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European law and member states’ corporate tax systems are at odds. Mark Persoff of Clifford Chance looks at recent events

A change in accounting standards will slap a one-off tax bill on UK law firms that could run into millions of pounds. From the beginning of 2004 law firms will have to account for work in progress at the billable value rather than cost, making taxable profits much higher.

In an effort to increase the transparency of corporate tax return filings, the US Treasury and IRS on January 28 2004 released a new proposed draft form for use by certain corporate taxpayers. The new form affects corporations with total assets of $10 million or more and will help the IRS improve monitoring of corporate tax compliance.

The government of Nigeria has accused Shell of unfairly exploiting tax loopholes and could be forced to hand back hundreds of millions of dollars to the authorities. The tax dispute relates to a reserves-addition bonus scheme that offered companies incentives for investing in oil and gas.

The fourth draft of the foreign investment entity legislation (FIE legislation) was released by the Canadian Department of Finance on October 30 2003 and generally adheres to the structure of earlier drafts

BT Group, the UK telecoms company, has carried out a £1.3 billion ($2.37 billion) sale and leaseback of its ageing telecoms business that could cut the company’s tax liabilities by as much as £300 million ($546 million) over a number of years

On December 22 2003 the European Council formally adopted a Directive amending the Parent-Subsidiary Directive. The changes include:

India's tax authorities need to keep up with international tax trends to protect their income. The introduction of anti-avoidance measures to counteract the harmful tax practices of pro-taxpayer nations would contribute to increasing India's share in world tax collections, according to Sunil Gidwani and Rajat Panikkar of PricewaterhouseCoopers

A UN meeting of tax experts has proposed setting up a new body covering international tax called the UN Fiscal Committee.

Type of deal Value Acquirer Target Adviser to acquirer (tax) Adviser to target (tax) M&A $726 million North Fork Bancorporation The Trust Company of New Jersey Skadden, Arps, Slate, Meagher & Flom, New York, Mitchell Solomon Sullivan & Cromwell, New York, David Spitzer, Miriam Elizabeth Paul M&A $120 million Westar Energy agreed to sell its interests in Protection one to an affiliate of Quadrangle Group The Quadrangle Group affiliate agreed to acquire 88% of the outstanding common shares of Protection One Davis Polk & Wardwell, New York, Kathleen Ferrel, Harry Ballan, Roy Caner Simpson Thacher & Bartlett M&A $2.9 billion Henkel KGaA The Dial Corporation Cleary Gottlieb Steen & Hamilton, London, James Duncan, Eric Atkerson Skadden, Arps, Slate, Meagher & Flom, Washington DC, Clifford Gross M&A Undisclosed Frank Russell Company Pantheon Holdings Debevoise & Plimpton, London, Peter Schuur SJ Berwin, London, Dominic Adams M&A $925 million CSL Aventis agreed to sell the Aventis Behring Plasma business Simpson Thacher & Bartlett, New York, Steve Todrys Shearman & Sterling, Munich, Peter Blessing, Jen Zheng M&A £145 million ($267 million) Davis Service Group HSS Hire Service Group Slaughter and May, London, Feiza Jivraj Travers Smith Braithwaite, London, Kathleen Russ M&A ?3.1 billion ($3.9 billion) The Blackstone Group Celanese Simpson Thacher & Bartlett, New York, Gary Mandel, Meredith Jones Shearman & Sterling M&A ?1.4 billion ($1.7 billion) Bain Capital Deutsche Bahn agreed the sale of its Brenntag and Interfer Stahl subsidiaries to Bain Capital Ashurst, Frankfurt, Karl Herkenroth, Karl Stenger; Kirkland & Ellis, Chicago, Jeffrey Sheffield, David Kung, Pratibha Shenoy Skadden, Arps, Slate, Meagher & Flom, New York, Phillip Adams M&A Undisclosed Lazard WestLB agreed to transfer the Panmure stockbroking business to Lazard Herbert Smith, London, Isaac Zailer Allen & Overy, London, David Lewis, Ben Eaton, Jonathan Chapper, Mike Aherne M&A Undisclosed Bankhall Investment Management agreed to acquire the Premier Mortgage Services business from Prudential UK services Premier Mortgage Services Ashurst, London, Henry Franklin, Alastair Ladkin Maclay Murray & Spens, Glasgow, Martyn Jones, Caroline Colliston M&A Undisclosed Ripplewood Holdings and ZelnickMedia Corporation Ripplewood Holdings and Zelnick Media Corporation acquired Time Life, the direct marketing business of Time Simpson Thacher & Bartlett, New York, Gary Mandel, Adam Rosenzweig Cravath, Swaine & Moore, New York, Stephen Gordon, Lauren Angelilli M&A $385 million Novartis Novartis agreed to acquire the adult medical nutrition business of Mead Johnson & Company Shearman & Sterling, New York, Don Lonczak Cravath, Swaine & Moore, New York, Stephen Gordon, David Dubner M&A $2.4 billion FedEx Kinko's Davis Polk & Wardwell, New York, Kathleen Ferrel, Robert Heller Debevoise & Plimpton, New York, Peter Furci M&A $58 billion JP Morgan Chase Bank One Simpson Thacher & Bartlett, New York, Steve Todrys, Jeffrey Mensch Wachtel, Lipton, Rosen & Katz, New York, Adam Chinn, Jared Rusman M&A $1.2 billion Abbot Laboratories TheraSense Skadden, Arps, Slate, Meagher & Flom, Chicago, Louis Freeman Davis Polk & Wardwell, New York, Harry Ballan Type of deal Value Issuer Lead managers Adviser to issuer Adviser to lead managers IPO $168 million Nelnet America Securities and Credit Suisse First Boston Cahill Gordon & Reindel Davis Polk & Wardwell, New York, Harry Ballan, Avrohom Gelber IPO £165 million ($289 million) Alea Group Holdings (Bermuda) Goldman Sachs International and Merril Lynch International Clifford Chance, London, Douglas French, Lisa McDermott Linklaters, London, Simon Marks Notes offering $3 billion Wyeth Citigroup Global Markets and JP Morgan Simpson Thacher & Bartlett, New York, Dickson Brown, Jeff Mensch Davis Polk & Wardwell, New York, Michael Farber, Misty Bailey