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At the outcome of the cabinet meeting on December 23 2004, the Belgian government announced plans to introduce legislation in June 2005 that will allow companies to deduct a notional (deemed) interest deduction on equity and retained earnings (not stated in the accounts) in calculating the taxable base. This measure will alleviate the different tax treatment between debt and equity, that is, borrowing or equity financing. At present, companies have more to gain from debt than equity financing, because loan interest is tax-deductible and dividend distributions are included in calculating the company's taxable base. In addition, Belgian tax law knows no general thin-capitalization rules.

The US Tax Court has dealt with litigation worth hundreds of million of dollars and a few thousand dollars during its 81-year existence. Joel Gerber, its chief judge, spoke to Ralph Cunningham about how he and his colleagues operate and his more than 20 years as a judge

At the end of 2004, the House of Lords gave their verdict in two important tax avoidance cases. Barclays Mercantile and Scottish Provident provided mixed results for taxpayers, reveals David Taylor of Freshfields Bruckhaus Deringer

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.

Darrin Litsky, a senior US transfer-pricing specialist, has become the latest in a string of high-profile hires for Baker & McKenzie. The international law firm has been expanding its global transfer-pricing capability with senior hires from big four rivals.

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. The deficit is 6% of the projected GDP. The actual oil revenue realization during 2004 was $33.90 per barrel against the 2004 budgeted price of $21 per barrel. The increase in oil price during 2004 helped eliminate the entire budget deficit for 2004. There were no additional borrowings during 2004 and Oman's GDP grew by 12.5% during 2004. The growth rate in 2003 was 6.9%.

The Internal Revenue Service (IRS) started the new year on a positive note by issuing proposed regulations that provide for the first time that a statutory merger under foreign law may qualify as an A reorganization.

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.