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Tax advisers and industry are reacting to Belgian Prime Minister Guy Verhorstadt's tax cutting budget with uncertainty. The budget, announced early October, included a cut in corporate tax from 40.17% to 33.99% from January 1 2002. A second reduction in the tax rate, down to 30%, is being considered over a two-year period.

On August 31 2001, the Netherlands state secretary of finance published a legislative proposal that contains measures against dividend stripping (see International Tax Review, June 2001, discussing new measures against dividend stripping.) The proposed amendments have retroactive effect as of April 27 2001.

With China entering the WTO, the government is being forced to fully open the domestic market. Restructuring to take advantage of such opportunities will have major tax consequences. By Glenn Desouza, PricewaterhouseCoopers, Shanghai

The epic trade war between the US and the EU continues, with the US refusing to accept a WTO ruling against its Foreign Sales Corporation (FSC) legislation. It is appealing against the WTO's August 20 decision in favour of the EU's claims that the act and its replacement, the Extraterritorial Income Exclusion Act (ETI) of November 2000, constitute an export subsidy that allows US exporters to save billions of dollars a year.

The Spanish government has recently submitted the draft budget laws for 2002 to parliament. As in prior years, many relevant tax measures are included although this year they appear to be even more significant. Some of the proposed tax measures are as follows:

Legislative proposal Tax Plan 2002 II sets out key changes to the Netherlands participation exemption regime and its rules on hybrid debt, among others. By Eelco van der Stok, Freshfields Bruckhaus Deringer, London

Intra-group lending raises transfer pricing and thin capitalization concerns. Whatever form the challenge takes, the prudent approach is multi-pronged. By Thessa Mac, CMS Cameron McKenna, London

The Italian tax authorities are gearing up for more detailed monitoring of major taxpayers. Perhaps the traditional deficit of qualified tax personnel can be offset by Italy’s sectoral studies approach. By Dr Davide Bergami, Studio Associato Legale Tributario, Milan (correspondent firm of Ernst & Young)

In the aftermath of the terrorist attacks on the US, the prospect of a week in the beautiful US West Coast city of San Francisco did not prove alluring enough to the members of the International Fiscal Association (IFA) this year. Estimates put the level of cancellation for the 55th Congress ? held from September 30 to October 5 ? at an astonishing 30%-35%. In total, just over 900 delegates registered for the congress. Although the number of accompanying persons boosted numbers for the social side of the congress, attendance was still down on the Munich event last year.

Baker & McKenzie has strengthened its indirect tax group by hiring a senior lawyer from HM Customs & Excise in the UK. Hassan Khan has joined Baker & McKenzie as a senior associate after spending six years with Customs & Excise where he was also EU legal coordinator and human rights act coordinator. The expansion is part of the London office's strategy to concentrate on specific industries.