Benefits of consolidating multinational taxes with one agency

Benefits of consolidating multinational taxes with one agency

Benefits of consolidating multinational taxes with one agency

Managing accounting and tax in your company is a complex task. It is one of the most critical business processes to manage, so there is simply no room for error. For organisations that operate in multiple countries within the region, regulations and compliance requirements can be even more involved.

According to Deloitte’s 2021 Asia Pacific Tax Complexity Survey, 80% of respondents believe tax regimes in the region have become more complex over the last three years.

For many tax and accounting executives, finding an international tax advisor in Singapore, Malaysia, Hong Kong or China, who can handle all your accounts at a local level is ideal. But this doesn’t happen for most organisations. At least, not from the start.

Instead, as companies grow organically, they might add offices across the Asia-Pacific region, each with different tax specialists to deal with their country’s specific needs. Perhaps this seems like a smart idea – after all, these specialists will have a deep understanding of the local tax regulations. But managing multiple specialists can quickly raise its own set of problems.

This is why many tax leaders in multinational firms find themselves grappling with:

  • Communication siloes: getting multiple tax specialists to coordinate their operations can be challenging, especially with language and cultural differences at play.
  • Staff turnover: the great resignation is upon us, which means as more employees are leaving, there are more people to train.
  • Technology challenges: each country has its own system and method of communication, which may not feed into each other.

If you are facing similar challenges, it might be a good time to think about consolidating your tax operations with an international tax advisor in Singapore, Malaysia, Hong Kong or China. This advisor can then help coordinate your tax efforts across the region while having one single point of contact, regardless of your base location.

Here is what you need to know about why to consolidate your taxes with one company, and how to choose the right provider for your business.

 

Do not underestimate the power of local expertise

The tax landscape in Asia-Pacific is constantly changing, with governments regularly introducing new regulations and laws.

This means partnering with a trusted tax advisor to help you navigate the complexities of local tax regulations is crucial for successful operations. Singapore itself has many complicated tax regulations, such as Goods and Services Tax (GST), which need expert local knowledge to understand. Also having a partner that can help you with certified tax planning, financial accounting, and compliance services will help during reporting season, allowing you to maximise tax incentives and benefits.

Choosing a global provider with local offices will give you a premium service at a regional level.

A reliable tax advisory service can also help you drive long-term success in your business by maximising your tax incentives and benefits. Without expert local knowledge, it can be easy to miss out on tax breaks and exemptions that your business is entitled to.

If you’re purely a Singapore-based business, managing all this in-house may be achievable. But multinational organisations need to deal with cross-border issues and any complexities regarding tax compliance that may arise. This can quickly become unmanageable if you don’t have the right partner to help you navigate through it.

So choosing an international tax advisor in Singapore who has connections in other countries, can significantly streamline this process and ensure the business continues to operate safely across the region.

One contact, or many?

When selecting a tax partner, check whether you’ll have a single point of contact or deal with different individuals in each country. If the latter is true, you may be no better off than you would with managing your teams.

Ideally, you want access to a connected ecosystem of tax advisors while only dealing with a single point of contact. That way, you get all the benefits of local tax expertise without the headaches that come with managing in-house teams.

Another important factor to consider when managing tax in multiple countries is dealing with cultural nuances. The Asia-Pacific region is home to a diverse mix of cultures, religions, languages and customs.

woman standing in front of her business team discussing tax compliance

Having people who understand, and can sensitively navigate, cultural complexities is an important part of doing business and maintaining a well-functioning team.

A dedicated international tax advisor in Singapore, Malaysia, Hong Kong or China, can help you to navigate all of these issues, and advise you on the best approach for each country in which you operate.

Tax compliance matters more than ever

As regulations tighten, tax activities are attracting more and more attention from authorities. No executive wants their company to be the subject of a tax compliance audit. At the same time, however, finance and accounting teams are under pressure to do more with less, as budgets and teams are scaled back.

Organisations are also dealing with a workforce in transition. Many employees are seeking a ‘next role’ that offers higher pay or better working conditions – reducing available resources and stretching teams beyond capacity.

