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Argentina is suffering a severe economic downturn. Companies operating in the country should take the opportunity to align supply chains and their tax strategy. By Manuel Solano, New York, and Daniel Rybnik, Buenos Aires, of Ernst & Young

Contacts Emails Richard J Wuermli richard.wuermli@taxexpert.ch Christoph Busin christoph.busin@taxexpert.ch Bruno Beer bruno.beer@taxexpert.ch Daniela Fischer daniela.fischer@taxexpert.ch Katharina B Padrutt katharina.padrutt@taxexpert.ch Matthias Erik Vock matthias.vock@taxexpert.ch Löwenstrasse 11

The EU is delaying the proposed takeover of Andersen in France by rival professional services firm Ernst & Young. The European Commission's antitrust regulators are concerned about how the proposed union will affect competition in the domestic audit market. The Commission has requested that Ernst & Young re-submit its application for approval because it discovered that the firm underestimated the French market share that would be controlled by the combined firm.

Early this year, two notices were issued to encourage the export of manufactured products and to expedite and strengthen the tax refund administration for exported goods. The two notices dramatically changes the current tax policies for exported goods, including:

Criticism by the UK government of Ireland's low-tax regime could lead to Irish subsidiaries of UK-owned parent companies facing higher tax bills. The government announced that companies operating in Ireland should no longer qualify for automatic exemption from UK tax. The decision would mean that companies would have to pay the difference between each country's rate of corporate tax. In the UK corporate tax rates can be as high as 30% but in Ireland the rate of corporate tax is 16% and is due to fall to 12.5% from January 2003.

The tax authorities have lost a transfer pricing case in the Dutch Supreme Court. Following the new codification of the arm’s-length principle, however, taxpayers may not always be so lucky – insufficient transfer documentation can reverse the burden of proof. By Dave Rutges, Eduard Sporken and Barry Larking, KPMG Meijburg & Co, Amstelveen, the Netherlands

Drinks company Diageo has agreed to sell Burger King for $2.23 billion in cash. The fast food corporation has been bought by a consortium composed of Texas Pacific, Bain Capital and Goldman Sachs. A portion of the purchase price is dependent on Burger King Corporation satisfying certain performance targets in its financial year ended June 30 2002. The drinks company intends some of the cash proceeds to be returned to shareholders and some reinvested in the drinks business. The tax cost on the disposal is approximately $175 million.

Russia is preparing to introduce international accounting standards. Tatyana Paramonova, the first deputy chairman of the Central Bank, has said that the bank has prepared draft instructions for transferring to the international standards. The instructions clarify issues including the calculation of capital and reserves. On July 29 2002 the Council on Audit at the Ministry of Finance approved drafts of audit standards. These standards refer to the standards approved by the International Accounting Federation

Zurich, Switzerland

The UK government has dropped Ireland from the list of countries enjoying exemption from the CFC rules. Jason Short and Alistair Craig of Ernst & Young’s International Tax Service Group in London work out why and what it will mean