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Dunja Brodic Protocol amending the Sweden-US tax treaty The protocol amending the 1994 Sweden-US tax treaty was ratified on August 1 2006. Under the new rules, which entered into force on August 31 2006, the dividend withholding tax is reduced to nil in most situations when dividends are paid from a subsidiary in one state to a parent company in the other state. Also pension funds may benefit from the exemption from withholding tax on dividends from the other contracting state. The protocol contains, however, a number of exemptions the purpose of which is to avoid treaty shopping. The rules regarding withholding tax apply as of October 1 2006.

The UK system for taxing dividends Where a UK-resident company receives dividends from a company that is also UK-resident, the recipient company is not liable to corporation tax in respect of those dividends. Where a UK-resident company receives dividends from a company resident outside the United Kingdom, it is liable to corporation tax on those dividends. The UK-resident recipient company is entitled to a tax credit either under the provisions of UK national law or a double taxation convention (if applicable). The national legislation provides that withholding taxes paid on such dividends may be offset against the corporation tax liability of the resident company receiving such dividends. Where the resident company controls 10% or more of the voting rights in the company making the distribution, relief is also granted for the underlying foreign corporation tax (corporation tax paid by the company making the distribution in its jurisdiction of residence) on the profits out of which the dividends were paid. Such relief is limited to the amount of corporation tax payable in the UK on the relevant income.

Francisco Lavandera On November 30 the Tax Fraud Prevention Law was published in the Spanish Official State Gazette, which introduces specific amendments to the laws governing the main taxes in the Spanish system. The law is aimed mainly at controlling and preventing tax fraud.

Henry An Jin-Young Lee On December 15 2006 the Ministry of Finance & Economy (MOFE) announced revisions to the enforcement regulations under the Law for the Coordination of International Tax Affairs (LCITA) which set forth transfer pricing documentation requirements. These revisions follow changes made to the LCITA and underlying the Presidential Enforcement Decree on May 24 2006 and August 24 2006, respectively.

Peter Dachs In the absence of a double tax agreement, non-resident investors are subject to South African tax in respect of any South African-sourced income, or income deemed to be sourced from here.Because of this, foreign investors into South African funds (such as hedge funds, private equity funds) face an enquiry into whether the profits from such investments are derived from a South African source or deemed source.This is particularly relevant where the foreign investors have a direct exposure to the underlying assets, such as where the fund is a transparent entity such as a partnership.

Mikhail Filinov Ilarion Lemetyuynen Certain changes to Russian tax law came into force in 2007. Below we present an overview of some of them which may be of interest to international tax professionals.

Arne Kattouw The Dutch Supreme Court recently rendered judgement in several appeal cases concerning whether the Netherlands may levy tax on the wages of employees working abroad on a short-term basis for a foreign-affiliated company of their employer.

Hans Olav Hemnes Hanne Skaarberg Holen The Supreme Court delivered judgement in more than 20 tax cases in 2006. The lot comprised a good spread in different areas, including income/corporate tax, inheritance tax, property tax, VAT, formal assessment issues as well as penalty taxes.

The Indian Supreme Court has said that the offshore supply of goods and services by foreign companies cannot be taxed in the same way as if they came from an Indian firm.

The six percentage point fall from 28% was announced on January 26.