Nevertheless, businesses cannot ignore compliance requirements. Singapore has some very strict tax laws, it’s critical that your company does everything it can to follow them by paying taxes correctly and on time. Any business that does not follow tax compliance is doing so at the risk of breaking the law.

Even something as small as overlooking a detail in tax law or inaccurately calculating taxes owed can result in non-compliance.

And maintaining compliance with changing tax laws can be particularly challenging for multinational organisations with business partners all over the world.

business meeting with six colleagues discussing tax notes international

Having a team of professionals that understands not only the tax laws in Singapore, Malaysia, Hong Kong and China but also those across the entire Asia-Pacific region, can free your business to focus on its core business. The team can help you to navigate the changing tax laws across the region, and assist you in adjusting your tax reporting processes accordingly.

And of course, if tax compliance issues arise, the team can deal with them swiftly and accurately.

But most importantly, having a trusted team to manage tax compliance services can ensure in-depth analysis of your business structure, before providing industry-leading advice on the best long-term tax solutions. After all, it takes skilled knowledge to structure your business divisions to understand and be able to take advantage of tax benefits.

Seek value with service

One of the biggest benefits of outsourcing your tax function is cost savings. ‘Time is money’, and increased efficiency can substantially improve your bottom line.

However, simply going with the cheapest option may be a false economy. When looking for a business tax advisory service, carefully consider their reputation in the market.

Here are some questions to ask:

  • How long have they been operating?
  • What is their client footprint?
  • How many staff do they have? And more importantly, how well do they retain their employees in the long term?
  • How solid is their track record? Do they have measurable results they can share?
  • How big is their regional and international footprint? Can they support your growing business?

To find an international tax advisor who satisfactorily answers all these questions, you will likely need to choose a premium provider.

The good news? Partnering with an established business tax advisory service gives you complete peace of mind that they will handle your tax matters efficiently, accurately and professionally.

Choosing a premium provider such as BoardRoom also means:

  • Low error rates: we have over 50 years of experience in the Asia-Pacific region and a proven track record of performance.
  • Fast service: we maintain high staff retention rates, so we always have the right amount of people to efficiently handle our clients’ needs.
  • Skilled staff: our staff are highly trained and keep up to date with changes in local regulations.

Think beyond where you are today

While planning for your current tax activities is crucial, any smart leader knows that planning for tomorrow is just as important.

If your business already operates in multiple countries within the Asia-Pacific region, you may be considering expanding even further. This means, of course, even more legal, compliance and cultural differences to navigate.

Therefore, it is essential to check with potential providers about their global capabilities.

For example, BoardRoom is part of Andersen Global, a worldwide network of tax and legal professionals operating in 315 locations. As such, we are well-versed in a range of international company taxation and tax planning issues.

In short, partnering with an international tax advisor ensures that wherever you grow your business, they have people on the ground to deal with the local tax regulations.

Look beyond just tax

When choosing a tax advisory service, it is also worth checking whether they handle other aspects of corporate advisory and management.

As your company expands, you will need to navigate the issues that lead back to the important issue of tax and tax compliance. You will also need to consider company incorporation and corporate secretarial services.

Partnering with a corporate advisory service that offers a full spectrum of corporate services, can help make expanding simpler. It is also more efficient, cost-effective and allows the business to focus on its core operations.

man with calculator tax compliance meaning

Streamlining your operations often becomes more important the bigger you get. Once you start to see the benefits of outsourcing your tax to a trusted firm, you may consider other areas in which they could help, such as:

If you decide to engage a full-service firm to handle your tax, they will already be familiar with your business structure, operations and working style. This will enable them to seamlessly move to support you in other areas of your business.

Cut the complexity by consolidating

When you consider the cost and effort of coordinating individual tax specialists across the region, the benefits of consolidating with one partner quickly add up. Having people with an in-depth understanding of the local tax incentives and benefits your company is entitled to can create significant savings each financial year.

But the benefits extend far beyond mere cost savings into making business simpler.

There is no doubt that tax complexity is on the rise. Having a trusted tax advisor to help you coordinate your growing operations within the Asia-Pacific region while navigating the changing regulations can reduce this complexity.

