support amounts claimed for the credit or to
use a simplified system for estimating the credit.
All valid tax invoices must contain the following particulars:
• the full name of the supplier
• the date of the taxable transaction
• the description of the taxable transaction
• the total amount charged on the taxable transaction
• the full name of the person to whom the goods or services are supplied.
Does a reverse charge or indirect
tax withholding mechanism apply?
No.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes, however given the practical aspects of the formal ruling system,
taxpayers generally seek informal verbal comments from the tax authority.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• Liquor Tax
• Tobacco Tax
• Special Tobacco Tax
• Gasoline Tax
• Liquefied Petroleum Gas Tax
• Aviation Fuel Tax
• Petroleum and Coal Tax
• Local Gasoline Tax
• Motor Vehicle Tonnage Tax
• Promotion of Power-Resources Development Tax
Further detail available online: For more detailed information, please refer to KPMG’s VAT/GST essentials:
kpmg.com/indirecttax.
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30 | Asia Paci?c Indirect Tax Country Guide
Korea (Republic of)
Type of indirect tax VAT.
Standard rate 10 percent.
What supplies are liable to the
standard rate?
The supply of all goods and services and the importation of all goods into
Korea.
Any there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rated supplies include the export of goods; the supply of services
outside Korea; the supply of international transportation services by vessel or
aircraft; the supply of certain goods or services, the compensation for which
is received in foreign exchange.
Exempt supplies include various food products; tap water; briquettes and
anthracite coal; various medical and health services; educational services;
various passenger transportation services; certain postage stamps; revenue
stamps; certificate stamps; notary certificates; goods subject to the control
of the Office of Monopoly; certain banking and insurance services; certain
leases of residential housing and land associated with such housing;
land; and the personal services of writers, composers, and other persons
specified by Presidential Decree.
Who is required to register, and
what is the threshold?
Every business person engaged in the business of supplying goods or
services, whether or not for profit. Business persons include individuals,
corporations, the national and local governments, and unincorporated
organizations and associations.
Is voluntary registration possible? Not applicable.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes. However, a physical place of business in Korea is required to register
for VAT. It has been proposed that the VAT laws be revised so that a foreign
company which does not have a permanent establishment in Korea which
provides digital products to Korean users, would be required to have a VAT
registration.
Typical frequency of returns Quarterly.
Are there any items that a
registered business cannot recover
VAT on?
Items that a registered business cannot recover VAT on include non-
business-related expenditure; rental and/or maintenance of small passenger
vehicles; expenditures that have a similar nature to entertainment expenses
or equivalent; purchase of land related to capital expenditures and input VAT
incurred more than 20 days prior to filing an application for VAT registration.
A valid VAT invoice is required in order to claim any input tax.
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Asia Paci?c Indirect Tax Country Guide | 31
Can an overseas company recover
VAT if it is not registered?
No. Exception: A foreign corporation which does not have a permanent
establishment in Korea is eligible to claim a VAT refund when the foreign
corporation purchases goods or received services from a supplier who is
doing a certain business in Korea as listed below:
• Food and lodging services;
• Advertisement services;
• Electronic and telecommunication services;
• Real estate leasing services;
• Goods and services purchase necessary in operating an office of a foreign
corporation in Korea – which are purchase of fixture and furniture in an
office in Korea; maintenance services of fixture and furniture; leasing of
fixture and furniture.
Please note that there is a condition that the refund of the VAT is allowable
only when the relevant foreign country allows Korean companies to recover
the local VAT or similar taxes [Reciprocity rule].
The foreign corporation should claim a VAT refund for the purchase of goods/
services during the period from January 1 to December 31 by the end
of June 30 of the following year. The amount of VAT to be refund for one
calendar year should be KRW 300,000 or more to apply a VAT refund.
Typical time taken to obtain VAT
refund following return filing
Typically, within 30 days of the tax return filing due date.
Are there specific requirements
for content of invoices to be
considered valid for VAT purposes?
Yes. Invoices must contain the suppliers name and registration number; the
registration number of the buyer; the tax base; the VAT amount; and the date.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes. A taxpayer who receives services or intangibles from any one of the
following entities and uses those services for its VAT-exempt business is
required to pay VAT on behalf of the service provider:
• a non-resident or a foreign corporation that does not have a business place
in Korea
• a non-resident or a foreign corporation that does have a business place
in Korea but provides services that are not effectively connected to the
business place (as stated by the Presidential Decree).
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes. Rulings are published in the Korean language here:http://taxinfo.nts.go.kr/index.jsp.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• stamp tax
• customs duty
• liquor tax
• securities transaction tax
• individual consumption tax.
Further detail available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
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32 | Asia Paci?c Indirect Tax Country Guide
Laos
Type of indirect tax VAT.
Standard rate 10 percent.
What supplies are liable to the
standard rate?
Goods and services produced and consumed domestically or being imported
into Laos.
Any there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rate – goods and services for export. Exempt supplies include the
following:
• crop seeds and animals for breeding, pesticides, vaccines, organic, and
chemical fertilizers
• certain imports related to air transport
• certain educational operations
• specified financial services operations
• specified medical services
• certain vehicles for specific purposes.
Who is required to register, and
what is the threshold?
Business operators who have a minimum annual business turnover of
400 million Lao Kips (LAK).
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes, if the business has a place of business within Laos.
Typical frequency of returns VAT returns are submitted monthly and the submission shall not later than
the 15th of the following month.
Importers of goods and services must declare and pay VAT on every
importation, at the same time as the declaration of customs duties.
