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By Emmanuel Llinares, NERA Economic Consulting

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.

The GCC states, in their efforts to attract larger volumes of foreign investment, are increasingly willing to enter into and conclude bilateral foreign investment treaties, including bilateral investment treaties, free trade agreements and double taxation agreements. Of particular interest and some debate is the application of tax treaties in the low-tax jurisdictions of Bahrain and the UAE. Bahrain's tax laws only apply to the profits of oil companies, while, within the UAE, although general taxing provisions apply to all businesses, in practice only the profits of oil companies are taxed.

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.

Taxpayers will have to act now if they wish to change any arrangements because of revised thin capitalization rules due to be introduced in 2007. Parliament is unlikely to change the draft law, warns Eric Davoudet of Clifford Chance

Demonstrate your knowledge in our test on the tax issues that matter

Tax practitioners' reports for their clients in the Netherlands have been further protected by a Dutch Supreme Court ruling. Hans Seeling and Machiel Visser of PricewaterhouseCoopers compare the judgement to practice in other jurisdictions

The Lok Sabha, or lower house, of the Indian parliament has passed a bill to set up a national tax tribunal, which will deal, primarily, with appeals against orders of the Customs, Excise and Service Tax Tribunal and Income Tax Appellate Tribunal.

China's banking regulator has proposed a reduction in business tax for banks. Liu Mingkang, chairman of the China Banking Regulatory Commission, also suggested that there should be a single income tax system for domestic and foreign institutions. Business tax for domestic banks is 5% of their total revenue, with income tax at 33% of profit. This figure is only 15% for foreign financial institutions.