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From September this year, Haarmann Hemmelrath has been able to offer its Frankfurt clients dedicated customs advice. The German firm has hired Michael Hundebeck as an associated partner from Schürmann & Glashoff Steuerberatungsgesellschaft.

A reform of Spain's personal income tax (together with certain aspects of non-resident income tax and corporate income tax) is now underway.

The United Arab Emirates Offsets Group, the majority owner of the $3.5 billion Dolphin Energy Project, is selling 24.5% of the venture to Occidental Petroleum. The project includes the construction of a 260-mile natural gas pipeline from Qatar's offshore North Field to the UAE. Occidental Petroleum has replaced Enron as the third partner in the venture, alongside the UAE Offsets Group and the French company Total Fina Elf. Shearman & Sterling provided tax advice, with Alfred Groff and Carol Ann Johnson in Washington representing UAE group.

Multinational groups that operate in a large number of taxing jurisdictions face challenges in demonstrating compliance with the arm's-length standard. Among the growing number of countries that demand contemporaneous documentation, there is very little commonality in requirements. This makes it difficult to achieve economies of scale in the preparation of documentation.

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.

Foreign investors in China wishing to take advantage of the post-WTO business environment need to align clearly their business tax strategies and carefully adopt tax-planning techniques to optimize the tax position before and after the deal. By Billy Hsieh and Sandy Cheung, PricewaterhouseCoopers, Shanghai.

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.

Ernst & Young has expanded its New York financial services tax practice with seven tax advisers from the defunct Andersen. The firm announced on September 16 that five partners and two principals have joined the group in addition to 26 support staff.