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Franchising may be an appropriate framework for analysing intra-group transactions, including potentially in industries where third-party franchising is generally not observed, believe Emmanuel Llinares of NERA Economic Consulting in Paris and Nihan Mert-Beydilli of NERA Economic Consulting in Chicago

The Isle of Man has adopted a zero-10 tax regime. Jersey and Guernsey are about to do so. KPMG's Tony Mancini in Guernsey, John Riva in Jersey and Greg Jones in the Isle of Man compare the three systems

Indian parliament: getting ready to look at APA rules Tax authority officials in India have bowed to business pressure and begun a process towards the adoption of advance pricing agreements (APAs).

Hong Kong: reaching out A new double tax treaty has been concluded between Hong Kong and Luxembourg. It is Hong Kong's fourth in recent years. It signed similar deals with Belgium in 2003, Thailand in 2005 and mainland China in 2006.

Federal Board: conducting reviews Pakistan's Federal Board of Revenue has created a task force to review how multinationals' international transactions are taxed. The task force will look specifically at banking sector, non-resident companies, petroleum/gas exploration companies, pharmaceutical, telecommunication, satellite TV channels and mobile phone companies.

By Ralph Cunningham

An international tax associate has been promoted to the partnership at Latham & Watkins.

Daniel Armesto Antonio Matute Nárdiz The European Commission has opened a formal investigation under EC treaty state aid rules into a provision of the Spanish corporate income tax law (article 12.5) that allows Spanish companies to take tax deductions deriving from acquiring a stake in non-Spanish companies. According to it, any Spanish taxpayer (company or permanent establishment) may depreciate for tax purposes the investment in a subsidiary up to the amount of the subsidiary's goodwill implicit in the price paid for it. This so-called financial goodwill is determined as the positive difference between that price and the market value of the underlying assets of the subsidiary; in other words, it is the part of the purchase price of the shares in a company that exceeds its equity and the latent capital gains attributable to particular assets. The tax deductions require the acquisition of a significant shareholding (5% or higher) in a foreign company and are taken on a straight-line basis over the 20 years following the acquisition.

Elmar Jaster and Burkhard von Loeffelholz of PricewaterhouseCoopers outline the problem with A decree from the ministry of finance on Germany's VAT laws

Sharon Shulman Motti Tagar Leverage structures are frequently used worldwide in the acquisitions of companies. In general, the attempt of leverage is to maximise the utilisation of the borrowed money in order to increase the return on the investment to the investors. One of the main tax advantages of leverage structures is that they could erode the tax base in the target's jurisdiction by the deduction (as much as possible) of interest expenses associated with the debt used for the acquisition against the profits of target.