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Deloitte & Touche has announced that it is converting to a limited liability partnership (LLP) in the UK later this summer. In the post-Enron environment, protecting partners from as much risk as possible is vital for professional services firms, and becoming an LLP is increasingly popular. Deloitte is the last of the big four to convert and law firms are getting in on the act. But the much-desired international networks are proving to be problematic with authorities in some countries, such as France, threatening to tax income from a UK LLP as if it is from a company not a partnership.

In December 2002 the Special Commissioners published their decision in the case of Association of British Travel Agents Limited v Commissioners of Inland Revenue (Special Commissioners decision 359). The case concerned the application of the UK-controlled foreign companies (CFC) legislation in the context of two captive insurance companies.

Aforeign corporation that is engaged in a US trade or business is subject to regular US income tax on net income that is effectively connected with the trade or business. However, in order to claim deductions and credits otherwise available for calculating its US income tax liability, the foreign corporation must file a "timely and accurate" US income tax return. Failure to do so generally results in permanent disallowance of otherwise available deductions and credits. The IRS has recently issued regulations that significantly relax the standards for accepting late-filed tax returns.

On January 1 2003 Law 51/2002 entered into force (the Law) amending Spanish municipal taxation.

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

Countries joining the EU

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 Hong Kong Inland Revenue Department (IRD) issues employer's returns to companies carrying on business in Hong Kong on April 1 each year. Employers are required to submit details of remuneration paid to employees in the returns. The IRD uses employer's returns to scrutinize whether employees report their income correctly by matching the income disclosed in the individual's tax return with the payment of remuneration reported in the employer's return by his or her employer.

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