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The EU advocate general gave its opinion on the Test Claimants in the Thin Cap Group Litigation vs Commissioners of Inland Revenue case on June 29.

The government has proposed a set of changes in the various tax laws. The proposal shall be subject to parliament proceedings after the summer holidays and may be subject to a number of changes. The most important changes in the Corporate Income Tax Act and in the Tax Ordinance Act are presented below. The final shape of the tax laws for 2007 will become clear in late autumn 2006.

Previously a foreign company only qualified as a controlled foreign company (CFC) if more than 50% of its participation rights were held by South African residents. Participation rights were defined as including rights to participate in share capital, share premium and profits of the CFC. Voting control was ignored.

On April 20 2006 the Mexican Congress approved the Decree modifying sundry provisions of the federal tax code, which will enter into force shortly when indicated in its publication.

Last month this column mentioned the newly-published plans for a reform of the Dutch Corporate Income Tax Act (CITA) as they have been submitted to parliament. That column discussed some of the significant issues. This column addresses another significant issue from the proposal, the participation exemption.

Fraudsters committing missing trader intra-community (MTIC) fraud exploit the value-added tax (VAT) rules exempting intra-community sales in the country of dispatch. They acquire the goods free of VAT in one country and then sell them with local VAT in another. However, they do not account for this VAT to the authorities, but pocket it themselves before disappearing. The goods then pass through a chain of further companies known as buffers in a series of transactions legal in themselves and, frequently, are ultimately reacquired by the original seller. At least some of the buffers may be innocent of fraudulent intent, which raises the question – particularly for wholesalers and trading houses of repute – of a VAT risk from buying goods in good faith from dishonest partners.

Taxpayers claiming benefits under the current US-Denmark tax treaty should examine a new protocol closely for its impact on their ability to claim treaty advantages, recommends Michael Mundaca, Peg O'Connor and Jill Schwieterman of Ernst & Young

Jelle Bakker of Bakker Smit Vermeij looks at how draft amendments to the Dutch Corporate Income Tax Act might affect the current tax treatment of hybrid financing instruments. The changes are due to take effect at the beginning of 2007

The issue of time limits has come to the fore in tax cases at the European Court of Justice. The court would have to take a number of underlying issues into account before it could depart from existing case law, believes Liesl Fichardt of Dorsey & Whitney

The nature of international tax means that national revenue agencies and policy makers speak to each other all the time. Groups such as Jitsic (the joint international tax shelter information centre), which brings together the US, the UK, Canada and Australia in an effort against unlawful tax avoidance and the Leeds Castle group of national tax authorities, which as well as the four previously mentioned, includes China, France, Germany, India, Japan and South Korea, discuss best practices in matters such as compliance and administration. National tax authorities also take part in the work of multinational organizations such as the UN, the EU and the OECD.