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Kevin Rowe Edward Tanenbaum Treasury and IRS have finalised regulations under section 871(h) that apply an aggregate concept to determine whether US source interest received by a partnership is "portfolio interest" exempt from withholding tax. The final regulations adopt the aggregate approach and may apply retroactively to interest paid in prior years.

Henry An Jin-Young Lee On March 21 2007, the Ministry of Finance & Economy (MOFE) had its first public tax dialogue with foreign investors to share information about tax developments and respond to concerns. Some of the highlights of the meeting include:

Pursuant to Taiwan tax laws and regulations, dividends received by international investors are subject to a 20% withholding tax at the time of remittance by Taiwanese investee/issuing companies. The said withholding tax rate on dividends may be reduced (for example from 20% to 10%) if the beneficial owners of the dividend income are from countries that have executed DTAs with Taiwan.

Roberto del Toro Adriana Rodriguez On May 8 2007 a decree announcing the new tax treaty between Mexico and New Zealand was published in the Official Gazette, it was approved on April 11 2007 and signed on November 16 2006. This treaty will become effective 30 days after each country has notified the other of the completion of its ratification. In Mexico, its provisions regarding income subject to withholding tax will apply beginning on the first day of the second month following its entry in force; its other provisions will apply beginning January 1 of the next year.

Massimo Agostini Preliminary ruling no. 80/E, dated April 26 2007 (the ruling) has addressed the Italian tax treatment of the income produced by an Italian branch of a law firm organised as a UK Limited Liability Partnership (LLP). The ruling also looked at how income is attributed to the LLP's Italian partner is to be taxed.

Rajendra Nayak Ganesh Pai The Mumbai income tax appellate tribunal (ITAT) recently examined the taxability of a foreign enterprise having a permanent establishment (PE) in India on account of a dependent agent (DA). The taxpayer, a resident of and incorporated in Singapore, was engaged in the business of broadcasting and uplinking television channels. It had appointed an Indian company (the company) as an agent to market ad-space on its behalf, for a commission on an arm's length basis. The taxpayer had a PE in India under the tax treaty between India and Singapore (tax treaty), by virtue of the company being regarded as a DA carrying out certain activities on behalf of the taxpayer. The issue before the ITAT was whether in view of the taxpayer having remunerated the company on an arm's length basis, any further income should be taxed in India, other than the profits earned by the company.

Volker Jorczyk Travel agents selling airline tickets do not charge VAT on their commission received from the airline, but must do so if they are acting for the customer. However, only the commission on the domestic portion of a flight is chargeable. Traditionally, travel agents´ commission has been VAT-free irrespective of the method of settlement. Lately, though, more and more airlines are refusing to remunerate the travel trade, preferring to deal with passengers online. This leaves the agent with no option but to raise a service charge on the customer, subject to VAT for the distance flown in German airspace. The finance ministry tried to simplify matters with a decree in March 2006 arbitrarily declaring a flight within the EU to be 25% flown in Germany, falling to 5% on flights to destinations elsewhere.

A European Commission decision has forced Luxembourg to change its holding companies legislation, reports Keith O'Donnell and Samantha Nonnenkamp of ATOZ Tax Advisers

The tax advantages that Cyprus offers is increasing its appeal as a holding company jurisdiction in Europe, say Pieris Markou and Antonis Taliotis of Deloitte

India will need to change its international tax regime if it accepts an offer from the Organisation for Economic Cooperation and Development (OECD) to become a member.