The ASEAN Economic Community - The way forward | KPMG | SG

The ASEAN Economic Community

The ASEAN Economic Community

The way forward

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The ASEAN Economic Community

The ASEAN Economic Community (AEC) was formally launched on 31 December 2015, marking ASEAN’s further consolidation since its creation in 1967. This is a major milestone in the regional economic integration agenda in ASEAN.

At the 27th ASEAN Summit in Kuala Lumpur, the ASEAN Leaders also simultaneously endorsed the AEC Blueprint 2025 that provides broad strategic directions for the AEC from 2016 to 2025. Building on the 2015 blueprint, AEC Blueprint 2025 consists of five interrelated and mutually reinforcing characteristics, namely:

(i) A highly integrated and cohesive economy
(ii) A competitive, innovative, and dynamic ASEAN
(iii) Enhanced connectivity and sectoral cooperation
(iv) A resilient, inclusive, people oriented, and people-centered ASEAN
(v) A global ASEAN

With an ASEAN single market in goods and services, taxation becomes one of the policy tools still available for national governments to compete for investment. An intriguing element recently added to the 2025 Blueprint is a commitment to “discuss measures to address the issue of base erosion and profit shifting to ensure fiscal health”. By including this statement in the AEC Blueprint 2025, the ASEAN tax administrations are opening a door to future discussions about the potentially detrimental effects of tax competition within the region.

Going forward, clearer and closer monitoring of progress and identification of challenges faced by the ASEAN member states in the implementation of the various AEC initiatives will be critical in continual engagement with businesses and reinforcement of the AEC attractiveness for business investments.

 

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