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Although value-added tax is usually relevant to outsourcing, there are plenty of other tax issues to consider, explain Iain Scoon and Stephen Pevsner of Shearman & Sterling

The Public Company Accounting Oversight Board (PCAOB), the US accounting watchdog established following corporate scandals involving such as Enron and WorldCom, has released proposals that would for the first time ban firms from supplying certain tax avoidance schemes to audit clients.

The re-election of the coalition government has buoyed the business community with heightened expectation of further tax reforms, especially given its clear majority in the Senate from July 1 2005. High on the wish-list is completion of the current round of business tax reforms, and a government commitment to personal tax reform.

The tax authorities amended the country's transfer-pricing rules at the end of 2004. They will have to work hard to ensure taxpayers are treated equally throughout the country, believe Matthew Mui and Joanne Su of PricewaterhouseCoopers

The government of India has released details of a key value-added tax (VAT) plan that will come into force on April 1 2005. P Chidambaram, the finance minister, said the tax reforms were the most important since India won its independence in 1947.

The decision of one of Singapore's leading tax litigators to close his own firm and move to one of the city-state's biggest corporate and financial law firms, is down to the desire of international companies for corporate firms to handle their tax affairs.

The minister for finance announced the government's budget for 2005 on December 1 2004. From a corporate tax perspective, the minister reiterated the government's commitment to the 12.5% corporation tax rate.

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 most important changes to the directive are as follows:

The "butterfly reorganization" is the name in Canada for the type of reorganization by which a Canadian corporation, call it the distributor, can distribute property to one or more of its corporate shareholders on a tax-deferred basis. These reorganizations can be done by private corporations or public corporations, and can take the form of a "split-up", whereby one or more shareholders receive their share of the distributor's assets and cease to be shareholders of the distributor, or a "spin-off", whereby the distributor makes a distribution to a new corporation owned by the same shareholders as the distributor and in the same proportion. In 2001, rules were introduced to facilitate spin-offs by public companies. The Department of Finance has now recommended further amendments to the Federal Income Tax Act to provide additional relief for public company spin-offs.

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