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Foreign-funded banks and financial institutions established and operating in special economic zones (SEZs) including Shanghai Pudong and the Shuzhou Industrial Park have enjoyed a special exemption from business tax on their revenue from foreign exchange lending since 1997, under the Notice on Issues Concerning Adjustment of Taxation Policies for the Financial and Insurance Industries, Guo Fa [1997] No 5, issued by the State Council in the same year. Guo Fa [1997] No 5 provided that foreign-funded banks and financial institutions established and operating in SEZs would be exempted from business tax for five years from the date of registration of the relevant bank institution in respect of their turnover sourced from inside SEZs (the five-year exemption).

Lovells is to merge with French firm Siméon & Associés. Siméon's offices ? in France and Belgium ? will merge into the respective Lovells' offices on November 1 this year. The firm will be known worldwide as Lovells. The merger will give Lovells five full-time tax lawyers in Paris. Siméon tax lawyers Claire Guionnet-Moalic and Florian Delisle will join existing partner Hervé Israel and his two assistants. Jean-Pierre Langlais, a corporate partner responsible for overseeing the tax practice at Siméon, will also assist the team.

In the 25 years since the current UK-US tax treaty was signed, significant changes have taken place in the world of international taxation. The long-awaited overhaul is now complete, creating short-term uncertainty, but bringing a promise of less than a quarter of a century until the next update. By Chris Harrison and Dave Lewis, Allen & Overy, London

The IRS experiences a significant setback in its efforts to combat so-called corporate tax shelters and alleged abusive transactions, unexpectedly concedes the inclusion of stock options in cost sharing pool in Seagate, and has acquiesced on the UK petroleum revenue tax in Exxon v Commissioner. By Hal Hicks, David Benson and Margaret O’Connor, