malaysia great britain spain germany · 2013-05-13 · malaysia auditors’ responsibilities great...
TRANSCRIPT
MalaysiaAuditors’ responsibilities
Great BritainIncentives for the creative sector
Spain New reporting obligations
GermanyCorporate dividends – tax refunds
International Tax, Audit, Accounting and Legal News ECOVIS info . Issue 2/2013
Tobias KochECOVIS Lüdemann Wildfeuer & Partner Wirtschaftsprüfer, Steuerberater, Rechtsanwälte, Germany
2 Ecov i s info 2/2013
A couple of months ago, a listed company in Malaysia
shocked local auditors by filing a legal suit against its former directors, external and internal auditors. The company involved was Silver Bird Group Bhd. and two of its subsidiaries, which were troubled by possible financial irregularities that involved a sum of over RM100 million.Crowe Horwath, Silver Bird’s long time external auditors, were named as one of the defendants. The legal action was taken on the assumption that there was alleged negligence and breach of duty of care and/or its duties and responsibilities on the part of Crowe Horwath as external auditors. In their immediate response Crowe Horwath diminished the allegation as “frivolous in nature and without basis”. They claimed they had discharged their duties professionally and had been in
fact the ones who first discovered the financial irregularities and reported them to the audit committee and board of directors.The move to name an auditor as a defendant was believed to be the first of its kind in Malaysia although such suits have become common in countries like the United States, Great Britain and elsewhere. Those cases spotlight the roles and responsibilities of auditors. They also indicate that the profession of auditing and accountancy has become more of a challenge.As statutory auditors, we are engaged based on a scope of activities laid out under the International Standards on Auditing and Fraud Detection. Auditors do not examine every transaction and event, so there is no guarantee that all material misstatements, whether caused by error or fraud, will be detected. Auditors could have the ability to detect fraud or financial irregularities at an earlier stage with the involvement of forensic techniques, but this would require increased cost and time. A statutory audit is more of a deterrent: the longer someone perpetuates a fraud, the more indicators or red flags appear and the more likely he is to be caught. Apart from professional knowledge, in some cases, especially involving grey areas, the auditors need wisdom, judgement and skepticism to balance cost and practicality issues against special demands and expecta
tions of their clients. While providing professional services, they also feel obliged to assist their clients in coming up with “clean accounts”. Problems may arise when the imbalances constantly occur.The profession is now fully committed to better meeting the needs and expectations of investors and capital markets through improving the audit quality and methodology by leveraging new, innovative technology and processes. As the demands made of auditors have been increasing, accounting standard setters also issue new standards and guidelines to improve our professionalism. But the profession itself cannot solve the problems on its own. Success will require the involvement of a large range of stakeholders inside and outside the profession, such as the reporting community, the users of business reporting and the regulators.
ConclusionUltimately, a successful regulatory regime will not be sufficient to ensure good outcomes. Crucially, companies need to have an appropriate culture that is focused on the companies delivering the right longterm obligations to society. The right cultures are rooted in strong ethical frameworks and in the importance of individuals making decisions in relation to principles rather than shortterm commercial considerations.
MALAYSIA – AUDITORS’ RESPONSIBILITIES
Financial irregularities – who is to blame?Increasingly auditors are held accountable when corporate fraud is detected.
AuthorKris [email protected]
“Detecting and preventing financial irregularities early will require the involvement of all stakeholders, from accountants and auditors to regulators.”Kris Chan, ECOVIS AHL, Kuala Lumpur, Malaysia
TIPRead more:www.ecovis.com/fimalaysia
3Ecov i s info 2/2013
O ne thing we do really well in the UK is producing
highend television programmes like Downton Abbey, animation programmes such as Wallace & Gromit, and blockbuster video games such as the “Need for Speed” series. So when recently a number of highprofile and ostensibly “British” television programmes, such as “Titanic” and “Ripper Street”, were produced in other jurisdictions, notably the Republic of Ireland, the UK Govern ment got worried! The Film Tax Relief (FTR) system, introduced in 2006, has been very successful. The UK film industry now contributes over £5bn a year to UK GDP and there has been a 70% increase in the UK film production workforce since 2007. Not only this, but FTR, just like the new Patent Box rules and R&D Tax Credits, has also resulted in an increased overall tax take to the Treasury through enhanced VAT and PAYE receipts.
Unsurprisingly the proposed new tax relief for the creative sector (released on 11 December 2012) is based around the FTR model. Given that it is the Chancellor’s avowed intention that the new relief should be “the most generous available in the world”, it was also no surprise that it was well received.
