Search results for

In a recent unreported judgment, the Mumbai tribunal has held that the provision in Indian income-tax law authorizing taxing a foreign company at a rate higher than the rates applicable to an Indian company is still not activated by the legislature and hence by virtue of the non-discrimination article, a foreign company cannot be taxed at the rate higher than that applicable to similarly placed Indian company.

The 2004 Finance Bill confirms that, from April 1 2004, the UK's transfer pricing rules, which until March 31 2004 applied only to cross-border related party transactions, are extended so that an arm's length price is also imposed for tax purposes on related party transactions within the UK. This includes sale of goods, supply of services including head office and management services, licensing of intangibles, financial arrangements such as related party loans and guarantees and secondment of staff.

Germany could face proceedings in the European Court of Justice (ECJ) if it fails to respond to a European Commission (EC) demand to end its exit tax on unrealized capital gains of persons who leave the country. If Germany does not respond within two months of the April 19 2004 notice the EC will be able to challenge Germany's exit tax before the ECJ.

Deduction of expenses by French subsidiaries, resulting from rebilling by foreign parent companies is likely to attract the attention of the French tax authorities. The latter may challenge the deductibility of these expenses pursuant to the specific provisions of section 57 of the French Tax Code: once the French tax authorities have proven that the French and the foreign companies are related parties, they only have to provide evidence of an advantage given to the foreign company in order for the transaction to be deemed abnormal.

On April 1 2004 the Australian federal government tabled legislation in parliament containing the most significant changes to emerge from the review of international tax arrangements. The proposals represent a major shift in the taxation of foreign income and will require a major rethink on tax strategies by Australian-based companies.

Rachel Anderson of KPMG says overseas shared service centres can offer global companies huge savings in operating costs, but that savings will only be maximized if tax issues are addressed early

The US Senate is no closer to breaking the gridlock over a bill to repeal the FSC Repeal and Extraterritorial Income Exclusion Act (ETI Act), Senate leaders indicated on April 20 2004. Progress appeared to have been made on April 8 when initial amendments were agreed. That compromise could set the process back further, however, as more than 80 amendments were listedthe list of amendments ran to over 80 in number.

Ken Bransom, the former head of Ernst & Young's US practice in Europe, has moved to Deloitte. Specializing in the US-European taxation of merger and acquisition planning and structured finance, Bransom joined Deloitte's London office on March 23 2004 and will work with a team of nearly 30 tax specialists led by Jeff Wehner that focuses on US companies with operations in Europe.

By Andile Pama, general manager: communications, South African Revenue Service

International law firm Greenberg Traurig expanded its US tax presence on April 2 2004 with the hire of Daniel Kraus for its Chicago office. Kraus, formerly a partner at Schiff Hardin, concentrates his practice in flow-through entity taxation, taxation of real estate investments, affordable housing and community development, start-up and growth-oriented investments, tax controversy, and tax litigation.