Indian Court Decision Facilitates GST Refund for Exports

In a recent case, an Indian company provided opinions on equity and future markets etc. to customers abroad. Payments were made via the platform “PayPal” in US Dollars. PayPal then transferred equivalent amounts in Indian rupees to the company’s bank account. The company remitted GST, but filed for a tax refund as payments for services exported from India do not attract GST. One of the legal criteria of an “export of services” is that payment is received in “convertible foreign exchange.” This was denied here by the tax authorities, the refund rejected.

The company was, however, successful in the Madras High Court: The fact that they used a financial intermediary, which was in full accordance with the Indian laws on foreign exchange management, would not stand in the way of their services being exports. The receipt of US Dollars by PayPal for and on behalf of the company qualifies as payment received by itself.

The case shows that the Indian tax authorities tend to interpret provisions of tax relief narrowly. The courts, however, oppose them when wrong. The decision provides welcome relief for Indian companies using payment service companies for their international operations.

—

Your contact person in India: Dr. Jörg Schendel

Suman Khaitan & Co.

W-13, West Wing, Greater Kailash Part-II
Delhi 110048, Indien

www.sumankhaitanco.in
germandesk@sumankhaitanco.in
schendel@adwa-law.com

Japan Introduces New Rules for Foreign E-commerce Sellers

In June 2024, the Japanese Parliament passed a reform bill introducing new rules for foreign e-commerce businesses that sell their goods directly to consumers in Japan. The bill encompasses amendments to several product safety-related laws, including the Consumer Product Safety Act and the Electrical Appliances and Materials Safety Act.

The amendments will come into effect in 2025 and will affect foreign businesses that import, sell, or distribute certain items designated as products that may cause harm. The list of these products, which are required to fulfill certain requirements and bear the PS (“Product Safety”) label, currently contains roughly 500 categories including gas appliances and a large number of electrical products.

The reform comes against the backdrop of numerous accidents involving foreign-made products sold online, such as fires caused by cellphone batteries. In the past, overseas products were conventionally marketed through an importer or distributor based in Japan, who was legally responsible for the compliance with technical standards. However, this has changed in recent years due to the rise of e-commerce: Many foreign businesses now sell their products directly to Japanese consumers through online shopping platforms. This has led to uncertainty as to who can be held responsible for product safety when there is no Japanese importer or distributor and the overseas seller does not operate an office in Japan.

According to the reform, overseas businesses will have to appoint and publicly announce a representative as domestic supervisor who will bear the legal responsibility for the safety of products sold in Japan. The revised law will also make it possible to request online shopping platforms to remove products that do not fulfill safety requirements.

Overseas businesses selling directly to Japanese consumers without involving importers or distributors will have to confirm whether their products are affected by the new rules and, if so, ensure compliance by appointing a domestic supervisor in Japan.

—

Your point of contact in Japan: Michael Müller

Mueller Foreign Law Office

Shin-Kasumigaseki Building
3-3-2 Kasumigaseki, Chiyoda-ku
Tokyo 100-0013, Japan

TEL       +81 3 6805 5161
FAX       +81 3 6805 5162

www.mueller-law.jp
info@mueller-law.jp

Changes to Malaysian Arbitration Law – An Overview

At the end of July, amendments to the Malaysian arbitration law were passed by Parliament (Arbitration (Amendment) Bill 2024). These are the most important changes:

• President of the Arbitration Court at AIAC: In the future, there will be an Arbitration Court at the AIAC, presided over by a President. The position of Director will be abolished. The President of the Arbitration Court will also take over the appointment of arbitrators according to the new arbitration law.

• Regulation of Litigation Funding: Litigation funding will be regulated in the future. It is now explicitly clarified that litigation funding is allowed in arbitration proceedings and related court proceedings. For companies operating in Malaysia, this means they will more easily obtain external capital to act as claimants in arbitration proceedings.

