Magazine
April 2000

Magazine Archive

US and WTO in showdown over FSCs

Despite EU complaints to the World Trade Organization being upheld, the debacle over alleged illegal exports subsidies being achieved by US foreign sales corporations looks no closer to resolution
Clinton aims to clear up shelters

The US budget plan for 2001 was announced in February. Big tax cuts are promised, partially offset by new revenue raisers but what is the true cost for taxpayers? Hal Hicks, Dave Benson and Margaret O’Connor of Ernst & Young, Washington DC sets out the planned changes
Reforms seek to reduce fiscal deficit

Argentina’s anticipated financial difficulties in 2000 have led the new government to turn to the tax system as a money-spinner. Taxpayers can expect to pay a heavy price. Lilian Falcón of PriceWaterhouseCoopers, Buenos Aires reports
Indian budget attacks dividends

Taxpayers’ worst fears of a harsh budget for the next year proved to be mostly unfounded. With the exception of a surprise doubling of the dividend distribution tax, nip and tuck seems the order of the day. By Prayaag Joshi and Ayesha Chandy of Arthur Andersen, Mumbai
Canada tries to stop migration

Canada’s federal budget attempts to balance the need to reduce excessive personal and business tax rates with the desire to increase government spending. But has it gone far enough to address the issue of tax migration? By Elinore Richardson of Stikeman Elliott, Montreal
Thin capitalization reform proposals
Federal budget 2000
New court decision on partnership issues
Intra-group trademark licensing
Recent tax developments
Tax treaty between Sweden and China
Multinationals stunned by severity of new UK regime

Proposals in the UK budget look like transforming the UK from one of the friendliest tax regimes for overseas investment to one of the least favourable of all major investor countries. By Bill Dodwell, Arthur Andersen, London
China offers VAT refund for purchase of equipment manufactured domestically

The PRC State Administration of Taxation has issued the Trial Measures for Tax Refund in Respect of Equipment Purchased by Foreign Investment Enterprises. Under the Trial Measures, a foreign investment enterprise (FIE) is eligible for a full refund of value-added tax (VAT) paid in respect of the purchase of equipment manufactured by enterprises situated in the PRC, if it has satisfied the following requirements:
Hong Kong budget steadies course but holds back surprises

Despite widely expected changes, the financial secretary, Donald Tsang Yam-Kuen, made no significant changes to Hong Kong's tax regime. Only three measures were announced: a reduction in the stamp duty on stock transactions (from 0.25% to 0.225%), an extension of the diesel duty concessionary rate, and an extension of exemptions for electronic vehicles.
Singapore budget shows more hopeful outlook

Finance minister Richard Hu announced a budget that drew on a more optimistic reading of the Asian economic climate. Principal changes included a reduction in the corporate tax rate from 26% to 25.5%. The two-year property tax rebate for commercial and industrial properties, announced in 1998 was extended until 2001 but at the lower rate of 25%.
UK climate tax spells trouble for steel industry

The UK steel industry is worried that government plans for a climate tax in 2001 could drive foreign investment out of the country. Although the tax was first announced in March 1999, industry protests forced the UK Treasury to slash the levy from £1.75 to £1 billion in November. But energy-intensive companies are lobbying for further reductions.
EU air fuel tax outrages industry

European finance ministers have agreed to discuss proposals for an air fuel tax on commercial aircraft. An ECOFIN (European Economic and Financial Affairs) council meeting on March 14 listened to European Commission (EC) plans for the tax, which would levy anything from 10-245 euros per 1000 litres of aviation fuel.
Slaughter acts in UK insurance deal

CGU and Norwich Union have agreed to merge in a £20 billion ($31.4 billion) deal, forming the UK's largest insurance company. The new firm, CGNU, predicts £250 million in annualized pre-tax cost savings within 18 months of the merger's completion.
Simpson Thacher advises on financial network deal

Global Crossing, the Bermuda telecommunications company, is to acquire IPC Communications and IXnet, both of whom provide networks for the financial community.
Quintus turns to Davis Polk

The Californian internet group Quintus Corporation is to buy the e-mail management company Mustang.com.
Covington & Burling coordinates software merger

The success of Computer Associates' $4 billion stock-for-stock acquisition of Sterling Software makes this the largest software deal ever.
Hogan & Hartson in French buy-out

The French advertising group Havas has bought the US company Snyder Communications for $2.1 billion. The deal is a stock transaction, with each Snyder share valued at $29.50. This latest acquisition makes Havas the fourth-largest advertising agency in the world.
Internet oldster opts for Fenwick & West

Network Solutions, one of the old guard of the internet sector, has been bought by VeriSign in a $21 billion stock swap deal. Network Solutions provides domain name registration and management. It is one of the few internet companies that actually manages to make a profit.
Cap Gemini acquires Ernst & Young management consulting arm

Ernst & Young used five law firms around the world in the sale of its global management consulting group to Cap Gemini. The sale still has to be approved by Ernst & Young partners, requiring a qualified majority of all partners and at least 75% of the management consulting group's partners to give their consent. The results should be known in April.
Northern Rock relies on Allen & Overy for £750 million mortgage securitization

Mortgage bank, Northern Rock, achieved the second phase of its planned £1.5 billion ($2.35 billion) mortgage securitization with a £750 million issue of floating rate notes.
Clear Channel turns to Akin Gump for stock merger with SFX communications

Out-of-home advertiser Clear Channel Communications has agreed a $4.4 billion stock merger with SFK Entertainment, a promoter, producer and venue operator for live entertainment.
Linklaters structures petrochemical deal

The UK petrochemical company BP Amoco has made a $4.7 billion offer for the chemical group Burmah Castrol.
Fiamma joins Allen & Overy

His move highlights a key element in the changing face of London law firms
Deloittes appoints e-business global leader

Deloitte & Touche has appointed Martin McClintock as its first global director of e-business tax. McClintock, who has been with the firm for 20 years, will move from his role as leader of international tax for north California, Hawaii and the Pacific Northwest.
Non-US firm first at New York State Bar

Freshfields' New York partner Robert Scarborough has been elected chair of the tax department at the New York State Bar Association (NYSBA). It is the first time that a non-US firm has provided the association's tax section with its chairman.
Matheson moves for tax team

Matheson Ormsby Prentice has boosted its tax department by bringing in four new associates.
Germany draft threatens heavy burden

The German draft transfer pricing documentation and APA regulations focus attention on the procedural elements of compliance. The rules, if adopted represent a significant documentation burden. By Thomas Borstell and Ludger Wellens, Ernst & Young, Düsseldorf
Vodafone Mannesmann tests EU law

Vodafone AirTouch/Mannesmann deal are reviewed by Conor Hurley and Andrew Beverley from Linklaters, and Lynne Patmore, group tax director at Vodafone AirTouch
UK updates three-way split

The UK does not have a single thin capitalization code, but recent additions to the tax rules significantly change the regime. David Hughes of Allen & Overy, London evaluates the three techniques used by the UK to combat thin capitalization
IRS moves against tax products

The US Treasury is out to get tax products and is increasing its demands for disclosure as a deterrent against their use. Further moves will soon follow, as Keith Martin of Chadbourne & Parke LLP, Washington DC explains