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By Peter Corcoran, global leader for international tax services for Deloitte Touche Tohmatsu

For many years the Brazilian government has failed to enact fiscal reforms and to revise its inefficient indirect tax system, which imposes several types of taxes collected by the federal, state and local governments. Over the last decade this situation has developed into a serious tax competition between the different layers of the Brazilian government. The current tax system is characterized as a maze of complicated tax rules, which greatly increase the cost of products and services in the country. The result has been that Brazilian taxpayers are among those with the highest tax burden, representing 36.45% of the country's gross domestic product (only below Sweden - 47% and Germany - 36.7%).

Guernsey is recommending introducing a withholding tax on EU resident individuals' savings interest instead of exchanging banking information when the EU tax package and Savings Directive is adopted.

Countries joining the EU

As from 1994, the year in which the Mexico-US tax treaty (the Treaty) was enacted, it was not clear whether the US limited-liability companies were entitled to the benefits of the Treaty when they were treated as pass-through entities when their partners were US tax residents.

While the new corporate reorganization rules have been used in many cases for the past two years, there remain some practical issues for qualified reorganizations.

The Italian Parliament passed a delegation law (Law 80 of April 7 2003), effective as of May 3 2003 pursuant to which the Italian government has been empowered to issue - within two years as from the entry into force of the Law - legislative decrees aimed at operating a wide reform of the Italian tax system (the Decrees), based on the principles outlined in same Law. The enactment of the Law represents a crucial step, since it is expressly intended to render the Italian tax system more efficient, and as such competitive with those of other European countries. The government has expressed its intention to enact most of the Decrees by the end of the year, so to have the reform effective as from January 1 2004.

The Finance Act 2003 (the Act), which became law on March 28 2003, effects important changes covering:

In order to eliminate double taxation, countries negotiating a tax treaty have the choice between the credit method and the exemption method.

Derek Jenkins and John Whiting of Pricewaterhouse-Coopers uncover what the 2003 Budget holds for international business