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Sixth VAT Directive – Scheme for travel agents – Package tours – Services bought in from third parties and in-house services – Method of calculating the tax.

VAT – Deduction of input tax paid – Capital goods financed by subsidies.

The Spanish media have recently reported of a significant reform in the transfer pricing legislation. The tax authorities are the source of the information but no drafts have been issued yet. Although the changes anticipated are still unofficial, a significant reform seems to be sought.

On January 1 2006 the provisions of the Tax Ordinance contained in a new section entitled "Agreements with respect to calculation of transaction prices" will come into force. The provisions introduce the possibility for taxpayers to enter into pricing agreements (APAs) with tax administration on application of selected transfer pricing method to transactions between related parties.

Anumber of significant developments occurred in Russian value-added tax (VAT) legislation recently. The amendments were introduced to the VAT chapter of the Russian Tax Code by three federal laws signed by the President of Russia on July 22 2005.

For several years a tax incentive has been in force in the Mexican Income Tax Law (MITL), which allows Mexican taxpayers to claim a credit for the expenses incurred in connection with technological research and development (TR&D) projects. The most recent update of the rules for the application of this benefit have been published in the Official Gazette providing some guidance for its application.

There have been two new Supreme Court tax rulings in Norway. They both concern losses on loans to subsidiaries. Combined with the new exempt-method for losses on shares, the cases, to some extent, turn Norwegian tax thinking up-side-down.

EU: provisions are unacceptable in view of the large benefits involved The US is likely to appeal the decision of an WTO dispute resolution panel on September 30 that it is still in breach of the recommendations of the organization's Dispute Settlement Body regarding American foreign sales corporation/ extra-territorial income rules. This is despite changes brought in by 2004's American Jobs Creation Act (AJCA). The WTO believes that the transitional nature of the rule changes still violate world trade rules.

Sed Crest discovers what drives Microsoft's corporate vice-president of finance, Michael Boyle, and his plan for the Tax Executives Institute as he takes on the role of international president

By Geoffrey Soh, KPMG in Singapore