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The Asia Pacific region offers dynamic opportunities and unique challenges for global businesses. Every business decision involves intricately entwined issues, not the least of which is its tax implications.

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.

The new limitation-on-benefits article is the chief feature of the newly-amended US/Barbados tax treaty, according to Margie Rollinson, Michael Mundaca, Lilo Hester and David Benson of Ernst & Young

An income deposit security is a work-in-progress. But the tax benefits are already apparent, believe Richard Willoughby, Alexandra Kau, Gary Gartner and Corrado Cardarelli of Torys

A reform in France's 2004 Finance Bill means that French companies need to think carefully about how they distribute their earnings, warns Stéphane Chaouat, of Weil, Gotshal & Manges

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.

A recent Indian authority advance ruling (AAR) examined whether a liaison office (LO) of a foreign company constituted a permanent establishment (PE) in India. In this case, a UAE company engaged in the money remittance business had set up a LO in India. It claimed that under the tax treaty business profits are not taxable in India unless they are attributed to an Indian PE. A PE is defined to include any fixed place of business in India through which business is wholly or partly carried on excluding the place maintained solely for the purpose of carrying on any activity of a preparatory or auxiliary nature.

Law 9430 introduced the transfer pricing regime in Brazil on December 27 1996. Under this law, Brazilian taxpayers were allowed to use three different methods to control their import transactions with related parties resident and domiciled abroad: