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Countrywide Assured Financial Services Limited has arranged a new 15-year distribution agreement with Friends Provident Life and Pensions. Under the terms of the agreement, Friends Provident Life and Pensions has been appointed as exclusive provider of the life assurance products through the Countrywide estate agency network. The distribution agreement is expected to create payments to the Countrywide Group of around £275 million ($426 million) on a discounted basis over the next 15 years.

Belize Government

TransCanada

Under draft legislation published recently, the UK intends to restrict the interest deduction that can be claimed by a UK branch through the imposition of an arm's-length debt-to-equity ratio on the branch. At present there is often little restriction in practice on the deduction that UK branches of overseas companies, particularly banks, can claim in the UK in respect of borrowing costs. In comparison, the interest deductions of a UK subsidiary of a foreign parent are effectively limited by the existence of its equity capital (restricting its level of debt). This has resulted in a disparity between the tax treatment of UK branches and UK subsidiaries, which favours (in this respect) branches. The government has decided to take action, because the current position is out of line with other major industrialized countries (in particular, France, Germany and the US).

The European Commission has formally closed its investigation into Spain's Vizcaya coordination centre regime after the Spanish government abolished the regime on April 30 2002. The Commission initiated a state aid investigation into the Spanish regime (as well as a number of other regimes in EU member states) in July 2001, and concluded that the regime constituted unlawful aid in August 2002. Under EU rules, incompatible aid may be subject to recovery from the aid recipient if the Commission was not notified of the aid.

Until 2001, capital gains obtained by foreign residents through the Mexican Stock Exchange (that is, individuals or corporations) were tax-exempt provided the transaction complied with certain formalities (for example, the shares are allocated among public investors).

To the surprise of many Canadian practitioners and taxpayers, the Supreme Court of Canada declined to hear OSFC Holdings' appeal of the Federal Court of Appeal decision (OSFC Holdings Ltd v The Queen, 2001 DTC 5471) upholding the application of Canada's general anti-avoidance rule (GAAR) to deny tax losses otherwise available under the specific provisions of the Income Tax Act (Canada). As is the customary practice, the Supreme Court did not give reasons for its rejection of OSFC's leave application, so practitioners and taxpayers were left to speculate on the reasons behind the decision, and the question of when the Supreme Court will wade into the growing number of appeals involving GAAR.

On page 34 of the September 2002 issue of International Tax Review, the word ?unpredictable' appears in the last sentence of the last paragraph. The word ?predictable' should replace this word. ITR apologises to the authors.

Singapore and Russia have signed an agreement for avoiding double tax and income tax evasion. The signing took place in Moscow and was announced on September 9. The agreement intends to ease the cross-border flow of trade, investment, financial activities and technical know-how between Singapore and the Russian Federation, as well as alleviating double taxation. There are also provisions for reducing or exempting tax on certain types of income.

The flood-hit Czech Republic has proposed a tax reform package to attempt to raise vital funds for rebuilding the country. The government wants to raise around CZK10 billion ($326 million) through the emergency measures that would cover around one-third of the estimated costs of repairs. Over the course of this summer the country has seen its worst flooding in more than a century.