• Determination of the Law Applicable to the Arbitration Clause: When the law applicable to the arbitration clause is not specified, disputes often arise. These disputes are purely procedural in nature (i.e., they and can significantly extend the duration of arbitration proceedings. The Arbitration Amendment Act addresses this issue.If the seat of arbitration is Malaysia, this will no longer be an issue in the future, as the law of the seat of arbitration will apply in the absence of an agreement between the parties. This provides clarity and leads to more efficient proceedings.

• No Repetition of Arbitration Hearings Upon Early Departure of an Arbitrator . Previously, the arbitration law stipulated that an arbitration hearing did not need to be repeated only if an arbitrator other than the chairperson left early. This rule did not apply to chairpersons or sole arbitrators, so hearings had to be repeated in such cases. In the future, the arbitration court can decide what happens, so the hearing does not necessarily have to be repeated, regardless of which arbitrator leaves.

• Arbitral awards may be signed electronically: The Bill expressly allows for arbitral awards to be signed digitally (as per the Digital Signature Act 1997) and electronically (as per the Electronic Commerce Act 2006). This will significantly accelerate the execution of arbitral awards, in particular in those matters, where the arbitral tribunal is composed of persons who have their residence in different countries.

• Automatic recognition of arbitral awards: Currently, arbitral awards are only recognized as binding upon an application to the High Court. The Bill removes this requirement to make the recognition automatic. This applies both to arbitral awards, where the seat of arbitration was in Malaysia and arbitral award from other countries.

—

Your point of contact in Malaysia: Dr. Harald Sippel

Skrine

Level 8, Wisma UOA Damansara
50 Jalan Dungun, Damansara Heights
Kuala Lumpur, Malaysia

TEL        +60 1 8211 4958
FAX       +60 3 2081 3999

www.skrine.com
harald@skrine.com

Digitalisation of import processes in the Philippines

Administrative Order No. 23, issued on 13 May 2024, prepares the introduction of a ‘digital and integrative system for pre-border technical verification and cross-border electronic invoicing of all imported commodities’. This order serves to ensure that imported goods fulfil the relevant quality and safety standards and that this can be verified before they are imported into the Philippines. The regulation protects national security, consumer rights and environmental standards from substandard and dangerous imports.

In addition, a committee chaired by the Secretary of Finance (SOF) will be established to oversee the implementation of the system. In addition to the procurement of a cross-border electronic invoicing system, these tasks also include the authorisation of qualified third-party companies for the implementation of the system. The Bureau of Customs (BOC) is to introduce the system in three phases: First for agricultural products, then for health and safety related products and finally for goods susceptible to misdeclaration to avoid duties and taxes. The system of prior checking and cross-border invoicing should be fully operational within two years of the decree coming into force.

Shippers are advised to prepare early for the changes in the customs clearance procedure for the Philippines.

—

Your point of contact in the Philippines: Lutz Kaiser

Villanueva Gabionza & Dy Law Offices

20th/F Corporate Center
139 Valero St., Salcedo Village
Makati City 1227, Philippines

CELL      +63 995 985 4957
TEL        +63 2 8813 3351
FAX       +63 2 8816 6741

www.vgdlaw.ph
manila@adwa-law.com

Singapore and EU conclude negotiations on digital trade agreement (EUSDTA)

The European Commission and Singapore concluded talks on a new digital trade agreement on 25 July 2024.

The EUSDTA builds on the EU-Singapore Digital Partnership (EUSDP) signed on 1 February 2023, an overarching framework for all bilateral cooperation in the digital economy, as well as the Digital Trade Principles, which outline the scope of a possible Digital Trade Agreement and mark the first step towards the EUSDTA.

The EUSDTA will provide clarity and legal certainty for businesses and consumers on the rules governing digital trade between Singapore and the EU and strengthen digital connectivity and interoperability between these markets.