How does the relief work? Just as with FTR, the tax relief will only be available to UK companies which fall within the charge to corporation tax (note that LLP’s will not be eligible, but coproductions will) and to productions where “core expenditure” is at least £1m per programme hour and at least 25% of this core expenditure is UK based. There are no minimum expenditure limits for animation or games, by the way.Companies for this purpose are deemed small or large pending on whether core expenditure is more or less than £20m. Small
companies can claim an additional deduction worth 100% of the lower of either UK expenditure or 80% of total core expenditure. Large companies are restricted to 80% of this figure. If a company is lossmaking it can surrender the additional losses for a cash credit.In summary, a small company will be able to claim an additional 20p on every pound of core expenditure, besides the tax relief it would normally obtain on the expenditure, and a large company can claim an additional 12.8p.
DefinitionsAs with all legislation, “the devil is in the detail”, and not all the terminology has an obvious meaning. Here are two of the key definitions:
Core expenditure is expenditure on preproduction, principal photography and postproduction of the programme. Certain development, distribution and finance costs are not eligible. Production fees will qualify towards the £1m threshold, provided they are less than 10% of the preproduction budget. For animation the cost of relevant quality assurance should qualify, but not service maintenance costs.
The Cultural Test. 16 points out of the same 31 in the original test are still needed. Points will be awarded for British locations, characters, dialogue, demonstrating British heritage
NEW TAX RELIEF IN THE UK
Incentives for the creative sectorThe UK Government defends the country’s pole position in high-quality productions.
AuthorChristopher Jenkinschristopher.jenkins@ ecovis.com
“The new scheme will enhance the benefits of the successful Film Tax Relief system and expand them to further areas such as computer games.”Christopher Jenkins, ECOVIS Wingrave Yeats, London, UK
4 Ecov i s info 2/2013
“The process of foreign investment in China is a complex subject and raises a lot of questions due to the legal requirements that have to be considered.” Richard Hoffmann, ECOVIS R&G Consulting Ltd, Beijing, China
AuthorsLily Gao [email protected] Richard Hoffmann [email protected]
The process of foreign investment in China is a complex subject and raises a lot of questions due to the legal requirements that have to be considered. Beforehand one should choose the legal structure of the company that best suits your business since there exists a variety of options (including offshore structures e. g. locating your business in Hong Kong, limited liability companies, joint ventures and the existence of representative offices). This also has an impact on the registered amount of capital needed and can have an impact on tax rates, as the tax system in China imposes different taxes on foreign investments based on the industry. Therefore, it is always recommendable to have an overview of the most important taxes.
For this purpose, the long article (see: Tip) illustrates the different legal structures and their characteristics as well as legal restrictions. Additionally, the relevant tax payments for foreign investments will be explained.
Starting Business in China – in Brief
or creativity, developing activity taking place in the UK and use of British developers. The main difference to the film Cultural Test is the expansion of the “cultural content” section to include the EEA (European Economic Area), not just the UK.
What programmes are eligible?
dramas, documentaries and comedies with a slot length of more than 30mins and core expenditure of at least £1m of direct production cost per hour
Programmes must be intended for broadcast on TV and also the internet and for digital distribution via mobile phones. Games must be available for “commercial release”.
Dramas and documentaries are treated as animations if their really animated content is at least 51%
Several programmes commissioned together will be treated as one, but the relief will be applied separately to each commissioned programme.
Noneligible programmes include advertisements, news, current affairs and discussion programmes, quiz, game and chat shows, competitions, live events and training programmes. Games producers will be required to selfcertify during the claims process that video games do not contain pornographic or other extreme material.
TIPRead more:www.ecovis.com/tax creativeuk
TIPRead more: www.ecovis.com/startchina
5Ecov i s info 2/2013
T he PIO card holder is entitled to the following benefits:
a multiple entry, multipurpose visa for visiting India. The PIO card itself is treated as a visa. Therefore no separate student/employment/business visa will be required for admission to colleges or institutions or before taking up employment, conducting business, etc. in India. There are special counters for speedy immigration clearance at designated immigration checkpoints. exemption from registration
with local police authorities for a continuous stay of up to 180 days in India
parity with nonresident Indians (NRIs) in economic, financial and educational fields except for acquisition of agricultural land or plantations
The PIO card can also be used as proof of identity when applying for a PAN card (the tendigit alphanumeric identification number for Indian income tax purposes) or a driving licence, and when opening a bank account in India, if the PIO card holder resides in India.
