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The European Commission has adopted a strategy on corporate tax compliance to head off future scandals involving financial malpractice. The strategy, which was released on September 30, calls for actions at the global level to foster company tax transparency and actions at the EU level to strengthen the work of tax administrators and to improve monitoring of companies.

India's Central Board of Direct Taxes (CBDT) has released a final circular to dispel the long-running confusion over the taxation of business process outsourcing (BPO). The September 28 2004 communication circular confirms that the CBDT will tax BPO units according to the country's transfer- pricing principles and in accordance with India's tax treaty network.

Jacques Barrot, the EU's incoming transportation commissioner, has suggested imposing a controversial aviation fuel tax on flights within EU borders. Barrot made his comments on September 29 2004 at his confirmation hearing before members of the European Parliament.

Independence and scope-of-service issues have helped another European law firm to hire tax practitioners from a big-four firm.

It is common for acquisitions to be conducted in the US on a tax-free basis through stock-for-stock exchanges. Assume that a European company (EuropeCo) lists its shares in the US and desires to acquire a US company (US Target) by providing a mix of EuropeCo shares and cash. Normally this can be done by EuropeCo forming a US acquisition vehicle (US Newco) and US Target mergers into US Newco, providing EuropeCo shares and cash to the former Target shareholders.

The future of the UK's tax disclosure regulations could be in jeopardy after the Inland Revenue and The Law Society failed to reach an agreement on the impact of the regulations on tax lawyers that claim legal professional privilege.

With the introduction of the business scale taxation and with companies using capital reductions to improve their financial conditions and to implement corporate reorganizations, there has been growing interest in the local tax consequences of capital reductions.

Type of deal Valuer Acquirer Target Adviser to acquirer (tax) Adviser to target (tax) M&A $2.3 billion International Power and Mitsui Edison Mission Energy agreed to sell its overseas assets Clifford Chance, London, Doug French Munger, Tolles & Olson, Los Angeles, Stephen Rose, Todd Molz M&A $4 billion Mylan Laboritories King Pharmaceuticals Skadden, Arps, Slate, Meagher & Flom, New York, Philip Adams Cravath, Swaine & Moore, New York, Lewis Steinberg M&A $161 million Priceline.com Holdco UK, a wholly-owned subsidiary of Priceline.com Active Hotels Baker & McKenzie, London, Geoff Kay Lovells, London, Sean Finn, Jessica McMichael, Dan Roman, Kiran Khetia M&A $265 million UBS Charles Schwab Corporation Sullivan & Cromwell, New York, Ronald Creamer Howard Rice Nemerovski Canady Falk & Rabkin, San Francisco, Stuart Lipton M&A $388 million Sumitomo Corporation JW Childs Associates agreed to sell The Hartz Mountain Corporation Dewey Ballantine Kaye Scholer, New York, Arthur Woodard M&A £5.8 billion ($10.4 billion) Cheung Kong Infrastructure Holdings, Macquarie European Infrastructure Fund and Scottish and Southern Energy (acquiring consortiums) agreed to acquire National Grid Transco's gas pipeline assets National Grid Transco agreed to sell its gas pipeline assets Herbert Smith, London, Derek Hill; Norton Rose, London, Dominic Stuttaford Linklaters M&A C$1.4 billion ($1.09 billion) Rogers Wireless Communications Microcell Telecommunications Fasken Martineau DuMoulin Stikeman Elliot, Montreal, Robert Hogan, Christian Meighen M&A £120million ($215.7 million) Oasis Stores group supported by the Baugur group Karen Millen Holdings KPMG, Birmingham, Brendan O'Grady, Iain Clarke, Rob Norris, Eddie Norrie, Iain Wright BDO, London, Tony Bogod, Lynne Pearson, David Ellis M&A Undisclosed SG Capital Europe and GIMV agreed to acquire the Sovitec group Cravey, Green & Wahlen agreed to sell the Sovitec group Linklaters, Brussels, Henk Vanhulle, Thierry Denayer, Antoine Dayez, Stéphane Martin; New York, Bob Smith; Madrid, Nicolas Martin, Javier Garcia-Pita, Marta Esteban; London, Valerie Leipheimer Alston & Bird; Jones Day; SJ Berwin; Wildgen & Partners M&A $4.8 billion A consortium led by the Sony Corporation of America Metro-Goldwyn-Mayer Skadden, Arps, Slate, Meagher & Flom; Dewey Ballantine Latham & Watkins; Christen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro M&A ?600-?625 million ($739-$770 million) Ripplewood Holdings The Carlyle Group agreed to sell Honsel International Technologies Latham & Watkins, Munich, Götz Wiese Millbank, Tweed, Hadley & McCloy, Munich, Norbert Rieger, Rolf Füger, Thomas Kleinheisterkamp M&A $1.52 billion WPP Group Grey Global Group Fried, Frank, Harris, Shriver & Jacobson, Washington DC, Alan Kaden Davis Polk & Wardwell, New York, Kathleen Ferrell M&A $600 million BAE Systems DigitalNet Holdings Cravath, Swaine & Moore, New York, Lewis Steinberg, Grace Lee, David Ware Fried, Frank, Harris, Shriver & Jacobson M&A $125 million Pfizer PA Consulting Group agreed to sell its 90% stake in Meridica Allen & Overy, London, David Lewis, Daniel Lewin Simmons & Simmons, London, Nick Cronkshaw, Darren Oswick M&A ?3.6 billion ($4.4 billion) Lone Star Hypo Real Estate agreed to sell a portfolio of real estate loans Mayer, Brown, Rowe & Maw, Frankfurt, Ingo Kleutgens Freshfields Bruckhaus Deringer, Frankfurt, Wilfried Schaefer, Jan Brinkmann M&A $1.2 billion First Reserve Corporation Ingersoll-Rand Company agreed to sell its Dresser-Rand Company unit Skadden, Arps, Slate, Meagher & Flom, New York, Philip Adams Simpson Thacher & Bartlett, New York, Charles Rappaport To get your deal (over $100 million) listed in International Tax Review contact Simon Briault on +44 207 779 8336 or sbriault@euromoneyplc.com

The UK Treasury on September 21 2004 introduced a new package of tax breaks for the film industry, replacing the so-called section 48 incentives. The UK government decided to amend the scheme after a crackdown in February on partnership schemes (often used to fund UK films) that manipulated tax relief to create claims for losses in excess of the capital at risk.

Austria's corporate tax reforms introduce wide-ranging changes, including a tax rate reduction, explain Christian Hoenig and Niklas Schmidt of Wolf Theiss