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It was decided in Commissioner of Inland Revenue v Kwong Mile Services Limited (In Members' Voluntary Winding Up) in July 2002, that income arising from an underwriting agreement was derived at the place where the activities were carried out under the agreement. The taxpayer, a Hong Kong incorporated company, entered into an underwriting agreement with a developer who constructed a commercial and residential building in Guangzhou. The taxpayer undertook the sale of the property. The taxpayer marketed and promoted the sale of the individual units through its agent in Hong Kong. The judge held that, in this case, the place where the underwriting agreement was signed or where the underwriter assumed the risk under the agreement (both in Guangzhou) was not important. The activities that gave rise to the profit were the promotion, marketing and actual sales of the commodities concerned, and the source of the income was derived at the place where such activities took place.

The US Internal Reveunue Service (IRS) is strengthening its anti-tax shelter stance and has set new audit priorities. The strategy is designed to focus on key areas of non-compliance and will hit promoters of the schemes first before aiming to identify participants in the tax evasion efforts.

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.

Ernst & Young can officially begin the difficult task of integrating some of its largest offices, after the European Commission cleared the proposed merger between Ernst & Young and Andersen in France and in Germany.

Royal Philips Electronics unit Philips Medical Systems and the Rabobank Group unit De Lage Landen are setting up a joint venture in the US. The new venture will be called Philips Medical Capital and will provide financing for the purchase of the full diagnostic imaging equipment that Philips Medical Systems produces throughout the US. The new venture will be based in Pennsylvania and will be 60% owned by De Lage Landen. De Lage Landen will treat it as a consolidated subsidiary. Schulte Roth & Zabel represented DeLage Landen, with Daniel Blickman leading the tax side. Sullivan & Cromwell advised Philips, with Andrew Solomon in New York leading the tax group.

Following the publication of the revised Catalogue of Foreign Investment in Industries, effective April 1 2002, the State Administration of Customs issued a circular clarifying the import value-added tax and customs tax exemption for equipment imported by a foreign invested enterprise for its own use within the enterprise's total investment amount. The circular states that "encouraged" projects approved after April 1 2002, and "encouraged" projects that were once categorized as "restricted B" projects in the old guidance catalogue, which involve technology transfers, are now both entitled to the tax exemptions.

US firm Shearman & Sterling has continued the expansion of its international tax team by hiring its fifth lateral partner in the past year.

Jim Copeland, the global CEO of Deloitte & Touche and Deloitte Touche Tohmatsu has announced his resignation, at the firm’s annual gathering last week.

European Commissioner Pedro Solbes has expressed his concern at France’s 2003 budget, which he believes will prevent the country from reaching a balanced budget position by 2006

A High Court decision last week raises doubt over AOL’s relief from VAT in the UK