A report by Deloitte shows that in two of the main Asia region economies - India and China - the complexity of tax is getting worse, while in Singapore and Hong Kong, the picture is more stable.

It pays to be predictable when it comes to tax – a point that jurisdictions all too often forget in regions such as Asia where complexity can be a major business headache, a study by Deloitte, the global professional services firm, has found. Singapore ranks highly for having a simple system, while India and China get poor marks.

Deloitte this week released the third edition of its Asia-Pacific Tax Complexity Survey report. It surveyed more than 300 financial and tax executives on their views of the current and anticipated tax environment of 20 jurisdictions across Asia Pacific. The survey showed that for the region as a whole, 35 per cent of respondents said tax had become more complex over the past three years, with only around 3 per cent saying they had become simpler. In Singapore, 20 per cent said they had become more complex over the period; in Hong Kong, 15 per cent of respondents said they had got more complicated. In Hong Kong’s and Singapore’s case, the majority of respondents saw little change in complexity. By contrast, in India, about 63 per cent of respondents said taxes had become more complex; in China, some 66 per cent took the same view.

In the uncertain tax landscape, tax regimes remain complex and predictability and consistency is elusive. This is especially the case in China and India, who have the most complicated requirements of all jurisdictions in the region.

Companies see that the largest developing economies - China, India and Indonesia - still have much progress to make before they can meet investors' expectations in this regard. Japan, Australia, Indonesia and South Korea also rank highly in terms of tax complexity. In contrast, Hong Kong, Singapore, Macau and Mauritius have the simplest requirements, the report found.

In 2010, complexity was the most important factor for surveyed tax executives in the region, and in 2014, consistency was most important. 

“As tax regimes have matured, tax complexity has improved and corporates now seek tax predictability to ensure smooth tax management. There is currently a general climate of uncertainty where governments are trying to balance the tension between creating an environment that attracts investment whilst at the same time protecting their tax bases and raising needed tax revenues, which could also be contributing to a sense of unpredictability in regional tax regimes,” Alan Tsoi, deputy regional managing director and tax and legal leader, Deloitte Asia-Pacific, said.

Tsoi’s colleague, said Pauline Zhang, vice chairman, tax partner, Deloitte China, added: “Some of the reforms needed to improve tax predictability and consistency include improving the training of tax officials and increasing public consultation on tax policy. However, there is added complication with the implementation of OECD's Base Erosion Profit Shift (BEPS) Actions taking place at the moment, with governments in many countries updating existing rules and developing new rules. Companies that trade or invest in the countries along the "One Belt One Road" will need to pay extra attention in this regard.