A ccording to the previous German withholding tax
regime, dividends distributed to domestic corporate sharehol ders generally enjoyed exemption of 95% in real terms. However, this relief was not granted to shareholdings of less than 10% by foreign companies including those from EU and EEA (shares not covered by the EU parentsubsidiary directive). In its decision dated October 10, 2011 with respect to case 284/09 the European Court of Justice (ECJ) concluded that this German withholding tax regime violates the free movement of
capital provision in the EU treaty. After protracted efforts to bring the German withholding tax regime into line with the principles of the EU treaty and the ECJ decision, German legislators finally adopted the new law on March 1, 2013. Under the new law no tax exemption will be granted for future tax periods in cases where a corporate shareholder owns less than 10% of the shares in the corporate entity. This rule applies irrespective of whether the corporate shareholders are domestic or not. However tax exemption for capital gains from
the sale of shares in the corporate entity remains unchanged. As the previous withholding tax regime was incompatible with EU law, shareholding companies in the EU and EEA can apply for retroactive tax exemption for all previous dividends distributed to them before February 12, 2013. Informal applications for tax refunds can be submitted to the federal tax office (Bundeszentralamt für Steuern) by companies registered or with their head offices within the EU or EEA, provided they own less than 10% of the shares in the German corporate entity.
INDIA’S PIO CARD
An admission ticket to many benefitsPersons of Indian origin who are citizens of other countries may apply for a PIO card.
GERMANY – CORPORATE DIVIDENDS
Tax refunds in GermanyCorporate shareholders from the EU and EEA can reclaim dividend tax paid previously.
AuthorDeepa Rathi [email protected]
TIPRead more:www.ecovis.com/pio
AuthorTobias [email protected]
TIPRead more:www.ecovis.com/refundtaxgermany
“The PIO card is treated as a visa and can also be used as proof of identity when opening a bank account in India.” Deepa Rathi, ECOVIS R. Kabra Corporate Advisors Ltd., Mumbai, India
6 Ecov i s info 2/2013
O n behalf of ECOVIS STT Vietnam, Managing Part
ner Nguyen Thanh Trung received the cup and certificate granted by “The Economic Times” in the award ceremony held on 16 March 2013 at the Hanoi Opera House.“Top Vietnam Brand” has been a prestigious award within Vietnam’s enterprise community since 2003. Over the last 9 years, the award has attracted thousands of enterprises in various sectors across the country such as finance and banking, textiles and garments, leather footwear, construction, telecommunications and informatics. This award is aimed at honouring Vietnamese enterprises for outstanding achievements in business operation and contributing to the country’s socioeconomic development. ECOVIS STT Vietnam prides itself on being one of 100 awarded enterprises. During over 10 years of operation the firm always strives for continuous improvement in its
services in the fields of auditing, outsourcing and legal consulting with the best quality and cost efficiency. ECOVIS STT Vietnam is committed to making the best use of its capacities and code of ethics to provide clients with the optimized benefits meeting all of their long as well as shortterm needs.As one of the winners of “Top Vietnam Brand in 2012”, we at ECOVIS STT Vietnam have clearly shown and proved our competitive capacity, our sustainable development and our prestige in the domestic market.
Quality assured by PCAOBOn 8 January 2013, ECOVIS STT Vietnam was registered with the Public Company Accounting Oversight Board (PCAOB), a nonprofit corporation created by the SarbanesOxley Act, a 2002 U.S. federal law. The PCAOB mission is to oversee the audits of public companies in order to protect the interests
of investors and further the public interest in the preparation of informative, accurate and independent audit reports. The PCAOB also oversees the audits of brokerdealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection. As a PCAOB registered firm ECOVIS STT Vietnam commits itself to rendering highquality services, under the strict supervision of an independent organization.For further information: http://pcaobus.org/Registration/Firms/Pages/RegisteredFirms.aspx
Guidebook for “Doing Business in Vietnam”ECOVIS STT Vietnam has released “Doing Business in Vietnam” as one of the most effective guidebooks for foreign enterprises which plan to enter the Vietnamese market or to invest in the country.“Doing Business in Vietnam” comprises 7 chapters ranging from an overview of Vietnam’s business and cultural environment and a snapshot on foreign direct investment to taxation, banking and exchange control, accoun ting and financial reporting, labor and employment, and land and lease customs. The guidebook aims to provide a reference and orientation for foreign investors and entrepreneurs who intend to do business or invest in Vietnam.You will find the publication on our website:www.ecovis.com/vietnam.
ECOVIS STT VIETNAM
Award-winning servicesECOVIS STT Vietnam has been honored as “Top Vietnam Brand in 2012” for its excellence.
