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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

The EU Directive on VAT and E-commerce will take effect from July 1 2003. But exactly what impact will implementation of the new system have on businesses? Alan Sinyor of Freshfields Bruckhaus Deringer, London, finds out

Business leaders in Europe have given cautious backing to European Commission plans to pursue a common consolidated tax base. The Commission invited representatives from businesses, governments and academia to a conference last month to comment on four approaches to European taxation: home state taxation, common consolidated base taxation (CCBT), a European corporate income tax and the compulsory harmonization of existing tax bases.

Due to Congress's failure to extend a financial transactions tax (the CPMF), Brazil has announced that it will cut planned expenditure of R$5.3 billion ($2.1 billion) from this year's budget to compensate for the shortfall. The extension of the CPMF had to be approved in March if the tax was to be collected, however the bill has been stalled by political wrangling. It is estimated that Brazil will see a shortfall of R$400 million every week when the CPMF expires this month.

The Spanish government has initiated a process to partially reform personal income tax by commissioning a committee of experts, chaired by Professor Manuel Lagares, to prepare a report on the fundamental aspects of the tax and then draft a bill. The bill has been sent to the Spanish lower house.

The draft amendments to the Tax Code have passed two readings in the State Duma (the lower chamber of the Russian parliament). The amendments include a broad list of changes in taxation, most of which are technical in nature and intended to eliminate ambiguities in recently introduced chapters of the Tax Code. Nonetheless, some of the proposed amendments may have a substantial impact on the taxation of foreign investors in Russia. The most important amendments are summarized below.

As a consequence of the 2002 comprehensive Mexican tax reform approved by Congress, the Mexican Income Tax Law now considers that when a Mexican tax resident entity ceases to be a Mexican resident under the rules established in the Mexican Federal Tax Code (ie when it changes its tax residence to a country other than Mexico), it will be deemed to be liquidated for Mexican tax purposes. The purpose of this change is to avoid the transfer of Mexican taxable income to a foreign country, as such a transaction is detrimental to the Mexican Treasury Department.

Cross-border reorganizations rank among the most complex tax planning transactions. Two recent changes in German tax law open up new possibilities for accomplishing certain cross-border reorganizations without realization of gain.

Effective for accounting periods ending on and after April 1 2002, a tokumei kumiai (TK) with foreign corporations and non-resident individuals that do not have permanent establishments in Japan (non-resident investors) are subject to a 20% withholding tax on the distribution of TK profits under contracts. The 20% withholding tax is the final tax on such distributed TK profits.