Speak to our tax experts today about how your company could benefit from consolidating your taxes with one partner.

Digital vs Electronic Signatures in Malaysia: a Guide

Electronic vs Digital Signatures in Malaysia

Digital vs Electronic Signatures in Malaysia: a Guide

When a face-to-face meeting is impossible, paperless signatures are a practical option for your business in Malaysia. They are fast, convenient and environmentally friendly.

However, you need to carefully consider the legal implications of using digital or electronic signatures over the traditional ‘wet-ink’ variety. While the terms ‘electronic’ and ‘digital’ are often used interchangeably to refer to paperless signatures, each one is a separate legal concept under Malaysian law.

In this article, we cover the differences between electronic and digital signatures in Malaysia, and explain when they are legally binding, and where you can use them.

What you need to know about electronic signatures in Malaysia

An electronic signature is defined by the Electronic Commerce Act 2000 (“ECA”) as:

 “any letter, character, number, sound or any other symbol or any combination thereof created in an electronic form adopted by a person as a signature.”

Electronic Signature in Malaysia
Are electronic signatures legally binding in Malaysia?

The ECA legally recognises electronic signatures used in commercial transactions either:

  • to fulfill legal requirements; or
  • to facilitate commercial transactions through electronic means.

In Malaysia, electronic signatures are typically used for simple contracts and agreements (such as the ones outlined below) where the risk of legal disputes around document validity is low.

Electronic signatures are legally binding under Malaysian law, where they fulfil the ECA requirements, being:

  1. that the signature is attached to, or logically associated with, an electronic message;
  2. the signer and their approval of the related information can be adequately identified; and
  3. the signature is as reliable as is appropriate, given the purpose and circumstances for which the signature is required.

To be considered ‘reliable’, electronic signatures must also fulfill these ECA requirements:

  1. the means of creating the electronic signature is linked to, and under the control of, that person only;
  2. any alteration made to the electronic signature after signing is detectable; and
  3. any alteration made to that document after signing is detectable.

Some grey areas surround these requirements as they have largely been untested in Malaysia Courts. However, we recommend that companies adopt internal guidelines relating to the use of electronic signatures that outline the approvals process, digital security measures, electronic record keeping policies and compliance and internal audit team procedures. These guidelines can be used to provide evidence that the ECA requirements have been met. Companies may consult their lawyers or corporate secretarial agents for assistance in this regard.

Common electronic signature applications in Malaysia

Common electronic signature applications

There’s a reasonably broad scope when it comes to applying electronic signatures in Malaysia to execute documents. For example, case law suggests that even a text message can be considered a legally binding electronic signature under the ECA.

More typically, electronic signatures are commonly used in:

  • HR documents: Employment contracts, benefits paperwork and new employee onboarding processes;
  • Commercial agreementsbetween corporate entities: Non-disclosure agreements, procurement documents and sales agreements;
  • Commercial real estatedocuments: Lease agreements, and sales and purchase contracts; and
  • Minutes and resolutions:(subject to the company’s constitution).

When deciding whether to use an electronic signature in Malaysia, it is important to note that while electronically signed documents are legally enforceable, wet-ink signatures may still be required for stamping and some filing and registration procedures. Some financial institutions may also require wet-ink signatures.

Where you can’t use electronic signatures

In Malaysia, electronic signatures are not allowed in:

  • Power of Attorney documents as per section 2 (2) of the ECA;
  • Wills, codicils and trusts as per section 2 (2) of ECA;
  • Negotiable instruments, bills of exchange, and promissory notes as per section 2 (2) of the ECA;
  • Any instrument dealing with properties under the Malaysian National Land Code; and
  • Statutory Declarations under the Statutory Declarations Act 1960.

The documents listed above cannot be executed via e-signature or digital signature because they require notarisation or attestation before a public notary or commissioner of oaths. As such, wet-ink signatures are required for these documents.

What you need to know about digital signatures in Malaysia

Digital signatures are considered a subset of electronic signatures in Malaysia and are governed by the Digital Signatures Act 1997 (“DSA“).

