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The tax bill for 2005 was approved on November 13 2004 and published in the official gazette on December 1 2004. This new tax bill creates a new definition of "business profits", which excludes the payments that are subject to the Mexican withholding tax under domestic law. Before the law change, these concepts could have been exempt from withholding if they qualified as business profits in accordance with the tax treaties signed by Mexico and the commentary to the OECD Model Tax Convention.

The 2005 Budget Law has not provided for any tax measures of great relevance. The socialist government, in office since March 2004, has promised a major tax reform for late 2005 the features of which are not yet known.

Ceteris, an independent transfer pricing and tax valuation boutique, has continued its expansion in the US by opening two new offices. Mark Schuette, formerly of Ernst & Young, will be in charge in Atlanta and Enrique Rayon, an ex-Deloitte adviser, will run the San Diego office.

The Arab Free Trade Zone came into effect on January 1 2005 marking the elimination of customs duty on intra-Arab trade. However, individual states will still have a "negative list" of trade items which will not qualify for exemption from customs duty. The Arab free trade zone currently comprises 17 member states: Saudi Arabia, Qatar, Bahrain, Egypt, UAE, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, the Palestine Authority, Sudan, Syria, Tunisia and Yemen. There is ambiguity on how the changes - with effect from January 1 2005 in case of intra-Arab trade- will be implemented as no procedural guidelines on the actual implementation have been issued yet. Imports from non-member countries will continue to be subject to customs duty based on the individual country's legislations.

With effect from January 1 2005 the amendments to the Polish Tax Code became effective, including that the tax authority is obliged, upon written request of the taxpayer, to issue binding advance tax rulings. A taxpayer that receives a ruling cannot be charged with any outstanding tax liability, provided that he conducted his transactions consistently with the tax authorities' interpretation of the tax law included in the ruling. The previously existing system of rulings had not offered such opportunity; the "old" rulings protected taxpayers against penalties but not against payment of the tax liability as such.

On December 21 2004, the Luxembourg Parliament passed the Budget Law for 2005. Although there will be no changes to tax rates, the Budget Law provides for an extension of the law of July 30 2002, which was due to expire in 2004, until the end of 2007. This law grants, among other things, reduced tax rates on capital gains realized upon disposal of land, higher depreciation rates for residential buildings and reduced real-estate transfer taxes. Capital gains from the disposal of real estate are taxed at 25% of the normal income tax rates, depreciation of qualifying buildings is 6% for the first six years and a credit of up to €20,000 ($26,000) is available for transfer taxes.

The government recently announced Oman's budget for 2005. The budget estimates a deficit of about $1.4 billion, which is based on a conservative oil price of $23 per barrel

GlaxoSmithKline (GSK), the UK-based pharmaceutical company, has received a demand for $5.2 billion in additional taxes and interest from the US Internal Revenue Service (IRS) over its transfer pricing calculations for legacy company Glaxo Wellcome from 1989 to 1996

In December 2004, the EU Council of Ministers agreed on proposals to amend the EC Mergers Directive to improve the relief available to companies operating in Europe

The Ministry of Finance announced a tax reform plan for 2005 on December 19 2004