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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.

In February 2003 the European Commission published a consultation paper that discusses the possibility of using the introduction of international accounting standards (IAS) in 2005 to also introduce a consolidated tax base for companies with EU-wide activities.

The Ministry of Foreign Trade and Economic Cooperation recently issued amendments to the rules on foreign-invested holding companies or investment-type companies.

President Luiz Inacio Lula da Silva emerged from a meeting with Brazil's state governors on April 16 with a common agenda for extensive tax reform. Moves toward the harmonization of the value-added tax on sales and services (ICMS) could reduce the need for regional tax advice in Brazil.

The Securities and Exchange Commission (SEC) has selected William McDonough as its nominee to be the new chairperson for the Public Company Accounting Oversight Board (PCAOB). The PCAOB was set up as part of the Sarbanes Oxley Act. McDonough is the president of the Federal Reserve Bank of New York.