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US taxpayers will be able to request an automatic, six-month tax-filing extension for certain business returns from the 1 January 2006. Businesses will be able to request a six-month tax-filing extension, without a reason or signature. This simplifies the existing two-step process, although a tax-filing extension does not alter the tax-payment deadline.

Articles 43 EC and 48 EC; Corporation tax; Groups of companies; Tax relief; Profits of parent companies; Deduction of losses incurred by a resident subsidiary; Allowed; Deduction of losses incurred in another Member State by a non-resident subsidiary; UK regulations could prevent parent companies from using foreign subsidiaries' losses to reduce their home tax bill;

Articles 43 EC and 48 EC – Corporation tax – Groups of companies – Tax relief – Profits of parent companies – Deduction of losses incurred by a resident subsidiary – Allowed – Deduction of losses incurred in another member state by a non-resident subsidiary – Not included.

Freedom of establishment – Articles 43 EC and 48 EC – Cross-border mergers – Refusal of registration in the national commercial register – Compatibility.

Sixth VAT Directive – Article 13B(c) – Exemptions – Exemption of supplies of goods excluded from the right to deduct – Resale of motor cars purchased second-hand by a leasing company – Article 26a – Special arrangements for sales of second-hand goods.

Sixth VAT Directive – Articles 21(3) and 22(8) – Joint and several liability for payment of VAT – Principles of proportionality and legal certainty – Missing trader intra-Community fraud – Carousel fraud.

A number of international tax-related changes were included in the Revenue Laws Amendment Act and the Revenue Laws Second Amendment Act, which were passed by parliament in November. The change in the participation exemption was dealt with in the November issue, and this update deals with two further amendments.

In October, the German tax authorities issued a form that banks and other unrelated third-party lenders may submit at the request of corporations seeking to avoid Germany's thin-capitalization rules applying to loans they have received.

The Belgian government has announced a significant improvement to the newly-enacted Belgian tax measure of the notional-interest deduction: the abolition of the condition of unavailability.

A condition of China's admission into the WTO was revision of the corporate tax system under which foreign investment enterprises (FIEs) doing business in China are taxed more favourably than domestic enterprises (DEs). The statutory income tax rate applicable to both FIEs and DEs is 33%, however, government statistics reveal that, after taking tax incentives into account, the average effective income tax burden for FIEs is about 15%, as opposed to 25% for DEs. It was recently announced that the tax reforms – an adoption of a unified tax system, which was supposed to come into effect on January 1 2006 – will be delayed.