A digital signature is defined by the DSA as:

“a transformation of a message using an asymmetric cryptosystem such that a person having the initial message and the signer’s public key can accurately determine:

a. whether the transformation was created using the private key that corresponds to the signer’s public key; and
b. whether the message had been altered since the transformation was made.”

Digital Signature in Malaysia

Electronic signature software providers like DocuSign and HelloSign use certificate-based digital IDs to authenticate each signer’s identity, providing a higher level of security and assurance. Each digital signature is bound to the document via encryption to provide proof of signing, and is validated by licensed certification authorities.

In Malaysia, it is the role of licensed certification authorities to act as a trusted third party in verifying the identity of both the signer and the recipient of electronically signed documents.

Think about it this way, a digital signature requires a process, whereas an electronic signature can be implied – such as in the case of a text message.

Are digital signatures legally binding in Malaysia?

A digital signature that meets the DSA’s validity requirements is as legally binding in Malaysia as a handwritten signature, an affixed thumbprint or any other mark.

When the law requires a seal to be affixed to a document, a digital signature must be used.

Where you can’t use digital signatures

In Malaysia, like electronic signatures, digital signatures are also are not allowed in:

  • Power of Attorney documents as per section 2 (2) of the ECA;
  • Wills, codicils and trusts as per section 2 (2) of ECA;
  • Negotiable instruments, bills of exchange, and promissory notes as per section 2 (2) of the ECA;
  • Any instrument dealing with properties under the Malaysian National Land Code; and
  • Statutory Declarations under the Statutory Declarations Act 1960.
Digital signatures must be validated by select authorities in Malaysia

Currently, there are no foreign certification authorities recognised in Malaysia. Digital signatures can only be validated with one of the following licensed certification authorities:

  • Post Digicert Sdn Bhd;
  • MSC Trustgate Sdn Bhd;
  • Telekom Applied Business Sdn Bhd;
  • Rafcomm Technologies Sdn Bhd;

Optimise your business with digitisation

A smart way to optimise your business processes is to use electronic and digital signatures, particularly when face-to-face meetings are not practical or possible. But – as we covered in this article – you need to fulfill specific legislative requirements in Malaysia to ensure that paperless signatures are legally binding.

Get in touch with our experts today to learn more about how they can help you implement innovative technological solutions to empower your business. 

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Mitigating Costs in an Economic Downturn

mitigating_costs_in_an_economic_downturn

Mitigating Costs in an Economic Downturn

The onset of the COVID-19 pandemic along with efforts to contain it has plunged much of the global economy into a recession. In April, the International Monetary Fund’s World Economic Outlook (WEO) projects global growth to shrink by 3 per cent. However, its October publication amended the projection to 4.9 per cent. The impact of the pandemic will continue into 2021, where the WEO projects global growth to be at 5.4 per cent, which is 6.5 per cent lower than the pre-COVID-19 projections of January 2020.

Mitigating costs in an economic downturn-Growth projection

Looking forward, we can expect the recession to leave lasting scars despite the extraordinary efforts of governments worldwide to alleviate the situation through fiscal and monetary policy support.

During these unprecedented times, companies need to take affirmative action to mitigate risk amidst the economic downturn. Crafting recession strategies to retain or expand your customer base, learning to embark on affordable yet effective marketing or even taking this opportunity to review and better optimise business operations are all practical solutions businesses can explore. However, the immediate strategy for most companies would be to adopt cost-cutting measures.

In this article, we will share some of the most popular and effective measures companies can take to mitigate costs during an economic downturn.

Look to outsource

Outsourcing is when a company engages a third-party service provider to handle or manage a business function externally instead of choosing to manage the particular service in-house.

Of the numerous functions that exist in a company, payroll is perhaps the one that will offer the most significant benefit when outsourced during an economic downturn. By outsourcing payroll, your company can effectively improve its focus and expand its accessible talent pool, which are all essential to helping the company navigate through an economic recession. But most notably (and most beneficial during an economic downturn), outsourcing can reduce and control a company’s operating cost.

