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David Miller: New rules would mean more work for tax advisers The US Treasury Department and the IRS has issued guidance for tax advisers as part of their campaign against abusive tax avoidance transactions. The guidance provides a set of best practices to ensure that tax advisers adhere to the highest ethical standards and inform their clients of any potential risks in certain tax transactions.

HM Customs & Excise (Customs) has put forward proposals to modify the criteria for value-added tax (VAT) grouping membership, to conform to the accounting consolidation rules rather than existing company law grouping rules. This is likely to affect many joint ventures (JVs), where VAT grouping is currently available but may be denied under the new rules. Customs considers that the current rules are too far removed from economic reality, and believes this situation is being abused. The changes, which are planned to take effect from mid-2004 without any transitional relief are subject to consultation. Corresponding changes are planned for limited partnerships.

David Blumenthal: Will offer a broad tax practice Dewey Ballantine launched a UK tax practice after poaching London-based Linklaters tax specialist David Blumenthal on January 14 2004. The move highlights a growing trend as US law firms expand their tax practices to cater for their clients' UK and European tax advice needs.

The American Bar Association (ABA) has said that the IRS must aggressively promote tax simplification to improve service to taxpayers and ensure that tax laws are effectively enforced

Debate is growing in India on the attribution of profits to business process outsourcing entities (BPOs) that are permanent establishments (PE) of foreign companies in India. Under Indian tax treaties, a non-resident has a PE if it carries on business through a dependent agent in India. A dependent agent is an entity in India that exercises authority to conclude contracts or secures orders on behalf of the non-resident and is legally or economically dependent on the non-resident. Treaties say profits attributable to a PE are taxable in India. There are conflicting views on the extent of the profits attributable to the PE.

On January 1 2004 various reforms to the Mexican tax legislation were effective. The most significant changes approved by Congress were made to the Federal Fiscal Code (FFC), which was substantially modified. Almost all of the proposed substantive modifications to specific taxes were rejected so such taxes will remain in essence unchanged for 2004.

The Ministry of Finance announced the tax reform plan for 2004 on December 19 2003. The emphasis is on taxing individuals. Corporation tax has not been drastically changed but notable changes are as follows.

More than a dozen Bills aiming to reform Germany's labour market, public health insurance system, and tax laws were enacted in December 2003.

On October 31 2003 the Brazilian government issued Provisional Measure 135/2003, which, among other things, altered the rules for the application of the social security financing (COFINS) tax. It also introduced new provisions with respect to capital gains realized on the sale of Brazilian assets (including the shares of Brazilian companies) between Brazilian non-residents.

The tax treatment of interest payments between related corporate parties and thin capitalization is set to change. Nikolaj Bjørnholm and Steen Halmind of Bech-Bruun Dragsted explain what’s in the proposed legislation