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Taxation of company profits – Parent companies and subsidiaries – Directive 90/435/EEC – Concept of withholding tax.

DATE TYPE OF DEAL VALUE ACQUIRER TARGET HOLDER ADVISERS TO TARGET ADVISERS TO ACQUIRER ADVISERS TO HOLDER 01/08/01 acquisition ($1.6 billion) £1.1 billion Gallaher Group, financed by Dresdner Kleinwort Wasserstein, Goldman Sachs, Barclays Capital, HSBC 41.3% stake in Austria Tabak n/a Cerha, Hempel & Spiegelfeld, Vienna, Dr Albert Birkner, Edith Hlawati Gallaher - Simmons & Simmons, London; Fried Frank Harris Shriver & Jacobson, New York; Banks - Linklaters, London, Ian Bowler, Giles Horridge, Sulivan & Cromwell, New York n/a 06/08/01 proposed acquisition £2.8 billion ($4.08 billion) Valentia Telecom-munications Eircom Valentia Consor-tium Arthur Cox, Dublin, Caroline Devlin, Niamh Caffrey n/a Freshfields Bruckhaus Deringer, London, Francis Sandison, Tom Passingham; Washington, Claude Stansbury, Kevin Cunningham; Debevoise & Plimpton, New York, Gary Friedman; London, Peter Schuur; A&L Goodbody, Dublin, Peter Maher, Andrew Quinn 06/08/01 tax planning and merger implemen-tation $6.86 billion Schneider/ Legrand n/a n/a n/a Andersen Legal, Paris, Frederic Donnedieu de Vabres n/a 10/08/01 convertible bond issue $500 million South African Breweries n/a JP Morgan Securities, Cazenove & Co n/a Lovells, London, Lyndsey Bainton Linklaters, London, Martin Lynchehan, Simon Marks 21/08/01 acquisition undisclosed Dexia Banque Internationale à Luxembourg Ely Fund Managers Holdings Ltd n/a Wedlake Bell, London, Jack Harper Norton Rose, London, Jeremy Reynolds n/a 31/08/01 share sale $157 million Enterprise Oil Petrobras' UK interests Petrobras Herbert Smith, London, David Mogford, Neil Warriner CMS Cameron McKenna, London, Richard Croker n/a 04/09/01 acquisition $2.2 billion Royal Ahold Alliant Food Service Inc n/a Debevoise & Plimpton, New York, Bob Cubitto, Seth Rosen, Rafael Kariyev White & Case, New York, Mario Fulgieri n/a 05/09/01 development £204 million($297.39 million) The Moor House Limited Partnership Ltd n/a n/a n/a Herbert Smith, London, Isaac Zailer n/a 10/09/01 merger / acquisition $25 billion Hewlett-Packard Company Compaq Computer Corporation n/a Skadden, Arps, Slate, Meagher & Flom, New York, Stuart Finkelstein, Kathy Bristor, Melissa McCann, Patrick Chu Wilson Sonsini Goodrich & Rosati, Palo Alto, Ivan Humphreys, David Gerson, Eileen Marshall n/a 10/09/01 merger $4.2 billion C-MAC Industries Inc Solectron Corporation n/a Stikeman Elliott, Montreal, Frederic Harvey, Luc Bernier; Davis Polk & Wardwell, New York, Kathleen Ferrell, Michael Mollerus Wilson Sonsini Goodrich & Rosati, Palo Alto, Ron Roth, Susie Morse; San Francisco, David Hasen; Osler Hoskin & Harcourt n/a 19/09/01 strategic alliance $1 billion Bristol-Myers Squibb ImClone Systems Incorporated n/a Davis Polk & Wardwell, Michael Mollerus, Kathleen Ferrell, Roy Caner Cravath Swaine & Moore, New York, Stephen Gordon n/a

The shares that a company holds in a subsidiary must be cancelled in the case of a merger with the latter. Depending on the circumstances, this cancellation may trigger a capital loss equal to the difference between the tax base of the shares in the accounts of the parent company and the fair market value of these shares at the time of the merger. This capital loss is, in principle, deductible from a tax standpoint, provided that it corresponds to a real decrease in the absorbing company's net assets.

For some while, the UK Inland Revenue has been committed to reviewing and updating the legislation covering the taxation of foreign exchange gains and losses (forex), financial instruments and corporate debt. A technical note was issued in November 2000 setting out suggestions for change and asking for comment, and at the time of the 2001 budget in March, a press release announced the publication of a further consultative document in the summer.

For some organizations, the value of their intangibles is a key element in the value of their brand. For others, intangible assets go unrecognized and unexploited. Find out how paying attention to intangibles can give your company a competitive advantage. By Thessa Mac, CMS Cameron McKenna, London

Latin American regulatory regimes traditionally lack a general anti-avoidance provision permitting the tax authorities to challenge transactions on the basis of their actual economic substance. But recent changes allow the tax authorities to seek out the substance over the form of a transaction. Prepared by the Latin American Business Centre of Ernst & Young in Europe

As globalization continues apace, taxing jurisdictions worldwide are paying close attention to transfer pricing. This column summarizes recent international developments and changes in transfer pricing legislation. By Bill Dodge and Giovanni DiCenso, Deloitte & Touche, Washington, DC

Dutch tax literature pays little attention to insurance tax. One of the reasons could be that, at first sight, the insurance tax is rather uncomplicated. It could, however, be otherwise in cross-border situations.

In a shock move, Latvia has announced draft proposals to drop its corporate income tax rate from 25% to 15% by 2004. The proposal, entails reducing the corporate tax rate down to 22% in 2002, 19% in 2003 and 15% in 2004, in a bid to attract foreign investors.

The debate over the possibility of the Tobin tax ? a proposed tax on cross-border capital flows, in particular speculative currency transactions ? is widening. Following French prime minister Lionel Jospin's support for the tax, UK foreign secretary Jack Straw has denounced the idea's viability, stating that it is unlikely to work in practice.