While the actual cost-savings of outsourcing HR and payroll services may vary between businesses, the most common areas where they could come from are:

  • Reduced payroll employees or headcounts
  • Elimination or change of existing payroll management software (often to something like a cloud-based payroll system that offers automation solution)
  • HR and payroll system updates
  • Employee training
  • Hefty penalties that are incurred when payroll mistakes happen

Outside of payroll, some of the most popular services that companies often outsource to mitigate and manage costs are accounting, administrative services (corporate secretary) and human resources.

Look to your accountants

During an economic downturn, it becomes imperative that you have experienced accountants to help you financially navigate through this challenging landscape. Beyond their capacity for keeping financial records, accountants can interpret them and provide you with a clear and succinct evaluation of the company’s current performance and financial position that could positively influence the outcome of any business decision during a recession.

Given their unique position and objectivity, a critical and core function of accountants on mitigating costs during an economic downturn is to uncover opportunities to eliminate unnecessary expenses and save costs. In areas where it is not possible to cut costs completely, your accountant can strategically advise on how payments can be deferred to maintain a healthy cash flow during difficult periods.

In addition to cutting cost, seasoned accountants can also analyse your business trends and provide effective forecasting. Such input is critical to helping you understand the changing performance of your business and assist with realigning projections, which can help you assess the viability of your current business plan and provide insights for new alternatives should the need arise.

Look at tax relief and economic stimulus packages

In an economic downturn, it is essential to monitor tax policy changes that can aid in providing financial relief for the company and improve cashflow. During such times, it is common for banks to begin cutting their interest rates while the government actively works to put forward spending and tax packages as well as offer administrative relief by extending tax-filing deadlines. Governments across the world might even introduce tax credits and tax cuts for companies that have experienced a significant drop in revenue.

Additionally, most governments would also roll out stimulus packages as part of their plan to spur their respective economies. However, it is worthwhile to note that in the long term, these governments intend to recoup the funds that were used to finance the stimulus packages and their plans could impact the bottom line of many businesses later. A likely course of action would be adjustments made to policies and tax rates, including but not limited to Corporate Taxes and the Sales and Service Tax (SST). Therefore, we strongly advise that businesses continually revise their tax plan in response to any possible policy changes to achieve greater savings and maximising any tax benefits.

As you embark on any tax planning efforts and find yourself lacking in experience or resources to do so adequately, it is a good idea to engage a professional. In doing so, you can ensure that your tax plan is continuously revised to strategically leverage every tax benefit, maximise tax deductions, and comply with the local tax regulation and statutory requirements.

Look at better managing your working capital

An economic downturn presents several working capital challenges for businesses across industries. To stay operational, companies must look for new ways to finance their working capital. According to the Hackett Group’s 2020 Working Capital Survey, organisations have focused on the availability of corporate debt as a source of working capital for too long. While this may be a common practice, it increases the company’s exposure to unavoidable risks, such as changing customer demands and disruption to the supply chain. During an economic downturn, these potential risks to your working capital could prove detrimental to the survival of the company.

Companies need to manage their working capital during an economic downturn effectively to mitigate cost through individual strategies that address their levels of debtors, creditors, procurement and inventory, and receivables process.

Mitigating cost and managing working capital in an economic downturn

Look at BoardRoom to help you through this crisis

During an economic downturn, when faced with numerous challenges, companies will naturally seek to hunker down and begin cost-cutting strategies. Such strategies are necessary, but it is also vital to note that even in crisis, there are opportunities. Companies will have to practice greater diligence and adapt to the changing landscape quickly through the adoption of forward-looking, growth-oriented plans that prepare the company for when the economy improves.

BoardRoom can help you through any recession period and prepare your business for the inevitable upturn. As a market leader in providing accounting, payroll and corporate services, our in-house team of dedicated experts can help to provide effective cost strategies regardless of your business size or needs. Our in-depth understanding and experience of economic trends will empower your business to discover and explore new opportunities.

Are you looking for a trusted partner and advisor as you weather this difficult time? We are here for you. Contact our BoardRoom outsourcing experts here!

