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By Graham Poole and Emmanuel Llinares of NERA

By Luis Liñero and Juan Carlos Molina

David Forst, James Fuller and Ron Schrotenboer, of Fenwick & West comment on recent international tax proposals, such as changes to the treatment of outbound asset transfers

Rajendra Nayak Ganesh Pai The Delhi income tax appellate tribunal in the case of Fugro Engineers BV v ACIT (2008-TIOL-502-ITAT-DEL) recently examined whether a permanent establishment (PE) would be constituted where the activities of foreign enterprise were carried on in India for less than 183 days. Fugro Engineers BV was a company incorporated in the Netherlands which was engaged in the business of providing geo-technical services and undertaking geo-technical and geo-physical investigation at drilling locations of its customers. It entered into three independent contracts with three different Indian companies for undertaking investigation activities and for provision of services.

International bodies and national governments have taken various initiatives over the years to make sure that tax havens, or international financial centres, which is what they call themselves, are not avoiding any tax obligations regarding the substance of transactions. The OECD has had its blacklist of uncooperative jurisdictions, which has been whittled away and now numbers only three in Europe. Policymakers have enacted laws to penalise taxpayers or outlaw transactions which use designated international financial centres. Secrecy and lack of transparency are of the biggest arguments used against these places.

Ten corporate tax lawyers have joined the partnership of Garrigues, the Spanish law firm, in nine different offices. Jesús Andujar is the new addition in La Coruña; Juan Antonio Pacheco has become a partner in Alicante; Granada gets another partner in the shape of José Pedro Fernández-Casas and Lisbon's Paulo Nuncio also joins the partnership.

Emil Brincker and Natalie Napier South African law firm Cliffe Dekker Hofmeyr has strengthened its tax department with the appointments of Emil Brincker and Natalie Napier.

Dieter Endres The Supreme Tax Court has rejected a taxpayer's claim that his profit share from an investment in a Florida limited liability company (LLC) should be automatically exempted from German taxation under the US/German treaty as income earned through a US permanent establishment. The claim was based on the US check the box election made by the LLC to be treated as a partnership, that is, for each investor to be taxed on his own profit share. The German tax office on the other hand saw the LLC as a corporation and sought to treat the profit share of the German investor as a dividend; that is as fully taxable in Germany with a credit for the US tax actually borne.

Stephen Nelson On November 5 2008 the PRC State Council passed the provisional regulations of the people's republic of China on value-added tax, extending its VAT reform to all industries nationwide from January 1 2009.

Paul Tamaki Jesse Brodlieb The fifth protocol to the Canada-US Income Tax Convention has cleared the US senate and appears poised to enter into force before 2009. All that remains is for the US President to sign an instrument of ratification and the exchange of instruments of ratification between Canada and the US.