Are there any items that a
registered business cannot recover
VAT/GST on?
Yes. Examples include VAT paid on matters not related to the main business
or incorrect or incomplete receipts of payment.
Can an overseas company recover
VAT/GST if it is not registered?
No.
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Asia Paci?c Indirect Tax Country Guide | 33
Typical time taken to obtain VAT
refund following return filing
VAT refund will be obtained within 15 official days, however, KPMG’s
experience is that a refund can typically be expected within six weeks of filing.
However, any advice herein is based on the facts provided to us and on
current laws including judicial and administrative interpretation. The laws
are subject to continual change, at times on a retroactive basis. Should
the facts provided to us be incorrect or incomplete or should the laws
or its interpretation change, our advice may be inappropriate. We are not
responsible for updating our advice for changes in laws or interpretation after
the date hereof.
Furthermore, any excess input-VAT amount cannot be carried forward more
than 6 months.
Are there specific requirements
for content of invoices to be
considered valid for VAT/GST
purposes?
Yes. Invoices should contain the name and business address, bank name
and bank account number (if any), telephone number and Tax identification
number of the supplier and purchaser; the description of services, sale price
excluding VAT; the sale price including VAT; any fee received; and the VAT
amount.
At the end of invoice should have a signature and stamp of the supplier and
purchaser.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
No. However, Laos’s VAT and other legal enactments are being updated.
Therefore, informal or formal rulings may be available in the future.
And in practical, some companies can request advance ruling from the tax
authority to clearly comply with their business which is case by case.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• excise tax
• customs duty
• stamp duty.
Further detail available online: For more information, please refer to the VAT/GST essentials available on
kpmg.com/indirecttax.
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34 | Asia Paci?c Indirect Tax Country Guide
Malaysia (GST)
Type of indirect tax GST (GST will be introduced from 1st April 2015. The current sales tax and
service tax will be abolished).
Standard rate 6 percent.
What supplies are liable to the
standard rate?
Domestic supplies of goods and services which are not zero-rated, or
exempt, or given relief; and imported goods and services.
Are any reduced rates, zero rates
or exemptions expected, and if so,
what would they apply to?
There will be no reduced rates. Zero rated supplies will include exports of
goods and services; basic foods; supply of the first 300 units of electricity
to domestic users for a minimum period of 28 days per billing cycle; and
supplies of water to domestic users.
Exempt supplies will include financial services; sale and lease of residential
property (including land); toll highway; private healthcare and education;
domestic public transport; land for agricultural purposes and land for the
purposes of burial ground, playground or religious building.
Who would be required to register? Businesses with an annual turnover exceeding MYR500,000.
Is voluntary registration expected
to be possible?
Yes.
Will voluntary registration be
available for an overseas company,
or a fiscal representative?
Registration of a foreign principal who does not belong in Malaysia and who
makes taxable supplies in Malaysia is allowed with the condition that he
appoints a local agent to act on his behalf for all matters pertaining to GST.
Typical frequency of returns Quarterly filing can be made for those with annual turnover less than MYR
5million. However, registered persons with annual turnover of MYR5 million
and above will be required to file monthly.
Are there expected to be any items
that a registered business cannot
recover GST on?
Yes. Items blocked from GST recovery are: supply to or importation of
passenger motor car or hiring of passenger motorcar, repairs, maintenance
and refurbishment expenses relating to a passenger motor car, club
subscription fee, medical and personal accident insurance premium or takaful
contribution, medical expenses (to the extent such expense is not an exempt
supply), family benefits and entertainment expenses (except for existing
clients/employees), expenses relating mainly to making exempt supplies.
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Asia Paci?c Indirect Tax Country Guide | 35
Might an overseas company
recover GST if it is not registered?
No.
Typical time taken to obtain GST
refund following return filing
Expected to be 14 days for electronic filing and 28 days for manual filing.
Are there expected to be specific
requirements for the content of
invoices to be considered valid
for GST purposes?
Yes. Invoices should contain the word ‘tax invoice’ in a prominent place, 
tax invoice number, date of issuance of the invoice, name, address and
GST identification number of the supplier, name and address of the person
to whom the goods or services are supplied, a description sufficient to
identify the goods or services supplied, for each description the type of
supply, the quantity of the goods or the extent of the services supplied and
the amount payable (excluding tax), any discount offered, the total amount
payable excluding tax, the rate of tax and the total tax chargeable shown
as a separate amount and the total amount payable including the total tax
chargeable.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes.
Would it be possible to apply for
formal or informal advance rulings
from the tax authority?
Yes. There will be public rulings and advance rulings.
Other indirect taxes that apply in
the country?
Other indirect taxes include the following:
• excise duty
• customs duty
• windfall profit levy
• cess.
Further detail available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
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36 | Asia Paci?c Indirect Tax Country Guide
Mongolia
Type of indirect tax VAT.
Standard rate 10 percent.
What supplies are liable to the
standard rate?
Goods imported into Mongolia; and goods produced or sold, work performed
or services performed in Mongolia.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rated supplies include exports of goods and services; international
transport services; and services related to international air travel.
Exempt supplies include gold; certain food products produced domestically;
education services, medical services, governmental organization’s services,
public transport services, tour operator services, and specific financial
services; small and medium manufacturing purpose equipment; civil aviation
aircrafts and spare parts.
Who is required to register, and
what is the threshold?
Any entity or individual with sales revenue which exceeds 10 million
Mongolian Tughrik (MNT) a year.
