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IRS information reporting councils; FATCA compliance; German investment fund taxation to align with AIFMD; Netherlands’ call for international action against tax avoidance; Australian carbon tax; UK VAT cut; Russian tax disputes; CRA on TEI audit targets

TYPE OF DEAL VALUE ACQUIRER TARGET ADVISER TO ACQUIRER (TAX) ADVISER TO TARGET (TAX) Acquisition $3.22 billion Kinder Morgan Copano Energy Weil, Gotshal & Manges / Bracewell & Giuliani Wachtell, Lipton, Rosen & Katz - Joshua Holmes Acquisition $2 billion MetLife AFP Provida Skadden Arps Slate Meagher & Flom Sullivan & Cromwell - Ronald Creamer Acquisition $1.5 billion Scientific Games WMS Cleary Gottlieb Steen & Hamilton Skadden, Arps, Slate, Meagher & Flom / Blank Rome Merger $1.36 billion JSW Steel JSW ISPAT Steel Amarchand Mangaldas Amarchand Mangaldas Acquisition $872 million Annaly Capital CreXus Investment K&L Gates Goodwin Procter Acquisition $701.7 million The Straits Trading Company WBL Corporation Allen & Gledhill WongPartnership Acquisition $500 million CCL Industries Avery Dennison Latham & Watkins - Laurence Stein Acquisition $161.9 million Actian Pervasive Software Gibson, Dunn & Crutcher Acquisition $96 million Adcock Ingram Cosme Farma Laboratories Amarchand Mangaldas Desai & Diwanji / Ernst & Young Acquisition Undisclosed Solera Holdings HyperQuest Fenwick & West TYPE OF DEAL VALUE ISSUER / BORROWER LEAD MANAGERS / ARRANGERS ADVISER TO ISSUER / BORROWER ADVISER TO LEAD MANAGERS Medium Term Note Programme $5 billion ICICI Bank ANZ / HSBC / Standard Chartered / Deutsche Bank Amarchand Mangaldas / Al Tamimi & Company Latham & Watkins / Homburger Concurrent Guaranteed Senior Bond Offerings $2 billion Sumitomo Mitsui Goldman Sachs / Citigroup / Barclays / J.P. Morgan / SMBC Nikko Davis Polk & Wardwell - John Paton Notes Offering $1 billion General Mills Credit Suisse / Deutsche Bank / J.P. Morgan Dorsey & Whitney Davis Polk & Wardwell - Lucy Farr Notes Offering $600 million Mohawk Industries Barclays / J.P. Morgan / Merrill Lynch / SunTrust Robinson Humphrey / Wells Fargo Alston & Bird Davis Polk & Wardwell - Samuel Dimon Notes Offering $500 million Korea Development Bank Barclays / Daiwa Capital / Goldman Sachs / HSBC / KDB / Merrill Lynch / UBS Cleary Gottlieb Steen & Hamilton / Jipyong & Jisung Davis Polk & Wardwell - John Paton Convertible Senior Notes Offering $350 million Auxilium Pharmaceuticals Goldman Sachs / J.P. Morgan Morgan, Lewis & Bockius / Ropes & Gray Davis Polk & Wardwell - Michael Farber SEC-Registered Offering $271 million Molycorp Morgan Stanley / J.P. Morgan / Goldman Sachs Jones Day Davis Polk & Wardwell - Rachel Kleinberg

Nils von Koch of KPMG explains how taxpayers can deal with the stricter approach to deduction of interest in Sweden.

Round two of the UK Parliament’s Public Accounts Committee (PAC) hearing on tax avoidance saw Margaret Hodge MP land a number of damaging blows on tax leaders of the Big 4 accountancy firms, but few preconceived opinions will have changed on either side of this polarised debate.

Gordana Vucenovic On December 15 2012, the Serbian Parliament officially adopted the amendments to the Corporate Income Tax Law as a part of the fiscal consolidation measures which aim to decrease the budget deficit of Serbia. Believing that the new changes might significantly influence the current business principles in Serbia, we outlined the most important changes below: The corporate income tax (CIT) rate is increased from 10% to 15%. The deadline for submission of annual tax returns is extended to 180 days, as of the end of the tax year. If the legal entity has suffered statutory changes, bankruptcy and liquidation, that deadline is 30 days from the deadline for submission of the financial statements. For the first time the category of tax haven jurisdictions is introduced, and the list of the jurisdictions considered tax heavens will be issued by the Ministry of Finance. The withholding tax on services is introduced, and the legal entities in Serbia will be obliged to withhold the general rate of 20% for services provided to the non-residents except when the recipient of income is the resident of a tax haven, where the withholding tax will be 25%. The threshold for deductibility of marketing expenses is increased from 5% to 10% of the total revenue. To qualify for large tax credits minimum investments in fixed assets is increased from RSD800 million ($9.4 million) to RSD1 billion provided that minimum of 200 new (instead of the previous 100) persons are employed for an indefinite period on full time base. The shareholding participation in non-resident subsidiary, for qualifying the legal entity to apply for tax credit, is decreased from 25% to 10%. To be considered as related party the percentage of participation in capital or voting rights is decreased from 50% to 25%. The projection of the Ministry of Finance of Serbia is that the amendments of the VAT Law, followed by other measures relating to the rebalancing of the budget would decrease the budget deficit from 7.1% to 6.7% in the year end 2012, and by the end of 2013, the budget defecit is expected to be decreased to 4%.

