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Hugo Chavez, Venezuela's president, announced a sharp rise in the royalty tax on multinational oil companies on October 10 2004. The tax increase from 1% to 16.6% per barrel of oil was effective immediately and affects all foreign oil companies operating in the southwestern Orinoco region of Venezuela. The rate rise is expected to raise an annual $1.27 billion in additional tax revenues.

By Shanto Ghosh, Deloitte and Sumon Mazumdar, LECG

Michael Serota has left his role as leader of Deloitte & Touche's national hedge fund practice, both audit and tax, in the US, to join Ernst & Young as the leader of its global hedge fund tax practice. Previously he was co-leader of Arthur Andersen's hedge fund practice.

Draft legislation was recently released by the Canadian Department of Finance to implement many of the measures announced in the government's March 23 2004 Budget. Certain changes to the rules affecting income trust structures featured prominently in the Budget. The September 16 2004 draft Budget legislation contains some important changes from the measures announced in the Budget.

On July 23 2004, provisional measure 183 was converted into Law 10,925. Among other provisions, Law 10,925 maintains the 0% withholding tax rate applicable on payments of interest, commissions, expenses and discounts arising from certain securities which are placed through foreign banks having a minimum average maturity date of at least 96 months and contracted before January 1 2000. More specifically, article 12 of Law 10,925 set forth that the 0% withholding rate remains applicable upon the extension of the initial payment terms of the arrangements in place as of December 31 1999. The latter benefit will be maintained as long as the extension of the initial payment terms is made in accordance with the Brazilian Central Bank regulations.

A rapidly emerging issue is the impact that International Financial Reporting Standards (IFRS) will have on the thin capitalization "safe harbour" which is measured with reference to Australia's Generally Accepted Accounting Principles (AGAAP).

The Netherlands has updated its transfer pricing rules. Dave Rutges, Eduard Sporken and Tjebbe Hoogcarspel of KPMG Meijburg & Co discuss what this will mean for corporate taxpayers.

The Societas Europaea came into existence in October 2004. The EU needs to update some directives before the limited tax benefits are realized, says Deloitte's EU tax group

Leading tax executives, advisers and regulators from around the world came to Berlin in September to discuss the latest issues in transfer pricing

The procedures for withholding tax exemption on Japan source income received by foreign corporations and non-residents in Japan have been changed from the "submitting method (teishutsu)" to "presenting method (teiji)".