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By Evgeny Bezlepko, Ernst & Young, Moscow

By Evgeny Astakhov and Maureen O’Donoghue, Ernst & Young, Moscow

Ministry of Taxation of the Russian Federation

By Victor Borodin and Alexander Smirnov, Ernst & Young, Moscow

By Scott Antel, Ernst & Young, Moscow

Over the last few months, Mexico has been analyzing the feasibility of issuing clear regulations on electronic signatures for use with electronic and optic technology or any other technology. On August 29 2003, a decree was published amending and adding to provisions of the Commerce Code as concerns electronic signatures.

The consolidated taxation system became effective in August 2002. The original consolidated tax rules were partly amended under the Tax Reform Act, which includes amendments to make up for the incompleteness of the original rules.

As a measure of further liberalization, the government has now decided that all companies that have entered into foreign technology collaboration agreements may be permitted, on the automatic approval route, to make royalty payments up to 8% on exports and up to 5% on domestic sales. They may do this without any restriction on the duration of the royalty payments and this is irrespective of the extent of foreign equity in the company's share capital. Previously, royalty payments to foreign companies by companies other then their wholly owned subsidiaries were allowed only for a specific period. This measure establishes the principle that payment for technology should not be governed by the relationship between the payer and payee and puts to rest the discrimination between royalty payments made by wholly owned subsidiaries and others.

Companies which have overpaid UK tax due to a generally held but mistaken view of the effect of UK tax law may be prevented from seeking compensation for the full amount of their loss. This is the effect of draft legislation published on September 8 2003. Claims brought before September 8 are not affected by this change. This move is particularly topical for multinational groups considering seeking compensation for UK tax law breaching EU law.

The project to overhaul the Brazilian tax system is continuing to move forward in the political sphere. On September 4 2003, the House of Representatives approved the tax Bill, which will still be subject to further amendments and to the Brazilian senate's review before its final sanction.