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Malaysia Budget 2021 – The Tax Highlights for Rakyat and Enterprises

Malaysia Budget 2021 - The tax highlights for Rakyat and Enterprises

Malaysia Budget 2021 – The Tax Highlights for Rakyat and Enterprises

Malaysia Budget 2021 – The Tax Highlights for Rakyat and Enterprises

On 6 November 2020, Finance Minister Tengku Zafrul Aziz delivered the Malaysia Budget for 2021. The budget is anchored on three crucial goals – Rakyat’s well-being, Business continuity, and Economic resilience. The three goals are a continuity of the PRIHATIN, PRIHATIN SME PLUS, PENJANA, and KITA PRIHATIN stimulus packages. Find out more below as we summarise the key tax highlights for Rakyat and Enterprises in the Malaysia Budget 2021. For further details you can download our full report.

Corporate Tax

Key takeaways in relation to corporate tax cover the following areas:

  • Support for companies relocating their operations to Malaysia and undertaking new investments via tax incentives for both new and existing companies. This is an extension from the original incentives unveiled in PENJANA, however, the deadline for application has been extended until 31st December 2022.
  • New incentives added for companies who have Malaysia as their principle hub and a global trading centre.
  • Income tax exemption for Equity Crowd Funding to encourage alternate financing methods for technology start-ups.
  • Tax incentives for Maintenance, Repair & Overhaul activities
  • Preferential tax rate for manufacturers of pharmaceutical products
  • Extension of income tax exemption until YA2022 for export of private healthcare services
  • Simplify and merge the tax incentive for manufacturers of industrialised building system
  • Income tax exemption has been extended for both East Coast Development Corridor, Iskandar Malaysia and Sabah Development Corridor & Sustainable and Responsible Investments (“SRI”)
  • Tax incentives for non-resource-based R&D product commercialization activities will be reintroduced.
  • Tax incentives for commercialization of R&D product by public research institutions will be extended to private higher education institutions.
  • There were also a number of incentives released in relation to employment of senior citizens, ex-convicts, parolees, supervised persons and ex-drug dependents.
  • Income tax deduction on investment on ASNB wakaf fund
  • Extended implementation timelines for the Wage Subsidy Programme

Individual Tax

Several initiatives were released in relation to individual tax:

  • Reduction in income tax rate by 1% for the chargeable income band range of RM50,001 – RM70,000
  • There were also a number of incentives released across
    • Compensation due to job loss
    • National Education Savings Scheme
    • Education fees
    • Private Retirement Scheme contributions
    • Lifestyle expenses
    • Disabled spouse
    • Medical treatment
    • Employee Provident Fund (“EPF”) contributions
  • A special income tax rate for non-resident individuals holding key positions in companies investing in new strategic investments was announced
  • Amongst other incentives a flat 15% tax rate was announced for the Revision of Returning Expert Programme (“REP”)

Sales & Services Tax (“SST”)

The following initiatives were unveiled in relation to SST

  • Sales tax exemption for the purchase of locally assembled bus including air-conditioner
  • Increase of Sales Limit for Value-added and Additional Activities Carried Out in the Free Industrial Zones (“FIZs”) and Licensed Manufacturing Warehouses (“LMWs”)

Stamp Duty

The key takeaways from the budget in relation to Stamp Duty are as follows:

  • Stamp duty exemption of 100% for the purchase of a first residential home
  • Stamp duty exemptions for the revival of abandoned housing projects
  • Stamp duty exemption will be extended for 5 years for the purchase of insurance policies and takaful certificates for “Perlindungan Tenang”
  • Stamp duty exemption will be extended for another 5 years on the Trading of Exchange Traded Fund (“ETF”)

There were a number of other incentives announced around Indirect Taxes. Our full report covers these and the above highlights in more detail.

 

Download the full Malaysia Budget 2021 tax highlights here

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SSM Offers Incentive of up to 80% for Compounds

SSM Offers Incentive of up to 80% for Compounds

SSM Offers Incentive of up to 80% for Compounds

SSM has announced a discount of up to 80% reduction on compounds in relation to offences for non-compliance with sections 143, 165 and 169 of the Companies Act 1965.

Payment PeriodReduction Rate*
9 to 30 September 201580%
1 to 31 October 201570%
1 to 30 November 201560%
1 to 31 December 201550%

* The reduced fee is based on the original compound amount and is subject to the terms and conditions.

Payments can be made at any SSM counters nationwide.

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