Dbriefs Bytes

25 October 2013

Dbriefs Bytes brings you a weekly summary of the significant international tax developments impacting Asia Pacific. This video is broadcast every Friday afternoon. Stay tuned!

Dbriefs Bytes is presented by Steve Towers, Asia Pacific Leader - International Tax. Our next Dbriefs Bytes will be broadcast on 1 November.

1. Cases

Thailand: Thai Tank Terminal

  • Supreme Court
  • Monthly fixed fee under Offshore Services Agreement with Dutch parent: royalty or service fee?
  • Court held the fee to be a service fee, because
    • Services were actually performed
    • Any information provided was not confidential
    • Know-how was separately provided (and remunerated) in another contract

Thailand: Philips Electronics

  • Supreme Court
  • Variable fee (0.5% of sales) under Marketing Services Agreement with Dutch parent: royalty or service fee?
  • Court held the fee to be a royalty, because
    • Items to be provided were confidential trade secrets
    • No significant marketing services (activities) were performed

Thailand: Esso Thailand

  • Supreme Court
  • Master Services Agreement with Belgian affiliate
  • Allocation of costs in respect of group’s accounting system: royalty or service fee?
  • Costs were software license fees paid to external vendor
  • Belgian affiliate was not a licensee or sub-licensee
  • Court held the cost allocation payments to be royalties
  • Possible reasons
    • Look-through approach: the cost allocation payments can be traced to software license fees, and such fees are regarded (in Thailand) as royalties
    • Default approach: Belgian affiliate did not provide services to the Thai company (because it was not a licensee or sub-licensee) and the default characterization is "royalties"

For information: Wanna Suteerapornchai (Bangkok) or Darika Soponawat (Bangkok)

2. UN

  • UN Committee of Tax Experts: annual meeting this week
  • For papers presented at the meeting, click here


  • OECD: Agenda for transfer pricing (TP) consultation on 12 and 13 November 2013
    • Packed agenda
      • Intangibles
      • TP documentation, including country-by-country reporting
      • BEPS: other TP topics
  • OECD: PE avoidance request
    • Focus Group on BEPS Action 7 has requested descriptions of PE avoidance strategies
    • Suggests that Action 7 will not be restricted to commissionaire structures and the use of Article 5(4) exceptions

4. In brief

  • Vietnam / Serbia treaty enters into force
  • India: Shell and Vodafone joint case (issuing shares at undervalue)
    • Hearing this week in Bombay High Court
    • For information: Vipul Jhaveri (Mumbai)
  • Korea
    • Public ruling in regard to characterization of "Johap"
    • For information: Gyung Ho Kim (Seoul)
  • Malaysia: Budget on 25 October 2013

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