Accounting Standards Taxation Contd (1)

ACCOUNTING STANDARDS & TAXATION (CONT’D)

A GLIMPSE OF ASIA

ACCOUNTING STANDARDS & TAXATION

SINGAPORE

MALAYSIA

PAKISTAN

INDIA

JAPAN

SINGAPORE

CAPITAL:

Singapore

CURRENCY:

Singapore Dollar (SGD)

AREA:

718.3 sq. km.

POPULATION:

5,469,700 (as of 2014 est.)

ACCOUNTING STANDARDS IN SINGAPORE

• In 2002, the Singapore government created the Council on Corporate Disclosure and Governance (CCDG) to replace the (then) Institute of Certified Public Accountants of Singapore as the accounting standard setter for all companies incorporated in Singapore.

• The CCDG was replaced by the Accounting Standards Council (ASC) as of November 1, 2007.


• The ASC was established by the Accounting Standards Act, passed in Parliament on August 27, 2007.

• In addition to prescribing accounting standards for companies, the ASC will also prescribe accounting standards for charities, co-operative societies, and societies.


• The Singapore Government believes that 'creation of the ASC is a positive step towards ensuring consistency in accounting standards, facilitating comparison of financial statements between different entities and enhancing the credibility and transparency of financial reporting'.

• The ASC is responsible only for the formulation and promulgation of accounting standards.


• The monitoring and enforcement of compliance with accounting standards remains the prerogative of the respective regulators:

– Accounting and Corporate Regulatory Authority (ACRA) for companies;

– Commissioner of Charities for charities;

– Registrar of Co-operative societies for co-operative societies; and

– Registrar of Societies for societies.


• As of November 2008, ASC has issued a set of accounting standards and interpretations that are almost identical to the current set of International Financial Reporting Standards (IFRS), though some differences between Singapore Financial Reporting Standards and IFRSs remain, including the following:

– Under the Singapore FRS 16 Property, Plant and Equipment, one-off revaluations of such assets that took place between 1984 and 1996 are permitted without requiring ongoing use of the revaluation model


– Singapore FRS 17 removes the words in paragraph 14 and 15 of IAS 17, which indicates that land normally has an indefinite economic life and, if title is not expected to pass to the lessee by the end of the lease term, the lessee does not receive substantially all of the risks and rewards incident to ownership.

– Some differences exist in the requirements to present consolidated financial statements and in accounting for associates and joint ventures as compared to IAS 27, IAS 28, and IAS 31


– There are some differences in the effective dates of the Singaporean equivalents of IFRS 2, IFRS 7

– The following have not yet been adopted: IFRS 3 (revised 2008) Business Combinations • IAS 27 (revised 2008) Consolidated and Separate

Financial Statements • IAS 27 (revised 2008) Consolidated and Separate

Financial Statements (Cost of an investment in the separate financial statements)

• IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments

• IFRIC 15 Agreements for the Construction of Real Estate

TAXATION IN SINGAPORE

• Singapore follows a territorial basis of taxation. In other words, companies and individuals are taxed mainly on Singapore sourced income. Foreign sourced income will be taxed when it is remitted or deemed remitted into Singapore unless the income was already subjected to taxes in a jurisdiction with headline tax rates of at least 15%.

• Singapore corporate tax rate is capped at 17%.

• Singapore personal tax rates start at 0% and are capped at 20% (above 320,000 SGD) for residents and a flat rate of 15% for non-residents.


• To increase the resilience of taxes as a source of government revenue, Goods and Services Tax (GST) was introduced in 1994. The current GST rate is 7%.

• Interest, royalties, rentals from movable properties, management and technical fees, and director’s fees paid to non-residents (individuals or companies) are subject to withholding tax in Singapore.

• Singapore has no capital gains tax. Capital loss expenses are correspondingly not allowed as deductions.


• For personal taxes, the tax year is the normal calendar year i.e. January 1 – December 31. Deadline for filing personal tax return is April 15. For corporate taxes, a company is free to to decide on its financial year. Deadline for filing corporate tax return is November 30. Taxes are paid on a preceding year basis.

