Tax advisors, accountants, auditors, lawyers in Taipei
Ecovis Taiwan has been in the field of auditing, accounting, tax and consulting for more than 20 years. We have gained a wide range of experiences from serving thousands of clients including both locally setup and foreign invested entities across a broad range of industries.
The Impact of COVID-19 on Contracts and Force Majeure
The COVID pandemic has a significant impact on the performance of contracts between parties. Therefore, clauses stating that a party does not have to perform a contract in the event of force majeure are necessary in both Polish and English law.
Polish civil law does not define force majeure. However, it provides for legal instruments that allow one of the parties to modify the contract under extraordinary circumstances that make the performance of the contract impossible, or too expensive to be economically viable.
These instruments are:
Clausula rebus sic stantibus (Latin: “things thus standing”). The legal doctrine allowing for a contract or a treaty to become inapplicable because of a fundamental change of circumstances.
An inability to perform the contractual obligations.
The first of these means that in case of an extraordinary change in circumstances that the parties had not foreseen while entering into the contract, but which results in the further performance of an obligation being unreasonably burdensome, or would lead to a material loss, the affected party may request the revision or termination of the contract. The weakness of this instrument is that the revision or termination must be applied for in court, which may lead to a situation where the affected party may already have incurred an irreparable loss before the court ruling.
We will support you if you have to cancel or change a contract due to the COVID pandemic. Nikodem Multan, Attorney at law, Partner, ECOVIS LEGAL POLAND PRUŚ AND PARTNERS LAW FIRM, Warsaw, Poland
Under the second instrument, if a contractual obligation becomes objectively impossible, then the obligation will expire. This applies only to extraordinary situations where the performance of an obligation is impossible, and thus this solution is rarely available in issues caused by the COVID pandemic.
Consequently, the Ecovis advisers in Poland recommend that the only effective solution is a precise contractual clause that provides for such situations and forces the parties to modify the contract.
English law is quite different; it is not based on a civil code. There are no consistent rules for what happens on events outside the parties’ control, nor on impossibility.
The ideas in English law which are most comparable are:
Frustration: A contract may be discharged when something occurs which renders it impossible or radically different from that agreed.
Impossibility: A party may be excused by a court if the contract becomes impossible.
Neither option is helpful; the contract will not be undone as if it had never existed or terminated in full. Instead, accrued rights survive and although money paid can be recovered, money due but not paid ceases to be payable and the court may allow recovery of expenses incurred and a “just” payment for any benefit gained.
Only enter into contracts with explicit clauses on force majeure. We would be happy to advise you. Mark Lucas, Lawyer, Moore Barlow LLP – Member of ECOVIS International, Guildford, Surrey
This is too much uncertainty. Well-advised parties use contracts with explicit force majeure clauses. These typically:
excuse one or both parties from performance (and liability) on force majeure
define force majeure as events outside a party’s reasonable control
give non-exhaustive examples
contain duties to notify, to mitigate the consequences and to discuss and agree a preferred outcome
allow the parties to suspend the contract to allow such discussions
ultimately, allow the affected party to terminate
contain clear and agreed consequences of termination.
Neither Brexit nor COVID-19 has caused any cases which have caused us to think again about the law on force majeure. We have seen lots of disputes where parties disagree about the effect of COVID-19 on their contracts (typically contracts for events and conferences). All have been settled by agreement. We are not aware of any cases which are likely to change the law, say the legal experts from the UK.
For further information please contact:
Nikodem Multan, Attorney at law, Partner, ECOVIS LEGAL POLAND PRUŚ AND PARTNERS LAW FIRM, Warsaw, Poland
Payroll in Singapore: Common Non-compliance HR Matters
Are you aware of the following?
Under the Skills Development Levy (SDL) Act, employers are required to pay SDL, at different contribution rates, for every employee they hire. This applies to all permanent, casual, part-time, temporary or foreign employees rendering their services wholly or partly in Singapore.
Bonuses are considered additional wages (AW) and the amount of AW for the year which attracts CPF contributions is subject to an annual AW ceiling.
With effect from 1 April 2016, employers must issue written key employment terms and itemised pay slips to employees covered under the Employment Act. Failure to comply will attract penalties.
CPF (Central Provident Fund) contribution rates are lower for Singapore Permanent Resident (SPR) employees who are in their first or second year of obtaining SPR status. Employers should apply the correct CPF contribution rates for their SPR employees.
Allowances, commission, bonus, overtime and incentive payments are also subject to CPF contribution. We need to determine whether they are classified as ordinary wages (OW) or AW and apply the correct formulae. The amount of AW for the year which attracts CPF contributions is subject to an annual AW ceiling.
Overpayment or underpayment of CPF contributions may arise due to application of the wrong formula. As an example, for a salary of SGD 4,000 and bonus of SGD 4,000, the correct CPF contribution should be based on total wages of SGD 8,000 and not capped at OW of SGD 6,000.
Benefits-in-kind are generally taxable and need to be included in Form IR8A. For example, service excellence awards (cash or non-cash) granted to an employee in recognition of his/her good service is not taxable if the value of the benefit does not exceed SGD 200. However, if the award exceeds the exemption threshold of SGD 200, the entire value is taxable.
How can we assist you?
We guide our clients to ensure they are compliant with the latest regulations. We offer comprehensive HR and payroll services to suit the needs of our clients. Regardless of the size of your company, you can expect:
High quality and professional advice from our dedicated HR & Payroll Department.
Accurate and timely payroll services to relieve our clients from any hassle and give them peace of mind to focus on growing their businesses.
