Search results for

A new circular, issued by the State Administration of Taxation and effective from January 1 2003, clarifies the application of enterprise income tax (EIT) and business tax (BT) in relation to the provision of services by a holding company to its investee companies. In particular, the circular provides that the service fee charged by the holding company may be determined by contract and be based on the particular criteria set out in the contract; and by allocating fees calculated on the actual expenses incurred by the holding company.

In its decision of January 22 2003 in what is known as the Pirelli case, the UK High Court rejected a claim by the Inland Revenue that companies that would otherwise be entitled to compensation in respect of advance corporation tax (ACT) paid on dividends to the parent companies in the EU on the basis of the European Court of Justice decision in the Hoechst case, should be denied such compensation or be subject to an offsetting reduction if the group was entitled to a tax credit refund under a double tax treaty between the UK and the country in which the parent company was resident. The court also decided that it was not necessary at this stage to refer to the European Court of Justice (ECJ) the issue as to whether ACT was a withholding tax. This decision is subject to appeal.

Where an Australian consolidated group is owned by a foreign parent company, consideration must be given to the tax impact for the foreign parent of how the liability to pay the Australian group's income tax arises.

The Brazilian government issued Provisional Measure 66/2002 (PM 66/2002) on August 29 2002. Among several other changes, PM 66/2002 had altered the rules for the application of the social integration program tax (PIS), and introduced new provisions with respect to tax avoidance.

On December 3 2002 the Auditor General released her report, which targets international transactions. Chapter4 entitled "Taxing International Transactions of Canadian Residents", indicates that the Canada Customs and Revenue Agency (CCRA) needs to be more effective in carrying out audits of international issues. Specifically, CCRA needs to perform better risk assessment to determine what compliance work should be undertaken in each tax services office and on a national basis. Second, CCRA must find ways to improve its staffing and training of auditors. Third, CCRA needs to be more effective in carrying out audits of international issues. Finally, CCRA must focus more on small-and-medium-sized businesses to ensure that their international related-party transactions are scrutinized. To achieve these objectives, the Auditor General makes a number of specific recommendations all of which CCRA has undertaken that it will adopt.

The willingness of UK inspectors to take on bigger and more complex transfer pricing cases may be about to increase. Gary J Mills, head of Ernst and Young's transfer pricing controversy practice, looks inside the Inland Revenue after Tax Bulletin 60

A new case has changed how employees of Japanese subsidiaries of foreign companies are taxed on their stock options. Ryuichi Tajima, Doug Rosser, Jonathan Stuart-Smith and Jonathan Golub of Deloitte Touche Tohmatsu, Tokyo explain why corporates need to review their plans

Transfer pricing professionals face a new challenge. Francois Vincent, Steven D Harris and Paul Burns of KPMG report on the case that is changing the landscape in North America

Multinationals doing business in the US should be worried about how the Thomas Bill will affect their business. PricewaterhouseCoopers' Oscar Teunissen and Larry Skor in New York and Christine Halphen, Steve Nauheim and Linden Smith in Washington DC explain why

1. Corporate tax compliance