The report by Dezan Shira & Associates focuses on the taxation landscape within the Association of Southeast Asian Nations (ASEAN). The main points discussed include:
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Taxation System: The report highlights the diversity of tax systems across ASEAN member states. This includes corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT)/sales tax, and withholding taxes.
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Personal Income Tax (PIT): PIT is levied on individuals in most ASEAN countries, with the exception of Brunei and Cambodia, which have lower or no PIT rates. The tax is progressive, meaning higher earners pay a higher percentage rate than lower earners. The tax rates vary significantly across the region, ranging from 17% to 45%.
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Indirect Taxes: The report discusses the VAT and sales tax as examples of indirect taxes that are added to the price of goods and services, making the final consumer bear the tax burden.
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Withholding Taxes: These taxes apply to funds transferred out of the country by foreign companies. Dividends, interest, and royalties are common areas where withholding taxes apply.
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Corporate Income Tax (CIT): CIT applies to business profits and is typically governed by the central government, sometimes also by provincial governments. The rates vary widely, from 17% to 40%, influenced by factors like government priorities, economic dependence on foreign investment, country size, and development level.
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Tax Compliance: The report also touches on the growing importance of tax compliance in ASEAN, driven by the need to attract foreign investment and create a competitive environment among member states.
The report further provides an overview of how tax policies in ASEAN are evolving to facilitate easier market access for businesses and investors in the region, with a focus on creating a harmonized tax environment despite the diversity of individual tax systems.
