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The Canada Customs and Revenue Agency (CCRA) continues to provide favourable advance income-tax rulings for a common but attractive cross-border financing structure. The structure is used for the financing of a Canadian subsidiary by its US parent. It provides for a tax deduction in Canada and no immediate income inclusion in the US. It also results in a so-called double-dip if the US parent has borrowed the money used to finance the Canadian subsidiary, in particular a deduction of interest expense in both Canada and the United States.

New M&A rules, which became effective on April 12 2003, allow the involvement of foreign investors in domestic M&As for the first time. The new rules allow for acquisition of equity where the foreign investor purchases the equity of a domestic enterprise by agreement or subscription to the increased capital of the domestic enterprise, thereby transforming the domestic enterprise into a foreign invested enterprise (FIE); and acquisition of assets where a foreign investor sets up a FIE, and then purchases and operates the assets of a domestic enterprise or purchases the assets and uses them as investment in a newly established FIE.

Maria Eugenia Palombo of Klegal reviews the key transfer pricing cases in Italy and reveals the implications of the decisions

By Tobias Lintvelt, Koichi Sekiya and Jeff Hongo, Shin Nihon Ernst & Young, Tokyo

By Derek Alty, Jay Niederhoffer and Andrew McBride, Deloitte & Touche, Vancouver and Toronto

Gianni, Origoni, Grippo & Partners

By Bradley Phillips, Derek Hill and Emma Nendick, Herbert Smith, London

By Dr Dietgard Klingberg, Marius Möller and Dr Frank Schmidt, PricewaterhouseCoopers, Frankfurt and Stuttgart

By Massimo Agostini and Claudia Gregori, Gianni, Origoni, Grippo & Partners, Rome

By Chris E de Jong and Jean Pierre Viergever, Deloitte & Touche, Rotterdam