Welcome to Herbert Smith Freehills’ new monthly private wealth industry updates in Asia.
Every month we survey ten Asian jurisdictions for legal developments concerning trust and estate planning which are of interest to the private wealth industry, and provide a succinct summary in a table format. The jurisdictions covered in the update are Hong Kong, Singapore, China, Taiwan, Japan, India, Malaysia, Indonesia, Thailand and the Philippines. We hope that these updates will prove to be a useful resource to keep private clients, business people, and lawyers abreast of legal updates in the region.
Hong Kong Limited partnership regime is now established by law
Hong Kong’s Legislative Council passed the Limited Partnership Fund Bill on 9 July 2020. The Limited Partnership Fund Ordinance (LPFO) will take effect on 31 August 2020. The LPFO establishes Hong Kong’s first investment vehicle structure suitable for establishing a limited partnership for private equity funds exempt from profits tax.
HKMA proposes tighter supervision of trust business in banking sector
The Hong Kong Monetary Authority (HKMA) recently launched a consultation on proposals to enhance the regulation and supervision of trust business in the Hong Kong banking sector, offering more protection to customers using wealth management services. Responses are required to be submitted by 9 October 2020.
The HKMA intends to regulate and supervise trust business via a Code of Practice for Trust Business (Code), which will apply to authorised institutions (AIs) and subsidiaries of locally incorporated AIs that conduct trust business in Hong Kong. Other trustees and trust companies are encouraged to adopt the proposed Code to the extent applicable.
Automatic 50 per cent penalty for tax avoidance is proposed
Singapore’s Ministry of Finance has proposed a 50 per cent surcharge for tax avoidance, along with an amendment and extension of the current general anti-avoidance provision in the draft Income Tax (Amendment) Bill 2020. The consultation is open until 7 August 2020.
Tribunal overrules retrospective application of GAAR
The Kolkata Tax Tribunal has ruled that the First Appellate Authority acted unlawfully in imposing the general anti-avoidance rule (GAAR) retrospectively. In this case, a public limited company amalgamated itself with a subsidiary in 2010 in order to write off gains from property disposals against depreciation costs.
Concessions are made on tax residency during COVID-19
Malaysia’s Inland Revenue Board has released updated guidance on international tax issues arising from COVID-19 travel restrictions, amending the guidance issued in May 2020. It addresses tax residence status, cross-border employment income and the potential creation of a permanent establishment in Malaysia. For tax residency day-counting purposes, a temporary enforced absence from Malaysia caused by coronavirus travel restrictions will be counted as absence, but temporary enforced presence in Malaysia will not be counted as presence.
Former Prime Minister is guilty of corruption and money laundering
Former Malaysian Prime Minister Najib Razak has been convicted of corruption related to the 1MDB state investment fund scandal and sentenced to 12 years in prison. He illegally received millions of dollars from the fund, which he launched three months after becoming Prime Minister in 2009.
The contents of this document are for reference purposes only. Some of the information comes from public sources and this may not be comprehensive, accurate or up to date; where we have relied on third party information and sources, this has not been verified by us. The document does not constitute legal advice, and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication, and any facts in this document should be checked for your specific circumstances at the time you wish to use or refer to them.