Zuzana Slavikova In Bratislava, on December 6 2012, OECD Secretary General Angel Gurria said: "The Slovak Republic has one of the highest growth rates in the OECD and is seen as an attractive environment for foreign investment". While remaining one of the strongest in the eurozone, because of substantial investments, primarily in the automotive sector, the economy has slowed, because of reduced demand and weakened investor confidence. Growth is projected at 2% in 2013 and 3.4% in 2014, down from previous years. The announcement accompanied and OECD economic survey Economic Survey of the Slovak Republic. The report stated that the Slovak Republic is weathering well the storm that has struck its main European trading partners. However, it cited a number of challenges going forward in restoring public finances while reducing unemployment and developing programmes for long-term inclusive growth. Three priority areas for action were identified: Strengthening the fiscal framework; Reduceing unemployment while introducing effective labour market policies increasing the efficiency and scale of the public employment system and investing in people's skills; and Boosting education, raising the quality of teaching and allocating more resources to support disadvantaged pupils. Slovakia's new government (led by Robert Fico who took office on April 4 2012) has adopted several measures to directly or indirectly reduce the public debt. One of these measures is, an extraordinary levy on banks (an additional 0.1% of the respective basis to the already existing 0.4% bank levy) and on 10 regulated industries (the rate being 0.00363% applicable on energy businesses, insurance, public health insurance, pharmacy, postal services, railway and airplane transport, electronic communication) introduced this past summer. The government has also recently approved legislation to replace the previous flat rate of tax (19%) with a corporate tax rate of 23% and a progressive individual tax capped at 25% in 2013. While recognising the economic results of these initiatives and the impact of the new increased social security tax on redistribution in the tax system, the report also recommended that the structure of taxation could be made less harmful to growth, notably by focusing on property, consumption and environmental taxes and lowering taxes on low wages. The efficiency of the tax system could also be improved by combating tax evasion further and unifying tax collection.

Evgeny Timofeev It has been three years since the Supreme Arbitration Court delivered its ruling in the Dirol Cadbury case hinting that bonuses payable to purchasers based on the volume of sales were in effect nothing else than discounts applied retroactively thus affecting the suppliers' sales for VAT purposes. Too bad most (including the Ministry of Finance and the Federal Tax Service) would not listen. If they would, the wholesale leg across most industries would not now be in such a dramatic no way out type situation. The fact that the legislator introduced special VAT treatment for retro changes in price was equally ignored by the industries – even though the government specifically noted bonuses as the target of the amendments when presenting these to Parliament. The new instrument introduced for dealing with such price changes – the corrective VAT invoices – was considered strange and burdensome but most would not bother – still considering bonuses VAT neutral (for no reason at all).

There has been a significant rise in controversy around the world in recent years centred on the topic of the beneficial owner test which appears in the dividends, interest and royalties articles of most double tax treaties. Richard Collier, of PwC, explores the work of the OECD in this area to date and what the future holds, calling for greater clarity on the concept.

Thuan Pham The normal practice in international transportation is to consider a bill of lading (B/L) as evidence of a contract between the shipper and the transporter. This is not necessarily the case in Vietnam, however. It is a crucial issue, as companies can qualify for a zero VAT rate on the provision of international transportation services if they can provide the following documentation: A transportation contract; and Evidence that the payment was made via a bank. Qualifying for the zero VAT rate gives a company the right to credit the input VAT from the purchase of goods or services associated with the transportation activities. If the VAT taxpayer fails to meet the criteria to qualify for the zero VAT rate, then they do not have to declare output VAT, but they are not allowed to credit the associated input VAT.

The French government has placed a new limitation on the deduction of financial expenses as part of a raft of measures introduced under the Finance Bill for 2013. This may force highly leveraged groups to reassess their financing structures.