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ECOFIN, the group of finance ministers of EU member states, agreed upon a tax package on June 3 2003 covering cross-border interest and royalty payments and a political commitment to phase out harmful tax practices. The package has three parts:

The Organization for Economic Cooperation and Development (OECD) is threatening to place Switzerland on a tax blacklist because of what it has called harmful tax practices. Switzerland has also been under intense pressure over the issue of information-sharing and keeping banking clients confidential. For many years EU countries such as the UK have been lobbying for more transparency in Switzerland's banking system.

Ivo Onkelinx: BCCS need to ask for a renewal of their recognition periods The European Court of Justice (ECJ) suspended a European Commission decision forbidding renewals of Belgium's tax-efficient coordination centres (BCCs). The BCC system allows companies to set up in Belgium and benefit from a zero corporate tax rate in certain instances. The system has attracted a large amount of foreign investment since its introduction in 1982.

On May 12 2003 a major reform to the Maquila Decree was published in the Mexican Official Gazette.

The Italian government on June 19 approved a Decree extending until 2005 tax breaks for banking foundations that earn capital gains on sales of shares and other assets. The deadline had been 15 June for Italy's banking foundations to give up their controlling stakes in banks or else lose their tax benefits. The move was engineered to reduce the influence of foundations in the banking sector.

In May 2003 the Inland Revenue Department (IRD) for the first time prosecuted a tax evader by using the common law offence of cheating public revenue instead of the usual statutory power conferred under section 82 of Inland Revenue Ordinance (IRO). Under the IRO, the maximum penalty for tax evasion is three-year imprisonment and a maximum fine of three times the tax undercharged as a result of the tax evasion. However, under the common law offence of cheating the public revenue, the heaviest penalty is seven-year imprisonment and a fine without upper limit (under section 101I of the Criminal Procedure Ordinance).

On May 13 2003 the Australian government announced its response to the Review of International Tax Arrangements conducted by the Board of Taxation (BOT). The response includes a package of reforms designed to reduce the costs of compliance with the controlled foreign company (CFC) and foreign investment fund (FIF) rules, reducing tax on foreign active business income and a programme of modernizing Australia's tax treaties.

Since the announcement of the introduction of the 12.5% corporate tax rate in Ireland, certain tax practitioners, industry and other bodies have been calling for greater clarity concerning the meaning of trading for tax purposes. This is important because only trading income qualifies for the 12.5% tax rate. Non-trading income is liable to corporate tax at 25%. This has culminated in the recent publication of a guidance note by the Irish revenue commissioners (the Revenue) entitled Guidance on Revenue Opinions on Classification of Activities as Trading (the Revenue Guidance). A copy of the Revenue Guidance can be found on the Revenue website at www.revenue.ie.

EU finance ministers agreed on June 2 2003 a tax package aimed at securing tax revenues and freeing up intra-group payments within the EU. The tax package includes:

On May 30 2003 Law 10,684 introducing modifications to the tax instalment programme for Brazilian taxpayers was enacted. The general rules set forth in Law 10,684 can be summarized as follows.