—

Your point of contact in Singapore: Dr. Andreas Respondek

Respondek & Fan Pte Ltd

1 North Bridge Road
#16-03 High Street Centre
Singapore 179094

CELL      +65 9751 0757
TEL        +65 6324 0060
FAX        +65 6324 0223

www.rflegal.com
respondek@rflegal.com

New Thai Visa Option: Eastern Economic Corridor Visa

The Thai cabinet has approved the Eastern Economic Corridor (“EEC Visa”), a new long-term visa designed for specialists, executives, professionals, and their dependents. This visa is intended to support the growth of key industries in Thailand including automation, robotics, aviation, logistics, and biochemicals.

This EEC Visa is intended to attract skilled professionals to the Eastern Economic Corridor, a special economic zone on Thailand's eastern coast. The EEC includes the provinces of Chachoengsao, Chonburi, and Rayong, all of which have been targeted for high-tech and industrial development.

Its ten-year validity (depending on the employment contract) allows for multiple entries and exits. Upon first entry, it grants a stay in Thailand of up to five years and includes a personal income tax rate of 17%. The visa scheme is divided into four categories i.e. EEC Visa “S” for Specialists, EEC Visa “E” for Executives, EEC Visa “P” for Professionals, and EEC Visa “O” for Others, such as spouses and dependents of the visa holder.

The fee for issuing or changing to an EEC Visa is THB 10,000 (ca. EUR 257) per person per year, while the EEC work permit application costs THB 20,000 (ca. EUR 514) per person.

—

Your point of contact in Thailand: Dr. Andreas Respondek

Respondek & Fan Ltd

United Center, 39th Floor, Suite 3904 B
323 Silom Road
Bangkok 10500, Thailand

CELL     +66 89 896 4048
TEL       +66 2 635 5498
FAX       +66 2 635 5499

www.rflegal.com
respondek@rflegal.com

Increase of Minimum Wages as of July 1, 2024

In Vietnam, there are two types of "minimum wages”: The "basic salary" applies to employment income paid in state owned enterprises as well as governmental agencies while the "regional minimum wage" applies to privately owned enterprises, including foreign-invested companies, and varies by geographical region in which the employer is situated.

Basic salary

Has been increased by 30% to 2,340,000 VND/month (approx. 85 EUR) effective as of July 1, 2024 (Decree 73/2024/ND-CP).

Regional Minimum Wages

The four regional minimum wages for employees in privately owned enterprises were raised by 6% as of July 1, 2024 (Decree 74/2024/ND-CP) to the following amounts:

Region I (e.g. inner-city districts of Ho Chi Minh City, Hanoi, Hai Phong): 4,960,000 VND/month (approx. 180 EUR)

Region II (e.g. outlying districts of Hanoi): 4,410,000 VND/month (approx. 160 EUR)

Region III (e.g. Sa Pa): 3,860,000 VND/month (approx. 140 EUR)

Region IV (all other localities): 3,450,000 VND/month (approx. 125 EUR)

Please do note that the actual remuneration paid to employees in industrialized provinces can be significantly higher and it is highly advisable to run a detailed check of the locally common “remuneration scheme” prior to determining the future location of your investment project in Vietnam.

Impact on Social, Health, and Unemployment Insurance Contributions

Since the basic salary is used to determine the cap applicable to social and health insurance contributions (20 times basic salary), this cap now increases to 46,800,000 VND (approx. 1,700 EUR).

The regional minimum wages must be considered when determining the maximum unemployment insurance contributions (20 times the respective regional minimum wage). Therefore, the increase in the regional minimum wage in cities like Ho Chi Minh City and Hanoi (Region I) results in a contribution assessment limit of 99,200,000 VND (approx. 3,605 EUR).

—

Your point of contact in Vietnam: Christian Brendel

Brendel & Associates Law Co., Ltd.

D&D Tower, 10th Floor
458 Nguyen Thi Minh Khai Ward 2, District 3
Ho-Chi-Minh-Stadt, Vietnam

CELL     +84 98 978 4791
TEL       +84 28 3911 2008
FAX       +84 28 3911 2010

www.brendel-associates.com
info@brendel-associates.com