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  • 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
  • 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 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.
  • Baker & McKenzie has hired eight tax associates from Arthur Andersen and Freshfields Bruckhaus Deringer in the Netherlands
  • Ernst & Young last week poached more than 200 Andersen staff across the US, as the troubles of the former Enron auditor continued
  • The US is preparing to overhaul its tax regime to limit the number of companies that pay less tax by shifting their operations abroad or merging with overseas companies
  • KPMG has strengthened its international tax capabilities by setting up a Swiss tax center of excellence in New York
  • Garrigues is finalizing an exclusive alliance with Deloitte & Touche, giving the independent Spanish firm access to a worldwide tax network
  • Mark Weinberger, the recent assistant secretary of the US Treasury for tax policy, has rejoined Ernst & Young to develop its Americas tax strategy
  • Cleary Gottlieb Steen & Hamilton plans to build an English-law tax capability to complement its M&A and capital markets focus, following a raid on Linklaters