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The rise in Ireland's corporate tax rate has not stopped companies establishing operations there. David Smyth, Joe Bollard and Rory MacIver of Ernst & Young discuss why the rate went up and look back over the three years since the new rate was introduced

A low corporate tax rate has helped Ireland secure a considerable amount of investment since a 10% rate was introduced in 1980. The rate has since gone up to 12.5% but it has not stopped companies, particularly from the US, from setting up in the country

Switzerland is about to make its value added tax system more attractive for businesses, report Mathias Bopp and Michelle Heer of PricewaterhouseCoopers

Final withholding tax on interest income introduced The Luxembourg Law of December 23 2005 introduces a final withholding tax on interest income for individuals. According to the law, any Luxembourg paying agent that pays interest to a resident beneficial owner must apply a final withholding tax of 10%. The withholding is final in the sense that no further tax is payable on the income, the interest is not required to be reported in the taxpayer's tax return and it is not taken into account when calculating the average rates of tax on the income.

The German thin-capitalization rules include a provision (section 8a (6) KStG – Corporate Income Tax Law) re-characterizing the interest expense associated with intra-group share acquisitions as a constructive dividend if the acquisition is financed using intercompany loans or back-to-back financing arrangements (so-called "tainted loans"). Interest re-characterized as a constructive dividend is effectively non-deductible. However, the provision's broad language leaves many questions unanswered. In particular, the types of acquisitions to which it is applicable are unclear – both with respect to timing and factual situations.

On December 29 2005, the finance minister issued Ordinance 436 and the Normative Instruction 602, which amended Brazilian transfer pricing legislation, to minimize the effects for Brazilian exporting companies of the appreciation of the local currency in relation to foreign currencies (more specifically the dollar and the euro), Since January 1 2005, the Brazilian currency (real) has gone from 2.7 per dollar to about 2.2 per dollar at the end of December 2005, a currency appreciation of more than 20%. As per the ordinance and normative instruction, Brazilian exporting companies will be allowed to increase their export revenues for calendar year 2005 (for transfer pricing calculation purposes) using the ratio of 1.35. This exceptional measure will only apply for the fiscal year 2005.

The Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Act 2005 received Royal Assent on December 14 2005. Australian corporate tax entities which derive foreign income and distribute it directly or indirectly to non-resident shareholders need to consider whether dividends paid on or after December 14 2005 should be declared to be conduit foreign income (CFI) under the newly enacted CFI rules.

Other jurisdictions across the world have implemented, or are considering, similar legislation to the Sarbanes-Oxley Act in the US. Patrick Walker of PricewaterhouseCoopers in the UK looks at the impact that the Act has had in indirect tax

The competent authorities of the US and Mexico signed a mutual agreement on August 26 2005 regarding the treatment of fiscally transparent entities under the US-Mexico Income Tax Treaty.

Corporate reorganizations, thin capitalization and transfer pricing are some of the areas covered by the 2006 tax reform proposals. Hidehiro Utsumi of Linklaters reveals these proposals and some tax law changes required due to changes to the corporate law.