AuthorTrung Nguyen [email protected]
“Our guide-book “Doing Business in Vietnam 2013” will be very helpful for foreign investors and enterprises planning to approach the Vietnamese market.”Trung Nguyen, ECOVIS STT Vietnam, Hanoi, Vietnam
7Ecov i s info 2/2013
“Assets and rights located outside Spain that have not been reported to the Spanish tax authorities in time could be taxed as unjustified capital profit.” Tim Lorenz, ECOVIS Barcelona, S.A., Barcelona, Spain
I n order to prevent and combat tax evasion Spain has estab
lished new reporting obligations for assets and rights located outside Spain. The new reporting obligations are regulated by Royal Decree 1558/2012 dated 15th November, 2012, and serve to prevent and combat tax evasion.According to Royal Decree 1558/2012 of 15th November, 2012, Spanish taxresident entities and individuals, as well as permanent establishments of nonresident individuals or entities, have to declare the following assets and rights located outside Spain at 31st December 31, 2012:
accounts held in financial entities located outside of Spain
values, securities, insurance rights and income deposited, administered or obtained outside Spain
real estate and real estate rights located outside Spain
The time limit for filing the reporting returns ends on 30th April of
the following year for which the information must be reported.There is no reporting obligation for assets and rights the value of which is lower than the given threshold of EUR 50,000 established for each of these groups. Should this amount be exceeded in one or more of the aforementioned groups, these assets have to be declared in the information return. In the following year the information return has to be filed only in the following cases:
if new assets or rights exist which exceed the given threshold
if assets and rights already reported to the Spanish tax authorities have increased by at least EUR 20,000.
The new tax law specifies significant penalties for incorrect, incomplete or late reporting of assets and rights located outside Spain. Noncompliance with the new reporting obligation is subject to EUR 5,000 penalty
for unreported, false information or data, with a minimum of EUR 10,000 per asset group listed above. Should the noncompliance refer to all three asset groups, the minimum penalty is increased to EUR 30,000.
Furthermore, assets and rights located outside Spain that have not been reported within the time limit to the Spanish tax authorities could be considered as unjustified capital profit and will be taxed retroactively, by applying the general tax rate (up to a maximum of 56%). This would also generate a most serious infringement subject to a penalty of 150%.
SPAIN – NEW REPORTING OBLIGATIONS
Chasing after assets and rights abroadTax residents not conforming to the new reporting rules will face severe sanctions.
AuthorTim [email protected]
As an entrepreneur or top executive you should not miss this unique opportunity. We invite you to attend the following Ecovis event (admission free!): “ChancenWelt – Ausland” on 23rd Sep-tember, 2013, in Munich, Germany, to hear talks by experts and personal accounts of what makes for successful endeavours. After the presentations our Ecovis advisors, who will be posted at each of the 20 national information desks, would be happy to give you firsthand information: you
will be impressed how quickly each of the partners in our global Ecovis network can respond to any questions you may have about planned projects abroad and provide solutions to any fiscal, legal and practical problems arising when penetrating foreign markets, processing transactions and considering making investments. You will find further information about this event and the corresponding registration form under www.ecovis.com/internationalevent
Advancing your foreign business➔Steuerberatung ➔Wirtschaftsprüfung ➔Rechtsberatung ➔Unternehmensberatung
Veranstaltung am 23. September 2013in MünchenAnmeldung unter:
ChancenWelt –Ausland50 Experten aus20 Ländern mit Ihnenim persönlichenGespräch
www.ecovis.com/internationalevent
ABouT ECoVISEcovis is a leading global consulting firm with its origins in Continental Europe. It has over 4,000 people operating in over 50 countries. Its consult-ing focus and core competencies lie in the areas of tax consultation, accounting, auditing and legal advice. The particular strength of Ecovis is the combination of personal advice at a local level with the general expertise of an international and interdisciplinary network of professionals. Every Ecovis office can rely on qualified specialists in the back offices as well as on the specific industrial or national know-how of all the Ecovis experts worldwide. This diversified expertise provides clients with effective support, especially in the fields of international transactions and investments – from preparation in the client‘s home country to support in the target country. In its consulting work Ecovis concentrates mainly on mid-sized firms. Both nationally and internationally, its one-stop-shop concept ensures all-round support in legal, fiscal, managerial and administrative issues. The name Ecovis, a combination of the terms economy and vision, expresses both its international character and its focus on the future and growth.
LEGAL NOTICEPublisher . ECOVIS International, Ernst-Reuter-Platz 10, 10587 Berlin, Germany, tel. +49 (0)30-31 00 08 55, fax +49 (0)30-31 00 08 56Realization . EditorNetwork Medien GmbH, 80805 Munich, GermanyEditorial Department . Kurt Bülow, Denmark; Vanessa Hadinegoro, Netherlands; Robert McCann, United Kingdom; Dr. Ferdinand Rüchardt, Germany; Andreas Karaolis, Cyprus; Carmen Vasile, RomaniaECOVIS info is based on information which we consider to be reliable. However, due to constantly changing laws, liability may not be assumed.