We can also offer digital HR and payroll solutions to facilitate our clients’ needs for electronic approval of leave and expense claim submissions.
About Ecovis Bizcorp
Ecovis Bizcorp offers a well-rounded suite of statutory compliance services in Singapore. As a member company of Ecovis International, we share our network’s vision of providing value-for-money services to our clients by assisting in their company set-up, corporate secretarial, accounting, tax compliance, as well as HR and payroll outsourcing needs.
Doing Business in Australia: Establishing a Local Company isn’t the Only Solution…
We are often contacted by our Ecovis international network offices asking if we can set up a company for their local clients who are planning to do business with Australia. While we are more than happy to do this, the client may be able to do business with Australia without the need for a company.
Depending on the precise facts of each case, there are simper solutions available.
Some common situations are:
A client has just won a supply contract with an Australian customer.
A client has already started supplying goods to Australia.
A client has sent staff to work on a project in Australia.
What Are the Facts?
Of course, before we can determine the best approach to the situation, we must understand the facts, including:
scope and nature of the supplies being made;
estimated revenue to be generated;
are the supplies tangible or intangible?;
will they be made from inside or outside Australia?;
how will the supplies be delivered and what is the contractual/ownership flow via the supply chain from non-resident to local customer?;
will the supply involve any assembly or other physical work being undertaken in Australia?
will local agents, contractors and/or employees be involved?
Based on the answers, we begin to form a picture of how connected the supplies are with Australia, and the degree of any footprint the supplier could have in Australia.
In many cases we find that the non-resident client will have no involvement ‘on the ground’ in Australia and as such may not need to set up a company, but may simply need to be registered for the Goods and Services Tax (GST).
Registering for the GST will enable the non-resident client to be the importer of the goods (if required under their supply contract), pay GST and customs duty all at the point of importation (typically facilitated by a Customs Agent or 3PL contractor) and in some cases claim credits for any GST they have paid on local costs incurred in the process.
GST Registration in Australia: The Options
The Australian Taxation Office (ATO) offers three options for GST registration for non-resident entities, depending on the nature of the activities “connected” with Australia:
“Simplified GST Registration” for non-residents who are eligible and want to register electronically, report and pay quickly and easily. This typically applies to non-resident businesses that sell ‘low-value’ goods online (<$1k) into Australia and are liable for GST on such supplies (since 1 July 2018). They get an ATO Registration Number (ARN) instead of an Australian Business Number (ABN) and cannot claim GST credits.
“Claim-Only GST Registration” for non-residents with an enterprise outside Australia who are not entitled to an ABN (as they are not carrying on an enterprise in Australia), do not make supplies connected with Australia, but want to claim GST credits. This typically applies to non-resident businesses that are not making supplies into Australia but have acquired goods/services from Australia and have been charged GST that they want to recover. They get a GST Registration No. instead of an ABN.
“Standard GST Registration” for non-residents who make supplies connected with Australia, issue tax invoices, and want to claim GST credits. This typically applies to non-resident businesses that are making regular taxable supplies of goods in connection with Australia, and as such have a liability to remit GST to the ATO, but also acquire taxable supplies (‘creditable acquisitions”) for which they want to recover GST credits. They get an ABN.
We can help determine the most appropriate option and then help apply and secure the necessary registration.
Setting up a Company in Australia: When is this Required?
Notwithstanding the above, in some cases a company may be required. For example:
The client chooses to establish a local entity because it suits their overall business plans.
The client is required to have a local entity under a supply contract they have won.
The client wants to employ local staff to help fulfil its business plans.
A company can normally be set up within a day, however with non-resident shareholders and directors it is likely to take several weeks, as original certified proof of identity (POI) documents must be sent over from the home jurisdiction. Further, a local resident director (RD) must be nominated: this is a mandatory condition for an Australian company.
Local Resident Director in Australia
If the company needs to be established urgently, before a local RD has been arranged, ECOVIS Clark Jacobs can step into that role on a short or long term basis.
Perhaps the client has identified Sa head-office employee to relocate to Australia to run the new business, and take on the RD role, but this will not occur for several months due to logistics, visas, etc. In the interim, a nominee RD must be in place from the date the company is established.
In this context ECOVIS Clark Jacobs is happy to provide RD services on a monthly basis until such time as the designate person arrives in Australia, or an alternative is recruited.
This flexibility provides the client with key benefits:
It can set up the company immediately.
It is covered if a relocating employee is delayed.
It is covered if recruitment of a local employee/director takes longer than expected.
Cutting Through the Red Tape
When we provide RD services to our clients, not only do we tick a critical box in terms of the law, we also offer the ability to establish your business in an efficient and streamlined manner, minimising your exposure to the many time-consuming pitfalls and road-blocks that often arise for the uninitiated.
However, it is not only in the initial establishment of a company that this is true, but in the subsequent ‘bedding down’ and even ongoing activities, that further issues may arise.
Indeed, once a company has been registered with the Australian Securities and Investment Commission (ASIC) and then for various tax and related requirements of the Australian Taxation Office (ATO) and the Office of State Revenue (OSR), there are typically several other needs that must be met to enable the business to actually commence operations.
Our local knowledge, experience and crucially our network, all enable us to quickly find the best fit for your specific needs.
The most common of these include:
Establishing a banking relationship (and a bank account).
Establishing relationships with lawyers (e.g: to assist with local contracts), immigration agents (eg: to assist with visas for key staff) and other consultants, with specific language skills if needed.
Liaising with recruiters, HR advisers, real-estate agents, etc.
Ultimately, ECOVIS Clark Jacobs can provide a practical solution tailored to the client’s specific circumstances.