tax notes international - Tuck School of Business - Dartmouth College

‘‘We cannot distribute cash to the people. What we
can do is give targeted tax cuts to garment factories
and spend more on infrastructure so we can prepare
for economic developments in the future,’’ Hang
Chuon Naron, secretary-general of the Ministry of
Economy and Finance, said in a January 23 interview
with Bloomberg.com.
Despite its problems, Cambodia has experienced
four straight years of growth above 10 percent. This
growth has stemmed largely from special deals for foreign
firms, such as tax holidays and greatly reduced
import tariffs.
Furthermore, 60 percent of that growth has arisen
from just three sectors: tourism, construction, and garment
manufacturing, with the latter accounting for 12
percent of GDP in 2007. However, weakening demand
in crucial retail markets like the United States, which
receives 70 percent of Cambodia’s textile exports, has
forced Cambodia to close 10 percent of its garment
factories, triggering the loss of 20,000 jobs, according
to Roger Tan of the Garment Manufacturer’s Association
of Cambodia.
Hang Chuon Naron anticipates a drop in garment
exports of 2 percent. He also foresees a 20 percent
drop in the number of tourists visiting Cambodia and
the virtual collapse of the construction sector. He
hopes the tax breaks will keep businesses afloat
through the difficult times.
The IMF has predicted that Cambodia will grow at
a rate of 4.75 percent in 2009, the slowest pace since
1998.
Chile
♦ Randall Jackson, Tax Analysts.
E-mail: rjackson@tax.org
Stimulus Package Wins Unanimous
Approval
The Chilean Senate on January 14 unanimously approved
a $4 billion economic stimulus plan presented
by President Michelle Bachelet on January 5. (For
prior coverage, see Tax Notes Int’l, Jan. 19, 2009, p. 212,
Doc 2009-349, or2009 WTD 5-3.)
The plan, which was unanimously approved by the
Chamber of Deputies on January 8, still must be
signed by Bachelet, a formality that Finance Minister
Andrés Velasco said would soon be addressed.
Tax measures in the plan include the temporary
elimination of the stamp tax, a reduction in the
monthly advance tax payments made by businesses
(expected to take effect as early as this month), and
provisions to accelerate income tax refunds for the
2010 tax year and to accelerate the tax credit available
for some training costs.
Velasco called the package ‘‘important and urgent’’
and expressed gratitude for the political consensus that
led to the approval of the package in a unanimous and
expedited manner.
China (P.R.C.)
CHINA (P.R.C.)
♦ Lisa M. Nadal, Tax Analysts.
E-mail: lnadal@tax.org
U.S. Companies Facing Compliance
Burdens in China
U.S. companies with operations in the People’s Republic
of China now face much more significant tax
compliance obligations, according to panelists on a
January 15 PricewaterhouseCoopers International Tax
Services webcast.
The P.R.C. government last year introduced a new
annual enterprise income tax return package, new
related-party transaction (RPT) forms, and new contemporaneous
transfer pricing documentation requirements.
The new EIT return package and the new transfer
pricing disclosure rules are very complex, PwC tax
partner Todd Landau said. ‘‘It is always a common
experience with respect to China that there’s only some
of what we need to know that is known today, with
additional information that will clearly need to be
known as time progresses throughout the period prior
to deadlines’’ for the filing of returns and the submission
of contemporaneous transfer pricing documentation,
he said.
For example, the State Administration of Taxation
(SAT) released guidance on the EIT return, plus 45
pages of explanatory notes, late in 2008, PwC tax partner
Michael Ho said. But those notes are no longer
valid because a new set of notes (Guo Shui Han [2008]
No. 1081) released on January 7 has superseded them.
This has left many companies struggling to keep up.
Background
The SAT on October 30, 2008, issued a new annual
EIT return package (Guo Shui Fa [2008] No. 101) for
use by taxpayers that must file returns under the EIT
law that took effect on January 1, 2008. The return
package includes a main return and 15 schedules, all of
which must be filed by May 31. (For prior coverage,
see Tax Notes Int’l, Dec. 22, 2008, p. 945, Doc 2008-
24993, or2008 WTD 247-14.)
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