Is voluntary registration possible? Yes, provided the entity’s sales revenue has reached MNT8 million, or it has
invested 2 million US Dollars (USD) or more in Mongolia.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
No.
Typical frequency of returns Monthly.
Are there any items that a
registered business cannot recover
VAT/GST on?
Yes. Registered entities cannot recover VAT paid in the course of import or
purchase of the following goods, work, or services:
• automobiles and its components and spare parts
• goods or services purchased for personal or employee uses
• goods, work, or services imported or purchased which are exemptible.
Can an overseas company recover
VAT/GST if it is not registered?
No.
Typical time taken to obtain VAT
refund following return filing
Under the VAT law, a refund should be obtained within 69 working days after
submitting an application to the tax authority. In practice however it is often
difficult to obtain a VAT refund for excess input tax credits.
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Asia Paci?c Indirect Tax Country Guide | 37
Are there specific requirements
for content of invoices to be
considered valid for VAT/GST
purposes?
Yes. A VAT invoice is only considered valid if it includes the following:
• both parties’ names and registration numbers (if applicable)
• date of issue of the document
• name of goods, work, and service and its code, measurement
and quantity
• total amount of goods, work, and service, excluding VAT
• the VAT amount
• the total amount, including VAT
• signatures
• company stamps.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes. If an entity that does not reside in Mongolia obtained income from
goods sold, work performed, and services performed in the territory of
Mongolia, the registered entity is responsible to impose and to withhold VAT
on the purchase payment, if it exceeds MNT10 million, and to transfer the
payment to the tax authority.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes, the Mongolian Tax Authority responds to requests for the clarification
of uncertain tax treatments by a formal letter; however, such a letter is not
binding on the Authority.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• customs duty
• excise tax
• stamp duty
• tax on petroleum and diesel fuel
• fees for mineral exploration and mining
• air pollution payment
• water pollution payment.
licenses
Further detail available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
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38 | Asia Paci?c Indirect Tax Country Guide
Myanmar
Type of indirect tax Commercial tax.
Standard rate Generally, 5% standard rate applies to most products and services.
Commercial tax on certain special items (such as alcohol, cigarettes and
petroleum products and vehicles) ranges from 8 percent to 100 percent.
What supplies are liable to the
standard rate?
Goods and services supplied in Myanmar, and the importation of goods from
abroad. The tax is also imposed on exports.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
There are certain products which include basic food and medicine which
are exempted. In addition, certain services such as housing rental, financial
services and public transportation are exempted as well.
Who is required to register, and
what is the threshold?
Anyone (personal, self-employed, and company) carrying out production/
manufacturing and services in the country and importing goods into the
country. There is no de minimis threshold for registration.
Is voluntary registration possible? Not applicable.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
No.
Typical frequency of returns Quarterly returns are required within 1 month of the end of each quarter.
Monthly payment is required based on actual revenue within 10 days.
Are there any items that a
registered business cannot recover
commercial tax on?
There are various rules depending on particular business circumstances. In
broad general terms, however, note that the production and manufacturing
businesses may be able to offset input and output commercial tax, but
service businesses cannot.
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Asia Paci?c Indirect Tax Country Guide | 39
Can an overseas company
recover commercial tax if it is not
registered?
No.
Typical time taken to obtain
commercial tax refund following
return filing
A refund can typically be obtained within 1 year from the date of refund
notification, subject to satisfying the requirements.
Are there specific requirements
for content of invoices to be
considered valid for commercial
tax purposes?
According to Notification 104/2012 Commercial tax rules, invoices should
contain the following information:
• enterprise registration number issued under the commercial tax regulation
• if the buyer of the good is an owner of the enterprise, his name, address,
and enterprise registration number issued to him under the commercial
tax regulation
• date of sale, description of goods, category, quantity, unit price and
selling price
• commercial tax due on the proceeds of sale.
Does a reverse charge or indirect
tax withholding mechanism apply?
Not applicable.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
There are no specific laws and regulations on this. However, in practice, it
may be possible to seek a ruling from the Internal Revenue Department.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• stamp duty
• customs duties
• property tax.
Further detail available online: For more information, please refer to the VAT/GST essentials available on
kpmg.com/indirecttax.
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40 | Asia Paci?c Indirect Tax Country Guide
New Zealand
Type of indirect tax GST.
Standard rate 15 percent.
What supplies are liable to the
standard rate?
Supplies of goods and services made in New Zealand, by a registered
person, in the course or furtherance of a taxable activity other than exempt
supplies.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rated supplies include exports; supplies of going concerns; certain
supplies of fine metal; supplies of financial services to GST-registered
persons making predominantly (75 percent) taxable supplies; and supplies
of land after 1 April 2011, where both the vendor and the purchaser are
registered for GST.
Exempt supplies include financial services that are not zero rated; residential
rent; supplies of fine metals that are not zero rated; and supplies of donated
goods by non-profit bodies.
A reduced rate of 9 percent applies to the provision of accommodation in
hotels, motels, and similar for longer than 4 weeks.
Who is required to register, and
what is the threshold?
Any person that is carrying on a taxable activity and whose current or
projected annual turnover in New Zealand is 60,000 New Zealand Dollars
(NZD) or more.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes if the overseas company is making taxable supplies in New Zealand or if
the overseas company wishes to claim GST on expenses even if they are not
making taxable supplies in New Zealand.
Typical frequency of returns Six monthly, if the value of total taxable supplies is less than NZD500,000 in
a 12 month period and IRD approval has been granted.