• Singapore has concluded more than 50 bilateral comprehensive tax treaties to help Singapore companies minimize their tax burden.

MALAYSIA

CAPITAL:

Kuala Lumpur

CURRENCY:

Ringgit (MYR)

AREA:

328,847 sq. km.

POPULATION:

30,707,000 (as of 2015 est.)

ACCOUNTING STANDARDS IN MALAYSIA

• Companies registered in Malaysia are required to prepare statutory financial statements in accordance with the approved accounting standards issued by the Malaysian Accounting Standards Board (MASB).


• MASB has three sets of approved accounting standards, namely:

– MASB approved accounting standards for entities other than private entities – Malaysian Financial Reporting Standards (MFRSs)

– MASB approved accounting standards for private entities – Private Entity Reporting Standards (PERSs) – to be withdrawn with effect from 1 January 2016

– MASB approved accounting standards for private entities – Malaysian Private Entities Reporting Standard (MPERS) – effective for annual reporting periods beginning on or after 1 January 2016.


• The MFRS Framework is to be applied by all entities other than private entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope:

– MFRS 141 Agriculture (MFRS 141)

– IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), together with parents, significant investors and venturers of such entities (called 'Transitioning Entities')

TAXATION IN MALAYSIA



PAKISTAN

CAPITAL:

Islamabad

CURRENCY:

Pakistani Rupee (PKR)

AREA:

803,940 sq. km.

POPULATION:

191,715,847 (as of 2015 est.)

ACCOUNTING STANDARDS IN PAKISTAN

• Under the Pakistani Companies Ordinance (1984), the Securities and Exchange Commission of Pakistan notifies the accounting standards that are applied by entities in Pakistan.

• Pakistan has adopted most but not all International Financial Reporting Standards (IFRSs) for mandatory application by listed companies, banks and other financial institutions and Economically Significant Entities (ESE), even when these are not listed.


• IFRSs are usually adopted as issued by the International Accounting Standards Board (IASB) and generally include 'any further revisions thereof', however, some differences are worth noting:

– IFRS 1 was not adopted as Pakistan has not adopted all IFRSs.

– Application of the requirements of IFRIC 4 and 12 has been waived for all companies. (A voluntary application is possible.)

– IAS 39 is currently applied in the 2009 version of the standard.


– IFRS 10, IFRS 11, and the revised versions of IAS 27 and IAS 28 have been adopted recently, but in doing so their mandatory effective date was set at 1 January 2015. (Earlier adoption is encouraged.)

– IFRS 12 and IFRS 13 have been adopted with an effective date of 1 January 2015.

– Adoption of IFRS 9 is currently under consideration.

– IFRS 14 and IFRS 15 have not yet been adopted.


– Standards relevant for financial institutions (IAS 39, IAS 40 , and IFRS 7) have not been adopted for banks and other financial institutions regulated by the State Bank of Pakistan (SBP). The SBP has prescribed its own criteria for recognition and measurement of financial instruments for such financial entities. However, adoption of IAS 40 for these companies is currently under consideration by the SBP.


– For insurance entities there is specific guidance for the measurement of some investments that differs from IAS 39.

– Power sector companies have been granted some relieve from the requirements of IAS 21.These regard the capitalisation of exchange losses and the fact that these companies nedd not recognize embedded derivatives under IAS 39. (If they want to do, they can adopt the requirements voluntarily.)

TAXATION IN PAKISTAN

• Corporate income tax is 35%, the exception to this is small companies, which are taxed at 25%.

• The standard rate of sales tax is 16%. However, this may vary in specified cases. Certain goods are exempt from sales tax.

• Personal tax rates differ between salaried taxpayers and non-salaried taxpayers.

• The top tax rate for salaried taxpayers is 20% while the top tax rate for non-salaried taxpayers is 25%.

