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Mexico is not just one of the most attractive investment locations in Latin America, but one of the best investment locations all around the globe, argue Yazmin Cáceres, David Cuellar, and César Salagaray of PwC.

As a result of recently introduced temporary provisions concerning trapped profits, Yaron Kafri and Doron Mutai of Ernst & Young Israel address some of the main tax considerations relating to the acquisition of Israeli companies that have benefitted from the capital incentives legislation.

Sumeet Khurana of Lakshmikumaran & Sridharan looks at the proposed changes in Finance Bill 2013 to alter the entire tax regime for the buy back of shares and the negative consequences they will have for taxpayers.

The world's M&A market remains as chaotic as ever. That is not to say it is all bad news for deal makers. Big money transactions, such as the proposed $24 billion Dell buyout, the $23 billion Heinz acquisition by an investor group led by Warren Buffett's Berkshire Hathaway, and, though it has met some official resistance, Anheuser-Busch InBev's $20 billion takeover of Mexican brewer Grupo Modelo, suggest the market is slowly beginning to pick up in North America.

Hans Grimbergen and Ivo Middelink of Ernst & Young Belastingadviseurs argue that the Dutch secretary of state has not gone far enough in overhauling the tax treatment of interest on acquisition debt and look at the various tax aspects of M&A which are causing problems in the Netherlands.

The IRS has released statistics on transfer pricing cases for the calendar year 2012 – the first since the formation of the joint advance pricing and mutual agreement (APMA) programme. The figures signal growing taxpayer confidence in the restructured programme.

BMR Advisors in India, part of the Taxand network, has promoted Sanjiv Malhotra as partner. Malhotra specialises in transfer pricing and operates out of the firm's New Delhi/Gurgaon oggice.

Canada’s 2013 budget included significant changes to cross-border taxation, including the broadening of the country’s thin capitalisation rules.

Yu Tao Jobst Wilmanns Captive financing entities and other vehicles for centralising a group's funding arrangements have long been objects of suspicion for the tax auditors. However the scope for negative findings is being progressively curtailed. The 2008 Annual Tax Act effectively disallowed loan losses on intra-group finance and the interest limitation (basically to 30% of EBITDA) of 2009 significantly reduced the scope for withdrawing profits through financing charges. On the other hand, Cadbury Schweppes (ECJ case C-196/04 of September 12, 2006) now prevents a tax auditor from declaring an EU group financing centre abusive, merely because it enjoys a favourable tax regime. The tax authority's attention is now increasingly directed at the interest rate, an area unbounded by hard and fast rules. The interest rate must be at arm's length. Arm's length is undefined, but should lie somewhere between the borrowing and lending rate typically on offer from banks. Third-party comparisons often assume there to be little or no loan risk, not least in reflection of the free-of-charge "group backing" featuring in the transfer pricing rules. This, though, has prompted an intention of changing towards rating a borrower within a group at the group rating rather than on its own financial standing. Unfortunately, attempts to reach a consensus on a rating formula have all foundered on the unanswered question of a parent's ability to strip a subsidiary of assets, and thus to shift the credit risk, at will. The same problem is also felt by members of international cash pools. Frequently, many still take a broad approach of basing the pool interest rates on EONIA or EURIBOR with a discount or premium of, say 20 or 30 basis points to cover the cost of running the pool. However, tax auditors are ever more searching in their demand to know which entity takes the risk and to impute income or disallow expense accordingly.

Thomas Schänzle Christian Birker Parliament has recently enacted a number of important changes to the German tax group (Organschaft) regime. Some of the changes are welcome, particularly those easing and clarifying the formal requirements for Organschaft recognition, but others are problematic. The main instance of this latter are the dual consolidation loss (DCL) rules which now apply not only to the Organschaft parent but, with effect for all open cases, to each and every member. The intention is to combat perceived double-dip arrangements. Under the new wording, a loss of an Organschaft parent or subsidiary is to be disregarded (without carryforward) for German tax purposes to the extent it is taken into account under a foreign tax regime applied to the controlling entity, the controlled entity or any other related or unrelated party. Despite intense debate, there is still uncertainty as to the impact of these new provisions, in particular whether they apply to a German partnership as an Organschaft parent and as to the exact meaning of "losses taken into account" under a foreign tax regime. Apart from interpretive issues raised by the rule's clumsy wording, its retroactive effect probably violates constitutional law. Its conformity with European law is also questionable.