Two monthly, if annual taxable supplies are NZD24 million or less. Monthly, if
annual turnover (including group turnover) is greater than NZD24 million.
Businesses can elect to apply a six monthly, two monthly or monthly taxable
period if IRD approval has been granted.
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Asia Paci?c Indirect Tax Country Guide | 41
Are there any items that a
registered business cannot
recover GST on?
GST is not recoverable on expenses to the extent that they are incurred to
make exempt supplies.
GST is not recoverable on entertainment expenditure to the extent that the
expenditure is treated as non-deductible.
Can an overseas company recover
GST if it is not registered?
No.
Typical time taken to obtain GST
refund following return filing
2–3 weeks.
Are there specific requirements
for content of invoices to be
considered valid for GST purposes?
Yes. A valid tax invoice must normally contain the words ‘tax invoice’ in a
prominent place; the name and registration number of the supplier; the
name and address of the recipient (unless the value is less than NZD1,000);
the date upon which the invoice is issued; a description of the goods and
services supplied; and the amount of GST charged.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes, it is possible to apply for a public, private, or product ruling. Additionally,
indicative opinions on the GST consequences of a transaction can be
obtained by writing to the IRD, but are not binding.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• customs duty
• excise duty.
Further detail available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
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42 | Asia Paci?c Indirect Tax Country Guide
Papua New Guinea
Type of indirect tax GST.
Standard rate 10 percent.
What supplies are liable to the
standard rate?
All supplies of goods or services unless zero rating or exemption applies to
the particular supply.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rated supplies include exports; international transport; most medical
supplies; certain fine metals; certain supplies of unprocessed petroleum;
supplies to resource companies, other than cars; supplies to religious,
charitable, or educational institutions; supplies to prescribed foreign aid
providers; and sale of businesses as going concerns.
Exempt supplies include most financial services; educational services;
medical services; most fine metals; public road transport; newspapers;
betting, lotteries and games of chance; postage stamps; and housing or
motor vehicles provided by the employer.
Who is required to register, and
what is the threshold?
Any person who carries on a taxable activity and the total value of supplies
(excluding exempt supplies) has exceeded 250,000 Papua New Guinean Kina
(PGK) in the last 12 months, or is expected to exceed PGK250,000 in the
coming 12 months.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes.
Typical frequency of returns Monthly.
Are there any items that a
registered business cannot recover
GST on?
Yes, supplies of motor vehicles and accommodation to employees and other
inputs for making exempt supplies.
In addition, items that are not deductible for income tax purposes to
employers when provided to employees, like club subscription or fees,
payment of domestic services, or expenditure on electricity, gas or security
relating to an employee and entertainment expenses.
GST incurred on goods and services for a personal or private purpose is not
refundable.
Can an overseas company recover
GST if it is not registered?
No.
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Asia Paci?c Indirect Tax Country Guide | 43
Typical time taken to obtain GST
refund following return filing
Refunds of GST are subject to a desk review by the IRC and can take from
4 weeks to upward of 4 months. A refund request must be made and
accompanying documentation such as supplier listings, invoices and/or bank
statements may be required.
Are there specific requirements
for content of invoices to be
considered valid for GST purposes?
Yes. Requirements include:
• the words ‘tax invoice’ in a prominent place
• the name, address, and registration number of the supplier
• the name and address of the recipient
• the date upon which the tax invoice is issued
• a description of the goods and services supplied
• the quantity or volume of the goods and services supplied and the total
amount of the tax charged, the amount payable, excluding tax, and the
consideration, inclusive of tax for the supply.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Formal rulings are available.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• stamp duty
• customs duty
• excise duty
• royalty, mining and development levy.
Further detail available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
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44 | Asia Paci?c Indirect Tax Country Guide
Philippines
Type of indirect tax VAT.
Standard rate 12 percent.
What supplies are liable to the
standard rate?
Sale, barter, exchange of goods and/or properties in the course of trade
or business in the Philippines; sale of services in the course of trade or
business in the Philippines; and importation of goods into the Philippines,
whether or not in the course of trade or business.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rate transactions include export sales; sale of goods or services rendered
in the Philippines to a non- resident person/entity not engaged in business
in the Philippines, wherein the service fee is paid for in foreign currency in
accordance with the rules and regulations of the Philippines’ central bank; and
sale of power or fuel generated through renewable sources of energy.
Exempt transactions include certain residential sales or leases; educational
services; employment; services rendered by regional or area headquarters
established in the Philippines by multinational corporations; and the sale,
importation or lease of passenger or cargo vessels and aircraft, including engine,
equipment, and spare parts for domestic or international transport operations.
Who is required to register, and
what is the threshold?
Any person or entity who, in the course of trade or business, sells,
exchanges, or leases goods or properties, or renders services, and any
person who imports goods.
However, if gross sales or receipts per annum are 1,919,500 Philippine Pesos
(PHP) or less, the taxpayer may opt to be exempted from VAT, but will then be
subject to percentage tax of 3 percent of gross quarterly sales or receipts.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
No.
Typical frequency of returns In general, every taxpayer liable to pay VAT shall file the following returns:
• monthly VAT declaration within 20 days after the end of the month
• quarterly VAT return within 25 days following the close of taxable quarter
• if applicable, Remittance Return of VAT and Other Percentage Taxes
Withheld for those required to withhold VAT.
