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I had a fantastic time attending the STEP conference in Singapore last month. As usual the conference was extremely well attended from delegates from all over the world and the talks delivered were thought-provoking and insightful. If you were unable to make the conference yourself or are simply keen to know the key developments in the region, I’ve put together my five key takeaways from the event.
– Ambassador Chan Heng Chee
The ambassador was keen to stress that while there is a change in the balance of power in Asia Pacific, the US remains the main economic power in the region. However, she felt that the US will need to further accommodate China as its influence in the region increases. Interestingly, Chan Heng Chee also expressed the opinion that China is as keen as the other Asia Pacific nations to choose sides when dealing with disputed territories in the South China Sea, and that is an issue for Singapore. Politically, this could cause instability in the region if there were to be a territory disagreement.
– Richard Hay TEP, Stikeman Elliott (London) LLP
This discussion centered on the requirement of certain jurisdictions to list beneficial owners on a public register to ensure that individuals are held accountable for the activities of the underlying entities. This is part of the global movement towards greater transparency and prevention of tax avoidance. Interestingly, the UK has some of the most stringent rules in this regard. However, many jurisdictions including the US have hardly any procedures in place for verification of ultimate beneficial ownership. The speaker also discussed the practicalities of Hong Kong or Singapore adopting such a register. It is possible that they may not do so because of the complexities around changing the law to accommodate such a register.
China, Thailand and Indonesia were represented on the panel and each panelist discussed the nuances of implementing CRS, the global sharing of information standard to help combat tax evasion, in their particular jurisdictions. From listening to the talk, and the questions that followed, it seemed that there was still some uncertainty around CRS in many respects including:
How accurately information has been disseminated to the public about what personal details will be exchanged under CRS? The early adopters on CRS (including the UK) have been able to do this but it remains to be seen how the newer jurisdictions such as China will be able to sufficiently educate the public in this respect.
To what extent accountants, lawyers and other professionals can help/protect their clients’ privacy when so much personal information is being provided to the tax authorities?
– Kurt G Rademacher TEP, Butler Snow LLP, Bruce Zagaris TEP, Berliner Corcoran & Rowe LLP
It was highlighted that the US could anecdotally viewed as almost a tax haven due to not being subject to CRS. It was the speakers view were that the US are unlikely to sign up in the future, as FATCA (Foreign Account Tax Compliance Act), provides them with all the information they require, and there is nothing further that CRS can offer the IRS (Internal Revenue Service). It was also noted that US anti money laundering (AML) requirements are largely voluntarily imposed by professionals and hence there is scope for US institutions to offer a higher degree of confidentiality than other jurisdictions.
Clare’s talk on China’s Belt and Road initiative was extremely interesting. The Belt and Road Initiative is the flagship policy of President Xi Liping. The policy hopes to re-create the historical trade route between Europe and Asia. It was Clare’s view that if implemented well, and China achieved its potential, it could be the “game changer” of the century. This is due to the potential for connectivity and therefore trade, which could usher in a period of huge economic growth for China, as well as Asia.
It was Clare’s view is that Singapore will be the connecting juncture between China and South East Asia and quoted some startling statistics – i.e. that 55% of Chinese inbound business currently goes through Singapore and approximately 33% of Chinese outbound business also goes via Singapore. Clare discussed how the significance of Singapore in the Belt and Road initiative as a result of, its geographic location, connecting China to South East Asia as well as a common language (Mandarin being widely spoken in Singapore by it majority Chinese population).
If you’d like to discuss any points raised in this article, or any other tax requirements, please speak to your usual Buzzacott contact or Ishali Patel:
Ishali Patel
Associate Director
T | + 852 3752 8885
E | pateli@buzzacott.hk
