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Uruguay's Executive Branch is expected to grant and/or extended tax benefits until May 31 2004. The decree, which has not yet been published, is designed to stimulate investment in the trade and service industries.

In May 2003 the US government passed The Jobs and Growth Tax Relief Reconciliation Act, significantly cutting taxes on dividends. Chief executives at some leading US firms now suggest the legislation is starting to reap rewards in terms of increased economic activity.

By Chee Weng Lee, PricewaterhouseCoopers in Hong Kong

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The German government approved on August 13 2003 a draft tax Bill that contains, among other measures, a completely redesigned set of thin-capitalization rules that are intended to be compatible with European law. The European Court of Justice (ECJ) held in its December 2002 Lankhorst-Hohorst decision that the existing thin-capitalization rules violate EU law. The ECJ's primary objection to the existing rules is that they apply primarily to foreign shareholders of German corporations, placing foreign EU shareholders at a disadvantage compared with similarly-situated, German-resident shareholders. While the German government was expected to respond to Lankhorst-Hohorst by extending the thin-capitalization rules to domestic shareholders (and their related parties), many tax professionals were nonetheless astonished by the sweep of the new proposal.

When the financial secretary Antony Leung delivered his first Budget speech in March 2003, he proposed to take away the exemption of holiday passages enjoyed under salaries tax. Initially, the first draft of the Bill merely repealed the provisions governing the exemption of holiday-passage benefits reimbursed by an employer. If an employer instead of reimbursement of an employee's holiday-passage expenses directly provided the benefits, such benefits were still exempt from tax under the principle of not being able to convert the benefit into cash. However, the Bill was subsequently amended to the effect that holiday passage benefits provided by an employer by whatever means are taxable under employees' salaries tax. If the holiday journey is partly for work purposes and partly for holiday purposes, the part for holiday purposes is taxable. The Legislative Council passed the law on June 25 2003, and the law takes effect from the year of assessment 2003/04.

Tax adjustments relating to the remuneration of inter-company administrative, technical and commercial support services are as frequent as the performance of such services is common.