TAXATION IN PAKISTAN

• There is no inheritance or gift tax in Pakistan.

• There is a provincial tax levied on the value of property, with the rates varying between provinces.

• Professional tax is a provincial levy on trade, professions, callings and employment generally payable on the basis of paid-up capital. The rates differ between provinces.

• Other taxes such as customs duty, excise duty, stamp duty, capital value tax, among others are levied.

INDIA

CAPITAL:

New Delhi

CURRENCY:

Indian Rupee (INR)

AREA:

3,287,590 sq. km.

POPULATION:

1,276,080,000 (as of 2015 est.)

ACCOUNTING STANDARDS IN INDIA

• Indian Accounting Standards (abbreviated as Ind AS) are a set of accounting standards notified by the Ministry of Corporate Affairs which are converged with International Financial Reporting Standards (IFRS).

• These accounting standards are formulated by Accounting Standards Board of Institute of Chartered Accountants of India.


• Now India will have two sets of accounting standards viz. existing accounting standards under Companies (Accounting Standard) Rules, 2006 and IFRS converged Indian Accounting Standards(Ind AS).

• The Ind AS are named and numbered in the same way as the corresponding IFRS.


• NACAS recommend these standards to the Ministry of Corporate Affairs.

• The Ministry of Corporate Affairs has to spell out the accounting standards applicable for companies in India.

• As on date the Ministry of Corporate Affairs notified 39 Indian Accounting Standards(Ind AS).


• This shall be applied to the companies of financial year 2015-16 voluntarily and from 2016-17 on a mandatory basis.

• Based on the international consensus, the regulators will separately notify the date of implementation of AS Ind for the banks, insurance companies etc.

• Standards for the computation of Tax would be notified separately.

TAXATION IN INDIA

• Generally, the income tax rate for individuals ranges from 10 to 30% for income exceeding Rs. 250,000

• In case of a resident senior citizen (who is 60 years or more but less than 80 years), the income tax rate is 10 to 30% for income exceeding Rs. 300,000

• In case of a resident super senior citizen (who is 80 years or more), the income tax rate is from 20 to 30% for income exceeding Rs. 500,000.

TAXATION IN INDIA

• 30% tax is levied on partnership firms

• A local authority is taxable at 30%

• A domestic company is taxable at 30%

• Cooperative societies are taxable at 10 to 30% for income exceeding Rs. 10,000

JAPAN

CAPITAL:

Tokyo

CURRENCY:

Japanese Yen (JPY)

AREA:

377,944 sq. km.

POPULATION:

126,880,000 (as of 2015 est.)

ACCOUNTING STANDARDS IN JAPAN

• Japanese Accounting Standards ('Japanese GAAP') are developed by the Accounting Standards Board of Japan (ASBJ), which was established in 2001.

• Under an agreement between the ASBJ and the International Accounting Standards Board (IASB) entered into in August 2007, known as the Tokyo Agreement, the ASBJ had been working towards converging the requirements of Japanese Accounting Standards with International Financial Reporting Standards (IFRSs).

ACCOUNTING STANDARDS IN JAPAN

• The achievements under the agreement were jointly announced in June 2011 by the ASBJ and the IASB.

• Japanese GAAP is not identical to IFRSs but have been found to be equivalent to IFRSs as adopted by the European Union (EU) by the EU since 2008.

REFERENCES

http://www.iasplus.com/en/jurisdictions/asia

http://www.guidemesingapore.com/taxation/topics/singapore-tax-rates

http://www.pwc.com/en_MY/my/assets/publications/2015-malaysian-tax-business-booklet.pdf

https://www.kpmg.com/Global/en/services/Tax/regional-tax-centers/asia-pacific-tax-centre/Documents/CountryProfiles/Pakistan.pdf

https://en.wikipedia.org/wiki/Indian_Accounting_Standards

http://business.mapsofindia.com/india-tax/income-tax.html

PREPARED BY:

Stephen Sonn M. Centeno

BSA V

Accounting Standards Taxation Contd (1)

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