International Tax updates for Australia, Bangladesh, Pakistan, Singapore and US

Australia: Treasury launches consultation on CGT changes for foreign resident

On 23 July 2024, the Australian Treasury released the following documents:

• A consultation paper titled “Strengthening the foreign resident capital gains tax regime,” which was open for consultation until 20 August 2024; and
• Exposure draft legislation titled “Improving the foreign resident capital gains withholding tax regime.”

The paper follows the government’s announcement in the 2024-25 Budget to broaden the application of the Capital Gains Tax (CGT) regime to foreign residents.

Generally, a capital gain made by a non-resident is disregarded except where the relevant asset is classified as “taxable Australian property.” This includes Taxable Australian Real Property (TARP) and certain shares, as well as other interests in entities that own TARP, referred to as Indirect Australian Real Property Interests (IARPI).

Three complementary elements which apply to CGT events on or after 1 July 2025:

• Clarifying and broadening the types of assets to which foreign residents are subject to CGT;
• Amending the IARPI point-in-time Principal Asset Test (PAT) to a 365-day look-back testing period; and
• Requiring foreign residents disposing of shares and other membership interests exceeding AUD20 million in value to notify the Australian Taxation Office (ATO).
   

Bangladesh: Budget 2024-25 and the Finance Bill 2024

The Bangladesh Budget 2024-25, presented on 6 June 2024, introduces key tax changes, including a 15% capital gains tax on listed securities, which is significant for Foreign Institutional Investors (FIIs).

Other proposals include:

• Extending the income tax return filing deadline by one month, at the National Board of Revenue;
• Reducing interest on late filings from 4% to 2%; and
• Clarifying that while losses from income subject to minimum tax rates could not be carried forward, non-residents are now allowed to carry forward and offset these losses.

More information on the key tax changes and updates proposed in the Finance Bill 2024 can be found here.
 

Pakistan Finance Bill 2024-25: Capital gain tax on listed securities

On 12 June 2024, Pakistan's government presented the Finance Bill for 2024-25. Effective on 1 July 2024, the bill proposes a 15% capital gains tax on securities for Active Taxpayers List (ATL) members, with higher rates for non-ATL investors (29%).

ATL investors who file late returns may face increased tax rates. Super tax rates remain unchanged and continue to apply to incomes exceeding PKR150 million.
 

Singapore: Guidance and amendments issued for funds on new tax regime for foreign-sourced disposal gains.

The Singapore Budget 2024 introduced significant corporate tax reforms and changes to tax incentive schemes.

On 4 April 2024, the Monetary Authority of Singapore (MAS) issued a circular detailing how Singapore-based fund managers can meet economic substance requirements under the new tax regime for foreign-sourced disposal gains. The circular outlines operational scenarios and their tax implications.

On 10 June 2024, the Ministry of Finance (MOF) issued the draft Income Tax (Amendment) Bill 2024 for public consultation, focusing on refining and implementing these changes. Key amendments include exemptions for income from funds managed by Singapore-based fund managers. The bill is expected to be presented to Parliament by the end of 2024.
 

United States: Impact of section 987 on investment management/global funds and real estate

Deloitte US has released a guide that discusses the implications for taxpayers of the proposed regulations under section 987 of the Internal Revenue Code, released in November 2023.

Section 987 generally applies to “tax owners” of a pass-through qualified business unit with a different functional currency than that of the tax owner. The proposed regulations would bring funds and real estate investment trusts under a new set of rules for Section 987.

For more information, please consult this page here.