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.
All cryptocurrency trading platforms to be regulated
Hong Kong is planning to regulate all cryptocurrency trading platforms, whether or not they trade securities. The Securities and Futures Commission’s new consultation paper proposes replacing the existing light-touch regulatory regime with a catch-all licensing requirement under anti-money laundering legislation, applying to all cryptocurrency trading platforms operating or targeting investors in international financial centres. Consultation runs until 31 January 2021, and legislation is likely to be introduced later next year.
Tighter regulation of digital money transfers
Singapore is to widen the scope of regulated digital payment token and cross-border money transfer services and activities, and impose additional conditions on virtual asset service providers, to comply with enhanced Financial Action Task Force standards. It has also issued a consultation paper on new rules for financial institutions to verify a customer’s identity where business is not being conducted face-to-face. Consultation closes on 9 December 2020.
China wealth link with Hong Kong to be capped at $23 billion each way
China’s plan to allow investments for private wealth across the border between Hong Kong and its increasingly affluent southern region will be capped at 150 billion yuan ($23 billion) in each direction. The Wealth Management Connect program, which will allow residents of Hong Kong, Macau and major cities in China’s southern Guangdong province to invest cross-border, will also have an individual quota of 1 million yuan, according to the Hong Kong Monetary Authority.
Tribunal rules dividends to foreign shareholders should not be taxed above the treaty rate
Dividend distribution tax levied on Indian companies’ distribution of profits to non-resident shareholders should be withheld at the relevant tax treaty rate, rather than the domestic rate of 21 per cent, India’s tax appeal tribunal has ruled in the Giesecke & Devrient case. Business that have received dividends from their Indian subsidiaries should now consider seeking refunds of excess tax paid, experts have said.
Favourable tax treatment for key foreign employees
Malaysia’s 2021 draft budget offers special income tax relief for key foreign employees of companies investing in new strategic investments through the country’s National Economic Recovery Plan (Pelan Jana Semula Ekonomi Negara, PENJANA), announced in June 2020. Up to five highly paid individuals will be able to opt for tax at a flat 15 per cent rate for five consecutive years, instead of 30 per cent, if they adopt Malaysian tax residency. The PENJANA incentives also offer start-ups a zero corporation tax rate for ten or 15 years.
Indonesia sovereign wealth fund aims to raise $15b by offering multiple funds
Indonesia’s new sovereign wealth fund will offer dedicated industry funds in a bid to drum up US$15 billion investment and deepen access to global capital by Southeast Asia’s biggest economy. The structure, outlined in a briefing by top economic ministers on 13 November 2020, has been adopted to entice global investors with various appetites for risk, return and the length of investment.
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.