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Jacques Bernier has joined Baker & McKenzie in Toronto from Bennett Jones. His practice focuses on tax controversy and litigation as it relates to income, capital, commodity and mining taxation, including transfer pricing.

Slobodan Mihajlovic The rumours that were circulating in the business circles of Serbia have finally become reality. The government has adopted new measures offering special benefits to employers who open new positions, fulfilling clearly prescribed criteria.

Edward Tanenbaum Tola Ozim Ronald Dabrowski, the deputy associate chief counsel (international technical) at the Internal Revenue Service (IRS), has provided taxpayers with the welcome news that a substantial business activity safe harbour, which had been removed from recent anti-inversion regulations, would likely be revived in final regulations still to come. Section 7874 generally applies to prevent entity inversions or expatriations by taxing inversion gain or, in some cases, by treating the foreign acquiring corporation as a domestic entity. A transaction comes within these rules where 1) a US corporation or partnership transfers substantially all of its property to, or becomes a subsidiary of, a foreign corporation; 2) the owners of the US entity acquire at least 60% of the foreign corporation by reason of their stock ownership in the US entity; and 3) the foreign corporation and its expanded affiliated group (EAG) do not have substantial business activities in the foreign country of incorporation as compared to the total business activities of the group.

Miruna Enache Over the last decade, one of the main scrutiny items in tax audit cases (from a corporate income tax perspective) and the reason for tax disputes has been the deductibility of services expenses. The Romanian taxpayer has to prove its compliance with the legal requirements in this respect (having written contracts signed with suppliers and documentation to support the effective provision of the services as well as their necessity for its business). However, the tax authorities have become, in recent years, increasingly active and aggressive in this respect, focusing on intra-group administration and management expenses, where the legislation disallows the deduction of stewardship costs (including costs for administration, management, control, consultancy and other similar functions).

David Cuéllar Marco Nava On April 27 2011 Mexico and Peru signed a tax treaty, which is not yet in force and is still subject to approval.

Despite strict rules, divergence on the regulations are expected Chinese tax authorities are giving financial institutions a deadline of only one to two weeks, rather than 20 days, to submit transfer pricing documentation for the 2008 and 2009 financial years.

Costa Rican President Laura Chinchilla has made tax reform a priority since starting her four-year term in February 2010, with a view towards improving transparency and encouraging foreign investment. Yet the tax reform package her administration proposed has been stymied by opposition parties in Congress.

The US administration needs to get its act together and come up with a substantial corporate tax reform plan.

The European Commission has confirmed that a financial transactions tax (FTT) will be introduced as part of the financial structure for its political objectives in the next five years, the Multiannual Financial Framework (MFF). An FTT is planned to assist the Commission’s effort to become self-funding between 2014 and 2020.

Andrew Miles Topical as ever, the Supreme Tax Court has joined the debate on alternative energy sources with three judgments on the capitalisation and subsequent write-down of wind farms. Two are on points of detail, but the third is general and basic. Essentially, the court takes a more general approach than IFRS by following the concept of a fixed asset as an item (assembly) recognisably capable of independent use without apparent alteration. This distinguishes it from a component or sub-assembly that has no purpose other than as part of a main item. A component is not open to regular depreciation.