However, taxpayers registered under the Electronic Filing and Payment
System (eFPS) shall be required to file monthly VAT declarations within the
period prescribed in the VAT Regulations depending on the business industry
classification of the taxpayer. The quarterly VAT returns of eFPS filers will still
be filed within 25 days following the close of the taxable quarter, regardless
of the business industry classification.
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Asia Paci?c Indirect Tax Country Guide | 45
Are there any items that a
registered business cannot
recover VAT on?
Yes, for instance, input tax attributable to exempt sales may not be used as
credit against output tax.
Can an overseas company recover
VAT if it is not registered?
No, an overseas company cannot register for VAT purposes, as a rule. If an
overseas company would be subject to VAT in the Philippines, e.g., sale of
service, the Philippine payee is required to withhold the applicable VAT.
Typical time taken to obtain VAT
refund following return filing
A VAT refund in the Philippines is a difficult process, and the proper
substantiation of sales (output tax) and purchases (input tax) is critical
including compliance with invoicing requirements.
Are there specific requirements
for content of invoices to be
considered valid for VAT purposes?
Yes. Note that invoices and official receipts are effectively pre-approved by
the tax authority in the process of obtaining an Authority To Print (ATP) prior
to actual printing.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes, a withholding system applies to supplies made by overseas companies
in the Philippines.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• percentage taxes
• excise taxes
• customs duty.
Further detail available online: For more detailed information, please refer to the VAT/VAT essentials
available on kpmg.com/indirecttax.
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46 | Asia Paci?c Indirect Tax Country Guide
Singapore
Type of indirect tax GST.
Standard rate 7 percent.
What supplies are liable to the
standard rate?
Taxable supplies of goods and services made in Singapore by taxable
persons, and all imports of goods (except for investment precious metals) into
Singapore, unless import relief or one of the import GST schemes applies.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rated supplies include the following:
• export of goods from Singapore
• provision of international services
• supply of a prescribed tool or machine used in the manufacture of goods
in Singapore including the development of prototypes of the tool or
machine, as well as any services rendered directly in connection with the
tool or machine to an overseas person
• goods supplied for use on board or installation on a qualifying ship
• goods sold or rented to ‘Approved Marine Customers’ for use or
installation on a ‘commercial ship’ wholly for international travel.
Exempt supplies include the sale/lease of residential properties, supply of
investment-grade gold, silver and platinum, and most financial services.
Who is required to register, and
what is the threshold?
A person is liable to register for GST when his taxable turnover has exceeded
1 million Singapore Dollars (SGD) in a 12-month period, or he is currently
making taxable supplies and his annual taxable turnover is expected to
exceed SGD1 million in the next 12 months.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes, if it makes taxable supplies in Singapore. An overseas entity that
registers for GST in Singapore must appoint a local agent to be responsible
for all its GST matters.
Typical frequency of returns Typically every 3 months in line with the taxpayer’s accounting periods.
However, there is an option for monthly or half-yearly accounting periods.
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Asia Paci?c Indirect Tax Country Guide | 47
Are there any items that a
registered business cannot recover
GST on?
Social and recreational club subscription fees; medical and accident insurance
premiums (with some exclusions); medical expenses (with some exclusions);
benefits provided to employees’ family members; any transaction involving
betting, sweepstakes, lotteries, fruit machines, or games of chance; and
expenses incurred on motor cars.
Can an overseas company recover
GST if it is not registered?
Generally, No.
Typical time taken to obtain GST
refund following return filing
The refund due date for GST is 1 month, 3 months, and 6 months (after
the IRAS receives the GST returns) for monthly, quarterly, and half-yearly
prescribed accounting periods, respectively.
However, GST registrants usually receive the refund earlier than the due date
unless a desk audit is performed on the return.
Are there specific requirements
for content of invoices to be
considered valid for GST purposes?
Yes. Tax invoices must be issued for standard-rated supplies made to taxable
persons. There are various requirements for a tax invoice including the words
‘tax invoice’ in a prominent place, invoice number and date, the supplier’s name
and address, the supplier’s GST registration number, the GST rate applied, the
amounts both exclusive and inclusive of GST, and the total GST payable.
Does a reverse charge or indirect
tax withholding mechanism apply?
No, the reverse charge is currently suspended in Singapore.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• customs and excise duties
• stamp duty
• property tax
• casino tax, betting and sweepstake and private lotteries duties.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes. The Inland Revenue Authority of Singapore (IRAS) offers taxpayers a
system of formal advance rulings. The rulings issued are private and are
legally binding. A fee is payable to the IRAS to apply for a formal ruling.
Informal, non-binding, rulings can also be sought.
Further detail available online: For more detailed information, please refer to the GST/GST essentials
available on kpmg.com/indirecttax.
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48 | Asia Paci?c Indirect Tax Country Guide
Sri Lanka
Type of indirect tax VAT.
Standard rate 11 percent effective 1 January 2015.
What supplies are liable to the
standard rate?
All supplies of goods or services that do not come under the zero rate and
exempt supplies are liable at the standard rate.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rate supplies include goods supplied for export; and certain services
that are either exported or are provided in relation to exported goods, or
goods outside Sri Lanka.
Exempt goods include paddy, rice, wheat, sugar and flour; drugs, medicines,
aids, and implements used by handicapped persons; ayurvedic preparations;
aircraft and helicopters; books, periodicals, and journals; certain petroleum,
oil, and similar products; cellular mobile phones; agricultural machinery and
fertilizer; certain agricultural tools and implements; textiles; prawns; machinery
and equipment for the leather or footwear industry, manufacture of bags,
manufacture of grain mixed bakery products; and locally developed software.
