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The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held in a recent decision that payments made to non-residents should be taxed at the rate prescribed under the relevant Finance Act and not at the rate prescribed under the applicable tax treaty between India and the country of which the recipient is a resident. According to the ITAT, the rate prescribed in the tax treaty is applicable only for the purposes of assessment and not for deduction of tax at source. The decision of the ITAT concerned the assessment year 1991-92 and has been passed by a Single Member Bench. There was no representation by the assessee and the matter was decided ex-parte.

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.)

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Eversheds has secured Gary Telford, formerly a tax partner in Ernst & Young's UK global employee solutions practice, as a tax director. In his new role, Telford will be focusing on three major areas with the primary objective of developing new business. With Ernst & Young, Telford worked with clients ranging from owner-managed businesses to major listed and global companies.

Garrigues is finalizing an exclusive alliance with Deloitte & Touche, giving the tax group of the independent Spanish law firm access to a worldwide tax network. A partner vote will take place during the first week of June, which is expected to be in support of the referral agreement that would serve around 40% of the firm's 110 partners.