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US taxpayers recently scored an important victory in Dover Corp v. Commissioner, which has monumental ramifications in the US tax treatment for disposing of non-US operations.

The new Japan-US tax treaty provides that the contracting states shall conduct transfer-pricing examinations of enterprises and evaluate applications for advance pricing arrangements in accordance with the OECD Transfer Pricing Guidelines. In connection with this policy, a new methodology for an arm's-length price, transactional-net-margin method (TNMM), which is provided by the guidelines, has been introduced by the Japanese 2004 Tax Reform, as one of the acceptable methods in calculating the arm's length price.

The French tax authorities use the abuse-of-law theory as an obstacle to oppose tax avoidance schemes when the latter are deemed excessive. In order to apply this theory, the French tax authorities must have evidence of either the fictitious nature of the transaction (interposition of persons, fictive or disguised deed) or an exclusive tax-driven purpose. The French Administrative Supreme Court (Conseil d'Etat, January 17 1994, Chollet) or the French Civil Supreme Court (Cass. Com., December 10 1996, Sté RMC France) interpret this notion in a restrictive way. In particular, restructurings, the effects of which generally go beyond the strict field of tax, are unlikely to fall within the scope of the abuse-of-law theory.

The Brazilian government issued on January 29 2004, Provisional Measure (PM) 164/2004. This PM introduced new regulations to subject imports of goods and services to the social integration program contribution-import (PIS) and social security financing-import (COFINS).

The UK is one of the few countries in the world to have separate agencies for collecting direct and indirect tax. Now the plan is to unite them. Simon Briault assesses the reaction to the merger of the Inland Revenue and Customs & Excise

Corporate tax rates across the EU Existing members Austria 34% Belgium 33% Denmark 30% Finland 29% France 29% Germany 20% Greece 35% Ireland 12.5% Italy 34% Luxembourg 22% Netherlands 34.5% Portugal 30% Spain 35% Sweden 28% United Kingdom 30% New members Cyprus 10% Czech Republic 28% Estonia 35% Hungary 18% Latvia 15% Lithuania 15% Malta 35% Poland 19% Slovakia 19% Slovenia 25% Source: Ernst & Young's Worldwide Corporate Tax Guide (as at January 1 2004). Note the method of calculation varies from country to country The Franco-German push for harmonized corporate tax rates across the EU's 25 members gained momentum on May 18 2004 when Robert Verrue, director-general of taxation and customs union, gave support to a single, EU-wide company tax base.

The National Tax Service of Korea (NTS) plans to cut back on the number of corporate tax audits and shorten their length this year. NTS commissioner Lee Yong-sup announced the plans on May 21 2004 as part of the government's efforts to reduce the compliance burden for companies with clean tax records.

In March 2004 the European Court of Justice (ECJ) invalidated a French statute that taxed the unrealized appreciation inherent in corporate stock held by long-term French resident individuals upon transfer of their tax residence from France to another country (Hughes de Lasteyrie du Saillant - Case C-9/02).

Regulatory changes have made the creation of a holding company in China more attractive. However, investors still need to be aware of the tax and foreign exchange rules, cautions Wendy Guo of KPMG