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Ernst & Young, one of the big four professional services firms, has lost some of its leading tax stars in four jurisdictions as fears over conflicts of interest between audit and tax services grow.

Revenue Ruling 2004-76 held that a foreign corporation (A), formed under the laws of country X, could not claim the benefits of the income tax treaty between the US and country X if under the income tax treaty between country X and country Y, it is treated as a resident of country Y. This ruling may limit planning options for companies that are treated as a resident under the laws of more than one country that has entered into a modern income tax treaty with the US. The ruling may also cause headaches for US withholding agents.

By Rod Burton, managing director and co-founder of the European American Tax Institute

Irish tax law provides for two rates of corporation tax:

The deductibility of interest expense is likely the tax issue on which the Supreme Court of Canada (the SCC) has commented most extensively. In March of 2004, the SCC added the Gifford decision to this line of case law, confirming that interest expense is generally (although not necessarily) on account of capital.

In recent years, eliminating abusive tax schemes has risen to the top of the agenda for revenue authorities, both locally and internationally. Until now individual tax administrations have worked within their own borders to combat revenue evaders but with many tax minimization schemes operating offshore and electronically it is increasingly difficult to track offenders.

The Argentine executive issued Decree No 916/2004 on July 23 2004, which provides clarification and new regulations to the provisions of last year's income tax reform introduced by Law 25.784.

Audit committees are opening up the tax services marketplace to long-overdue efficiencies. Specialists in transaction taxes will notice the change as much as those working in income taxation, according to Richard Thompson Ainsworth of Taxware

The IMF has recommended broadening the US tax base for businesses including a federal sales or value-added tax (VAT) and higher taxes on energy use.

Diagram 1 Germany put new thin-capitalization rules into effect this year that are intended to conform to the requirements of European law. In July 2004 the German tax authorities released final regulations addressing selected aspects of the new rules.