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A monthly commentary on the notable facts, figures and goings-on in the tax world. Suitable items should be sent to taxrelief@euromoneyplc.com

Vladimir Kotenko Businesses already take for granted the poor tax and legal environment in Ukraine. Now, however, the situation is reaching its boiling point due to openly arbitrary behaviour on the part of state agencies.

Slobodan Mihajlovic International investors have two options when deciding how to finance their investments in subsidiary companies. These options regard to a decision on whether to introduce funds by way of capital injection or through debt. Financing a subsidiary through debt is a more tax wise solution as interest is tax deductible (decreasing corporate tax) therefore the tax leakage is minimised, whereas dividends will be non-deductible distribution of profits. Thin capitalisation is when there is an excessive ratio of debt to equity such as when the capital of the company is comprised of greater debt than equity. This practice creates a high risk due to the fact that the said debt has to be repaid to the creditors even though the capital reserves are not enough for such repayment.

Gary Thomas The Japanese government is seriously considering the adoption of the best method rule as the basic principle upon which to determine the transfer pricing method to be applied by a taxpayer.

Loïc Le Claire Richard Juan The 2011 French Finance Bill preserves the attractiveness of the French IP/IT incentives. This includes the R&D tax credit and the reduced taxation of patents. Adjustments to the existing regimes, in force as from January 1 2011 (except the immediate refund, since 2010), include the following:

Jean Marc Gagnon Emmanuel Sala In a decision rendered from the bench, the Federal Court of Appeal of Canada (FCA) has dismissed the Crown's appeal in the Collins & Aikman case. In this case, the taxpayer had undertaken a reorganisation resulting in a recognition of cross-border paid-up capital which was subsequently distributed Canadian tax-free to the non-resident shareholder.

José Vicente Iglesias The traditional inspection and supervision model that the tax authorities employ for large taxpayers has recently shown signs of wear. Against this backdrop, in 2002, the Committee on Fiscal Affairs of the OECD started up the Forum on Tax Administration with the aim to develop effective responses to the issues faced by tax authorities and promote a constructive dialog on the issues arising in the short and long term.

Gary Gowrea Mauritius continues to accelerate its position as a major financial hub by entering into new investment promotion and protection agreements as well as continuously expanding its double taxation avoidance agreement (DTAA) network. With a fast expanding tax treaty network, the scope for tax planning opportunities is thereby enhanced, thus improving the image of the Mauritius as a jurisdiction of choice for structuring investments.

Rosanne Bonnici On October 25 ,Tonio Fenech, the Minister of Finance, the Economy and Investment, delivered the 2011 Budget and announced a number of fiscal measures aimed at incentivising internationalisation and promoting investment and business.

Simeon Grigorov Considering a company's activity from a tax perspective, one of the most essential issues is the scope of application of any allowable deductions. From a Bulgarian prospective, expenses incurred wholly and exclusively for the production of income are treated as deductible expenditure. It is widely used by companies to include the interest payments as part of their expenditures. The question is, however, whether or not, or how much of such interest payments are deductible or not.