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Switzerland's tax regime has a lot of advantages for any multinational corporation thinking of locating a headquarters there, explain Thierry Sauvaire and Andreas Müller of KPMG

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.

Throughout 2005 Ireland continued to enjoy record levels of growth (4.6% GDP), with low unemployment. The tax system in Ireland remains a vital component of Ireland's economic success story and an important reason why it remains a destination of choice for inward investment into Europe. The corporation tax rate is 12.5% on trading income (one of the lowest in the EU), and there is an accessible and responsive regulatory touch in the tax arena.

In the context of the application of Middle East regional tax treaties and the potential conflict between regional taxing systems and standard tax treaty language, at the heart of the debate about whether regionally-based businesses qualify as 'residents' for treaty purposes, and of considerable interest to regional businesses with historic and significant trade links with the sub-continent, is the application of the Indian tax treaties in the region, particularly India's treaty with the UAE. In this context it is interesting to note the decision of the Income Tax Appellate Tribunal in Mumbai in India.

According to a decision of the French Constitutional Court on December 29 2005 (which confirms the terms of the High Court decision of June 29 2005), value-added tax (VAT) was included in the motorway tolls paid during the years 1996 to 2000.

On November 23 2005, the federal minister of finance announced income tax measures intended to help equalize the income tax treatment of dividends from corporations and distributions from income funds. Income funds are an increasingly common business structure in Canada for operating businesses involving public entities which are flow-through entities for tax purposes.

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.

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.

Two reports published in the US in the last year propose changes to corporate residency and territorial tax rules. Any changes could have serious consequences for the inbound planning of foreign multinationals, according to PricewaterhouseCoopers

Type of deal Value Acquirer Target Adviser to acquirer (tax) Adviser to target (tax) M&A $67 million - $88 million Concur Technologies Outtask Fenwick & West, David Forst, Barton Bassett and Neal Gordon (US) DLA Piper Rudnick Gray Cary (US) M&A €1.5 billion ($1.8 billion) Fresenius Helios Kliniken KPMG, Christian Jänisch, Matthias Hogh, Germany In-house M&A £463 million ($5 billion) Kellen Acquisitions Ltd (an indirect subsidiary of the Terra Firma Partners II fund) East Surrey Holdings KPMG, Anneli Collins, Paul Cooper, UK Clifford Chance M&A £160 million ($279 million) Macquarie Goodman Group Arlington Securities KPMG, Ian Latter, Charles Beer, Gerard Franklin, UK PricewaterhouseCoopers, UK M&A £20.5 million ($35.7 million) Balfour Beatty Charter Builders and Edgar Allen In-house Slaughter and May, Steve Edge, Daphna Ben-Zvi, UK M&A $355 million Polo Ralph Lauren Corporation Polo Jeans Company Paul Weiss, David Sicular (US) Cravath, Swaine & Moore, Andrew Needham, Joseph Teti, and Young Park (US) M&A £2.8 billion ($4.9 billion) Fortune Brands Allied Domecq / Pernod Ricard spirits and wine brands, and the Allied Domecq distribution businesses in the UK, Spain and Germany Herbert Smith, Bradley Phillips and David Mogford (UK), Jean-Luc Calisti and Jerome Le Berre, (France) Macfarlanes, Ashley Greenbank, Ernst & Young acted for Pernod Ricard on tax. Linklaters acted for Allied Domecq M&A $7.4 billion Walt Disney Pixar Animation Studios Skadden, Arps, Slate, Meagher & Flom and Dewey Ballantine, Gordon Warnke, Joseph Pari In-house legal team led by general counsel Lois Scali, Wilson Sonsini Goodrich & Rosati, Ivan Humphreys, and Eileen Marshall (US) M&A $22.5 billion bid Mittal Steel Company Arcelor Garrigues, Ignacio Calvet, (Spain) Cleary Gottlieb, Pierre-Yves Chabert, (France) Skadden, Arps, Slate, Meagher & Flom M&A $537.5 million Lagardère Time Warner Book Group Cravath, Swaine & Moore, Stephen Gordon, Lauren Angellili, Darren Hei M&A £29.8m ($51.9 million) Stanley Leisure MLG Investments and Triangle Casino from RJ Bown Ashurst, Alex Cox Skadden Arps Slate Meagher & Flom, Tim Sanders, Charlotte Fallon M&A £21.5m ($37.5 million) Java Acquisitions Whittard of Chelsea Eversheds, UK Lawrence Graham, Elizabeth Ashby, UK M&A Undisclosed Groupe Proclif Clinique Lambert and Clinique La Montagne Clifford Chance, Alexandre Lagarrigue and Maxence Manzo (France) Baker & McKenzie, France Type of deal Value Issuer Lead managers Adviser to Issuer Adviser to lead managers Bond issue Two tranches of $800 million bonds Fortune Brands ABN Amro, Citigroup and JP Morgan Herbert Smith, David Mogford, (UK), and Chadbourne & Parke, (US). Davis Polk & Wardwell Debt issuance programme €6 billion ($7.2 billion) Federal State of Saxony-Anhalt Deutsche Bank In-house Allen & Overy Securitization €50 million ($59.7 million) ABN AMRO Uria Menendez, Filipe Romão (Portugal) Rights issue €2.9 billion ($3.5 billion) Eerste Bank Goldman Sachs International and JP Morgan acted as global coordinators and joint bookrunners Allen & Overy, Stephen Fiamma (UK), Dave Lewis (US)