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In 1998 the IRS and the Treasury Department got the attention of the outbound international tax community by issuing Notice 98-5. The notice sought to challenge certain tax-motivated transactions that generated foreign tax credits (FTCs) by testing their substance under an economic profits test. The transactions described in Notice 98-5 were later included as "listed transactions" subject to the tax shelter disclosure, registration and list maintenance requirements.

It is common in the US to acquire companies in tax-free stock acquisitions. These are referred to as tax-free reorganizations and they must qualify for tax-free treatment under section 368(a) of the Internal Revenue Code. Section 368(a) provides detailed requirements for several different types of reorganizations (mergers, triangular mergers, stock-for-stock exchanges, spin-offs and certain types of stock-for-asset exchanges for example).

The Spanish CIT law has been reformed for tax years commencing on 2004, to further improve the tax credits for research and development (R&D) and innovation activities.

On October 13 2003 President Fox issued a decree (the New Decree) that reformed the previous Decree for the Promotion and Operation of the Maquiladora Export Industry (the Decree) issued in 1998. The Decree, which has been amended several times since, granted certain tax and customs benefits to toll-manufacturing companies in Mexico that meet a minimum threshold of exports. The purpose of issuing the New Decree is to provide certainty to companies that have already applied for the Maquila programme and that opted for the benefits granted by the Decree, and for companies that may adhere to it in the future.

The increasing complexity and range of tax rules affecting international business require sophisticated and dynamic tax infrastructures in order to deliver global tax objectives. It is for this reason that Ireland is a particularly attractive location for multinationals.

The Japanese Diet is expected to ratify the new treaty by the end of March 2004, allowing the treaty to become effective on January 1 2005 in general, except for the provisions relating to withholding tax on dividends, interest, and royalties, which will become effective on July 1 2004. In order to adequately conform to the new treaty, Japan must pass new domestic tax rules as follows.

Laurence Isaacson: Will not work together in other areas Michael Smith: Tax issues play a part in structured finance deals A US and UK law firm have joined together to offer a global structured finance practice to their clients. McKee Nelson, which has offices in New York and Washington, DC, and Ashurst, located in 10 countries around the world, announced on March 15 2004 that they intend to offer the new service. The tax practices of each firm will deal with the tax issues of the structured finance deals in their respective jurisdictions.

Armin Marti and René Zulauf of PricewaterhouseCoopers, explain some of the tax system's features which has encouraged companies to base themselves there

Dealing with the compliance burden is only one of the challenges facing tax directors, according to Oliver Bartholet, global head of tax for UBS, the Swiss bank, in this exclusive interview with International Tax Review