Exempt services include insurance, certain financial services, education,
health and welfare and telecommunications, and the supply of services to a
unit trust by a unit trust management company.
Who is required to register, and
what is the threshold?
Any person or partnership engaged in a business of wholesale or retail sale
and making supplies (including exempt or excluded supplies) exceeding
100 million Sri Lankan Rupees (LKR) per quarter; and every person who
imports goods into Sri Lanka and/or carries on a taxable activity where the
value of the supply exceeds LKR15 million per year.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes, although an overseas entity must appoint a fiscal representative.
Typical frequency of returns Typically quarterly, but exporters and some other businesses must file
monthly.
Are there any items that a
registered business cannot recover
VAT on?
Yes. A business cannot recover VAT on exempt supplies; supplies not related
to its taxable activity; and other specific expenses, including expenses on
vehicles used for traveling.
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Asia Paci?c Indirect Tax Country Guide | 49
Can an overseas company recover
VAT if it is not registered?
No.
Typical time taken to obtain VAT
refund following return filing
A VAT refund in Sri Lanka is a difficult process and includes a tax audit to
substantiate sales and purchases. The guideline is that a refund will be
received within 3 years of filing, although in practice this is not always
the case.
Are there specific requirements
for content of invoices to be
considered valid for VAT purposes?
Yes. A tax invoice shall set out the following:
• the name, address, and the registration number of the supplier
• the name and address of the person to whom the supply was made
• the date on which the tax invoice was issued and its serial number
• the date of supply and description of the goods or services
• the quantity or volume of the supply
• the value of the supply, the tax charged and the consideration for the
supply, and
• the words ‘tax invoice’ at a conspicuous place in such invoice.
Does a reverse charge or indirect
tax withholding mechanism apply?
No.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes. Committee to issue advanced ruling – formal.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• nation building tax
• customs duty
• excise duties
• stamp duty
• cess
• ports and airports development levy
• construction industry guarantee levy.
Further details available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
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50 | Asia Paci?c Indirect Tax Country Guide
Taiwan (VAT)
Type of indirect tax VAT.
Standard rate 5 percent.
What supplies are liable to the
standard rate?
The sale of goods and services in Taiwan, as well as the importation of
goods into Taiwan, excluding financial institutions; special vendors of
beverages and food; and small businesses (as these are subject to GBRT).
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rate – exported goods or certain goods sold by duty-free shops;
services relating to export or services provided in Taiwan but used in a
foreign country; certain international transportation, vessels, and aircraft used
in international transportation and deep-sea fishing boats, and goods and
maintenance services provided to such; goods or services sold to a bonded
zone business entity for its operational use; certain goods sold by a bonded
zone business entity.
Exempt – sale of land; water supplied to farmland for irrigation; certain
medical services; certain social welfare services; certain educational
services; certain educational or academic publications; the goods or
services sold by student-run shops of vocational schools which do not
serve outsiders; certain publications produced and sold by legally registered
newspaper and magazine publishers, news agencies, and television and
broadcasting stations; the goods or services sold to their members by
cooperatives managed in accordance with the law; and business consigned
by government to cooperatives, etc.
Who is required to register, and
what is the threshold?
The head office of a business entity and its branches with fixed places of
business in Taiwan must each register for VAT.
Is voluntary registration possible? No.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
No.
Typical frequency of returns Typically bi-monthly. However, a company eligible for zero rate VAT may file
monthly.
Are there any items that a
registered business cannot
recover VAT on?
Yes, they include the following:
• purchases for which certain supporting documents are not obtained or
kept according to the law
• purchases not for the use of principal and ancillary business operation,
except purchases for the support of national defense, provision of morale
services to the troops, or contribution to the government
• entertainment expenses
• goods or services rewarded to individual employees
• passenger cars for personal use.
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Asia Paci?c Indirect Tax Country Guide | 51
Can an overseas company recover
VAT if it is not registered?
No. One exception is that input VAT may be refundable if it relates to
a foreign company participating in exhibitions or conducting temporary
business activities such as market investigation, training, procurement, etc.,
in Taiwan provided certain conditions are met.
Typical time taken to obtain VAT
refund following return filing
Generally, refund on input VAT relating to zero rate sales and purchase of
fixed assets can be obtained within 2 months of the return filing.
However, refund on accumulated input VAT upon cessation of business
or due to other reasons may take longer, as a special refund application is
required.
Are there specific requirements
for content of invoices to be
considered valid for VAT purposes?
Yes. The seller should issue a Government Uniform Invoice (GUI) to the
buyer. GUIs must contain the buyer name; buyer business number; date;
details of transaction; quantity; unit price; item subtotal; selling amount; tax
category & tax amount; and grand total.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes. The VAT on services supplied by a foreign entity without a fixed place
of business in Taiwan should be accounted for by the buyer. The buyer
should report such purchase and calculate the related VAT on its VAT return.
However, if the buyer is a business entity which engages in VAT-taxable
business only and the purchased services are used solely in the taxable
business, or if the purchase value is no more than 3,000 New Taiwan Dollars
(TWD) (VAT inclusive), such VAT is exempt.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• commodity tax
• tobacco and liquor tax
• amusement tax
• special goods and services tax (luxury tax)
• customs duty.
Further detail available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
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52 | Asia Paci?c Indirect Tax Country Guide
Taiwan (gross business
receipts tax)
Type of indirect tax Gross business receipts tax (GBRT).
