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Canada announced that its new transfer pricing rules would simplify the APA process for companies. Unfortunately, this is certainly not the case. Hendrik Swaneveld, Martin Przysuski and Venkat Nagarajan of BDO Dunwoody, Toronto (Markham), report

Singapore’s budget aims to encourage economic progress at a time of political uncertainty and intense competition. Taxation targets enterprise and growth, while attracting global talent. By Ajit Prabhu, Deloitte & Touche, Singapore

The recent UK budget announced changes that will make corporate compliance more complex. Simplicity and fairness may be the aim, but achieving it is going to require more hard work for practitioners. Derek Jenkins, PricewaterhouseCoopers, London

Financial statements are due to come under increased scrutiny following the Enron bankruptcy. Intercompany pricing once again finds itself in the spotlight. By Steven D Harris and Paul B Burns of KPMG, Washington, DC and Costa Mesa

The biggest surprise to come from this year's Australian federal budget was the announcement by treasurer Peter Costello on May 14 of an A$1.2 billion ($6.68 million) cash deficit in 2001-2002, attributed mainly to the war on terrorism along with disappointing tax revenues. As such, this year's budget provides for an underlying cash surplus of A$2.1 billion and lays the foundations for surpluses right across the forward estimates. Much of this will continue to fund further defence spending, which the treasurer says will rise by A$1.3 billion to A$14.1 billion in the financial year starting July. A further A$2.54 billion is to be allocated to border protection and domestic security. A large part of this will be funded by extra costs on Pharmaceutical Benefits Scheme (PBS) drugs, and tougher eligibility tests for disability pensions.

The US is once again taking a hard line with tax avoidance. Not only are there two bills before Congress proposing the end of corporate inversions, but also, in Notice 2002-35, the Internal Revenue Service has informed taxpayers that it is aware of a transaction involving notional principal contracts used to generate tax losses. It has stated that the tax benefits of this will no longer be allowed for federal income tax purposes.

7th Floor, Wisma Hamzah Kwong-Hing

May 7 saw EU ministers pass the tax measure requiring e-commerce companies to pay VAT on EU-based sales of digitally downloadable products. The VAT and E-commerce Directive has been at the centre of much controversy and there are fears that it could trigger a trade dispute with the US, which believes that its vendors could be at a competitive disadvantage. However, the EU claims that the new rules will ensure that EU suppliers will no longer be obliged to levy VAT on sales of these products on markets outside the EU. It believes the previous rules put EU suppliers at a competitive disadvantage because they were obliged to pay VAT on all services originating in the EU, regardless of the place of consumption. (For more on the VAT and E-commerce Directive, see EU VAT on e-commerce: the practical implications.)

Singapore's finance minister Lee Hsien Loong has revealed the details of the ?not ordinarily resident? (NOR) tax break scheme for expatriates living and working in the island republic. The new rules will mean that certain expatriates can pay income tax only on employment income attributable to the number of days spent in Singapore per calendar year, and remit pre-assignment income free from tax for a period of five years of assessment. NOR taxpayers must spend more than 90 days away from Singapore on business and pay at least a minimum of 10% on total employment income.

PKF is an international association of specialist tax, accounting and business consulting firms, advising clients in diverse industry sectors, through a network of member firms in 160 countries. The PKF Australian Tax Practices have highly trained tax consulting teams with expertise in all areas of corporate and personal taxation with particular specialist skills in corporate restructures, tax audit management, international tax, expatriate taxes, Captial Gains Tax, Goods and Services Tax and research and development concessions.