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The budgetary measures for 2003 include new rules on the place of supply of services for value-added tax (VAT) purposes.

A new notice issued by the Ministry of Finance and the State Administration of Taxation exempts enterprises from business tax on the disposal of equity or shares which were initially invested in the form of buildings, land use rights, technology or other intangible assets. Prior to the issue of these rules, intangible assets or real property transferred to a company as capital contribution were exempt from business tax until the investor disposed of the equity or shares, which then subjected the disposition to a 5% business tax. However, there was a lack of guidance on how the 5% would be calculated and this new notice clarifies this issue. The notice takes effect from January 1 2003.

Elimination of capital tax

Energy companies initially embraced President Bush's proposal to eliminate taxes on dividends, but some pulled back after reading the fine print. Keith Martin of Chadbourne & Parke explains why

Multinationals must constantly adapt to business environment changes. Ignacio Arias of Ernst & Young explores the main tax consequences of a European restructure

The EU has taken another step towards imposing sanctions against the US in the ongoing trade war between the two countries over unfair tax breaks for US exporters. The European Commission (EC) has given EU member states a draft list of US products that could be subject to countermeasures if the US does not change its extra-territorial income exclusion scheme (ETI) and the Foreign Sales Corporation Act.

China is opening its $500 billion A-share market to foreign investors through the qualified foreign institutional investors scheme. Derek Chow and William Zhang of PricewaterhouseCoopers point out the restrictions and pitfalls

Mark Bielstein, a partner with KPMG has been named the chair of the American Institute of Certified Public Accountants' (AICPA) accounting standards committee.

Australian law firm Mallesons Stephen Jaques has started a tax practice in London. Senior associate Tim Sherman moved to the London office from Melbourne earlier this year. Sherman focuses on corporate tax including the taxation aspects of investment and trade between Australia and the UK. He also has experience of the taxation of international employee share ownership plans.

Gary LeDonne has been named the new national director of Ernst & Young's US state and local tax practice. LeDonne will be based in New York and takes over from Steve Starbuck.