Standard rate Financial institutions – 2 percent for core business revenue, 1 percent for
reinsurance premiums of insurance enterprises, or 5 percent for non-core
business revenue.
Special vendors of beverages and food – 15 or 25 percent. Small
businesses – 1 or 0.1 percent.
What supplies are liable to the
standard rate?
The sale of goods and services in Taiwan from financial institutions; special
vendors of beverages and food; and small businesses.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Generally not applicable.
Who is required to register, and
what is the threshold?
The head office of a business entity and its branches with fixed places of
business in Taiwan must each register for GBRT.
Is voluntary registration possible? No.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
No.
Typical frequency of returns Typically bi-monthly.
Are there any items that a
registered business cannot
recover GBRT on?
Generally not applicable.
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Asia Paci?c Indirect Tax Country Guide | 53
Can an overseas company recover
GBRT if it is not registered?
No.
Typical time taken to obtain GBRT
refund following return filing
Generally not applicable.
Are there specific requirements
for content of invoices to be
considered valid for GBRT
purposes?
Yes, invoices must contain the buyer name; buyer business number; date;
details of transaction; quantity; unit price; item subtotal; selling amount; tax
category & tax amount; and grand total.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes. The GBRT on services supplied by a foreign entity without a fixed place
of business in Taiwan should be accounted for by the buyer. The buyer should
report such purchase and calculate the related GBRT on its GBRT return.
However, if the purchase value is no more than TWD3,000, such GBRT
is exempt.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• commodity tax
• tobacco and liquor tax
• amusement tax
• special goods and services tax (luxury tax)
• customs duty.
Further detail available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
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54 | Asia Paci?c Indirect Tax Country Guide
Thailand
Type of indirect tax VAT.
Standard rate 7 percent. This is a temporary rate, reduced from the standard rate of 10 percent
introduced by a special Royal Decree, valid until 30 September 2015.
What supplies are liable to the
standard rate?
Importation of goods into Thailand; sale of goods in Thailand; provision of
services which are performed and used in Thailand; and provision of services
outside Thailand and used in Thailand.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rated supplies include the export of goods; bringing domestic goods
into a duty free zone; provision of services performed in Thailand but
used outside Thailand; provision of services for the manufacture of goods
within a duty free zone or provision of services within a duty free zone
for the manufacturing of goods in Thailand for export; certain provision of
international transport services; sale of goods and provision of services to
government authorities under a foreign loan or assistance project; and sale
of goods and provision of services between a bonded warehouse and other
bonded warehouses or between a duty free zone and other duty free zones.
Exempt supplies include fertilizers; fish meals; animal feeds; newspapers,
magazines or textbooks; educational services; healthcare services; services
of domestic transport; services of international transport by land; rent of all
immovable property; and the import of goods brought into a duty free zone
when re-exported.
Who is required to register, and
what is the threshold?
A supplier carrying on the business of selling goods and providing services, if
the annual tax base of its business exceeds 1.8 million Thai Baht (THB).
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes, but an overseas company must appoint a fiscal representative and meet
certain conditions prescribed by the Director-General of Revenue.
Typical frequency of returns Monthly.
Are there any items that a
registered business cannot recover
VAT on?
Yes. VAT input tax is not recoverable if there is no tax invoice, failure to
show a tax invoice without a reasonable cause, or an incorrect or incomplete
invoice; input tax is not directly related to the carrying on of business; input
tax arises from expenses on guest-entertaining or a similar activity; tax
invoice issued by unauthorized persons; and input tax as prescribed by the
Director-General with Minister’s approval.
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Asia Paci?c Indirect Tax Country Guide | 55
Can an overseas company recover
VAT if it is not registered?
No.
Typical time taken to obtain VAT
refund following return filing
Three to 6 months, depending on the filing history of the VAT operator.
Are there specific requirements
for content of invoices to be
considered valid for VAT purposes?
Yes. A tax invoice shall contain at least the words ‘tax invoice’ in a prominent
place; the name, address, and taxpayer identification number of the supplier;
the name and address of the purchaser; the serial number of the tax invoice;
the description, type, category, quantity, and value of goods or services; the
amount of VAT on the goods or services; the date of issuance; and any other
particulars as prescribed by the Director-General.
Particulars in a tax invoice shall be in the Thai language, Thai currency and
Thai or arabic numeral; however, a VAT operator may issue a tax invoice in
English and use a foreign currency on approval from the Director-General of
Revenue.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• specific business tax
• customs duty
• excise duty
• stamp duty
• house and land tax
• local maintenance tax
• signboard tax.
Further detail available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
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56 | Asia Paci?c Indirect Tax Country Guide
Vietnam
Type of indirect tax VAT.
Standard rate 10 percent.
What supplies are liable to the
standard rate?
Goods and services used for the purposes of production, trading, and
consumption in Vietnam.
Are there any reduced rates, zero
rates or exemptions, and if so,
what do they apply to?
Zero rate – exported goods or services; construction and installation in
overseas and in non-tariff zones; international transportation; and certain
airline and marine services.
Exempt – there are 26 categories of VAT exempt supplies including, but not
limited to, certain agricultural products; salt products; transfer of land use
rights; life insurance, financial, medical, public postal, telecommunications;
construction work related to cultural work; education and vocational training;
radio and television broadcasting; publication; and public transportation;
temporary imported goods for re-export; technology transfer.
