Why Tax Is A Challenge In Asia

March 26, 2013 - PRLog -- Asia Pacific is often taken and managed as a whole region by most of multinational companies. Accordingly, human resource policies and even external sales incentives for dealers and channel partners are also expected to be
uniform as part of a global HR or channel strategy.
The one-approach to all countries often leads to issues as the amount of taxation, custom duties to be paid in each country varies in each country and is at times unpredictable when rewards are delivered across borders. The amount of taxation to be paid can also be substantial relative to the value of the rewards.

TAXATION, CUSTOM DUTIES AND DELIVERY CHARGES – CASE STUDY ONE

For three similar programs for two large IT services and product companies, due to the unique nature of the awards in each country and the requirements of the client – they were stocked and shipped directly from a single hub in Asia.
Custom duties and taxation amounted to 45% of the overall awards budget, as opposed to delivery from a local source in-country – which averages 5-11% in most Asian countries. Determining and confirming the actual costs of customs and taxation also took up to three months after the conclusion of the program, due to the lag in the claims for the taxes. This is a problem for most program implementers – having customs and taxes not exactly determined and invoiced for each fiscal quarter.
When planning performance improvement programs, taxation and custom duties need to be budgeted early into the program. The method of budgeting and fulfillment has to one that ensures adequate funds to pay for each quarter’s rewards and associated taxes, as well as not under-budgeting to avoid under-utilization.

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