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Attempts to introduce a new income tax in Bolivia collapsed after violent strikes left more than 10 people dead and many more injured in the capital city, La Paz. The Bolivian president Gonzalo Sanchez, announced that he was abandoning his Budget in light of the violent demonstrations in the city. The country descended into violence after the government announced its intention to bring in a tax of 12.5% to reduce the budget deficit.

The country's Ministry of Finance and the Chamber of Tax Advisers are testing electronic VAT returns. They are looking at issuing, filing, receiving and recording the forms electronically with the system due to be fully active in March this year.

The SEC is suing KPMG and four KPMG partners including the head of the firm's department of professional practice for fraud. The charges relate to KPMG's audits of Xerox from 1997 to 2000.

Proposals in Japan to allow the use of foreign company shares in stock-for-stock deals with domestic entities will be ineffective because the government will not remove prohibitive tax burdens.

Ernst & Young has successfully struck out a £2.6 billion claim against it by Equitable Life and the judge described Equitable's alternative bonus claim as 'seriously flawed'.

by Edward Troup, Head of Tax Strategy, Simmons & Simmons

Transfer pricing has been one of the most talked about areas of tax work in recent years and so far it has stayed firmly in the hands of the professional services firms. The big four have been able to make full use of their international networks in restructuring multinationals' supply chains and advising on the full range of transfer pricing services. Very few other firms have been able to compete on such a scale.

The Italian tax authorities have confirmed, in circular letter 8/E issued on February 6 2003 (the Ruling), the de facto tax neutrality of vehicles incorporated pursuant to the so-called Securitization Law (law 130 of April 30 1999) in order to carry out securitization transactions (Securitization Vehicles).

A recent notice, effective from January 1 2003, clarifies the approval, registration, foreign exchange and taxation of foreign investment enterprises (FIEs) with less than 25% foreign ownership. The notice unifies the approval, registration and foreign exchange treatment of all FIEs in China by requiring FIEs with less than 25% foreign ownership to obtain MOFTEC approval and abide by the same registration and foreign exchange procedures as other FIEs. However, the notice states that FIEs with less than 25% foreign ownership will not be entitled to the preferential tax policies offered to other FIEs, including the duty-free import of capital equipment.

On December 12 2002 the Court of Appeal delivered its judgment in the case of Mansworth v Jelley ([2003] STC 53). The court held that where an employee exercised unapproved share options granted by their employer or otherwise than by way of bargain at arm's length, the base cost in the shares should be treated as being the market value of the shares at the time of exercise of the option.