5 percent – The provision of certain essential goods and services including,
but not limited to, clean water; fertilizer; agricultural activities, products and
equipment; fresh foodstuffs; medical and education equipment; and scientific
and technology services
VAT ignorable transactions
There are also some transactions whereby the supplier is not required
to charge VAT but is generally allowed to claim the input VAT associated
with such transactions. These transactions include, but are not limited to,
payments of indemnities, bonuses; financial assistance or other financial
receipts, some services rendered by foreign contractors such as repair of
means of transportation, advertising, brokerage services; disposal of assets
owned by non VAT-registered owners; certain intercompany transfer of fixed
assets; capital contributions in the form of assets; receipts from insurance
claims against a third party; receipts on behalf of a third party.
Who is required to register, and
what is the threshold?
VAT registration is compulsory to all organizations and individuals producing
and trading taxable goods and services in Vietnam and importing taxable
goods or purchasing taxable services from overseas.
Is voluntary registration possible? Yes.
Is voluntary registration available
for an overseas company, or a
fiscal representative?
Yes. Voluntary registration is available to eligible overseas companies carrying
on business in Vietnam as ‘foreign contractors’, subject to their satisfaction
of accounting and bookkeeping requirements under Vietnamese Accounting
Standards.
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Asia Paci?c Indirect Tax Country Guide | 57
Typical frequency of returns Monthly or quarterly.
Are there any items that a
registered business cannot recover
VAT on?
Yes. These include, and are not limited to, input VAT suffered on purchases
for purposes other than producing taxable goods or services; input VAT
on invalid invoices; export transactions that do not satisfy bank remittance
requirements.
Can an overseas company recover
VAT if it is not registered?
No.
Typical time taken to obtain VAT
refund following return filing
The tax administration law generally requires the tax authorities to process a
refund application within a maximum period of 6-40 days following receipt of
all required documents from the applicant. In practice, delays are common.
Are there specific requirements
for content of invoices to be
considered valid for VAT purposes?
Yes, invoices should be in Vietnamese  and must contain name of invoice type;
symbols of invoice, and invoice number pattern; names of copies of invoice;
serial number of invoice; details of seller and buyer, especially their tax code
numbers; details of goods/services; signatures of buyer and seller; etc.
Does a reverse charge or indirect
tax withholding mechanism apply?
Yes.
Is it possible to apply for formal or
informal advance rulings from the
tax authority?
Yes.
Are there any other indirect taxes
that apply in the country?
Other indirect taxes include the following:
• special consumption tax
• import and export duties
• environment protection tax.
Further detail available online: For more detailed information, please refer to the VAT/GST essentials
available on kpmg.com/indirecttax.
© 2015 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ?rms of the KPMG network are af?liated.
kpmg.com/app
Contacts
Tim Gillis
Global Head of Indirect Tax
KPMG in the US
T: +202 533 3700
E: [email protected]
Lachlan Wolfers
Regional Leader, Asia Paci?c
Indirect Tax
KPMG in China
T: +852 2685 7791
E: [email protected]
Adrienne McStocker
Regional Leader
Asia Paci?c Indirect Tax
Center of Excellence
T: +65 6597 5810
E: [email protected]
Australia
Dermot Gaffney
T: +61 2 9455 9398
E: [email protected]
Cambodia
Michael Gordon
T: +855 23 216 899
E: [email protected]
China
Lachlan Wolfers
T: +852 2685 7791
E: [email protected]
Fiji Islands
Lisa Apted
T: +679 3301 155
E: [email protected]
India
Sachin Menon
T: +91 22 3090 2682
E: [email protected]
Indonesia
Roy Tedja
T: +62 21 5704888
E: [email protected]
Japan
Masaharu Umetsuji
T: +81 3 6229 8070
E: masaharu.umetsuji@
jp.kpmg.com
Laos
Ganesan Kolandevelu
T: +856 21 900 344
E: [email protected]
Malaysia
Bob Kee
T: +60 3 7721 7029
E: [email protected]
Mongolia
Enkhsaikhan D
T: +976 7012 8102
E: [email protected]
Myanmar
Thomas Chan
T: +95 1 860 3363 ext. 204
E: [email protected]
New Zealand
Peter Scott
T: +64 9 367 5852
E: [email protected]
Papua New Guinea
Dick Nijdam
T: +675 321 2022 ext. 227
E: [email protected]
Philippines
Manuel Salvador III
T: +63 2621 0824
E: [email protected]
Singapore
Kok Shang Lam
T: +65 6213 2596
E: kokshanglam@kpmg.
com.sg
South Korea
Dong Suk Kang
T: +82 2 211 20966
E: [email protected].
com
Sri Lanka
Suresh Perera
T: +94 1 1542 6502
E: [email protected]
Taiwan
Willis Yeh
T: +886 2 8101 6666
E: [email protected]
Thailand
Chayanuwat Varee
T: +66 2677 2454
E: [email protected]
Vietnam
Nhan Huynh
T: +84 8 3821 9266
E: [email protected]
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although
we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received
or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough
examination of the particular situation.
© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are
affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG
International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member
firm. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Designed by Evalueserve.
Publication name: 2015 Asia Paci?c Indirect Tax Country Guide
Publication number: 132061
Publication date: January 2015
Find out more
For more information on KPMG’s Global Indirect Tax Services practice (GITS) and access to thought leadership,
please visit: www.kpmg.com/indirecttax
For country summaries, updates, and events relating to tax matters across the Asia Paci?c region,
please visit: www.kpmg.com/asiapaci?ctaxcentre
kpmg.com/socialmedia

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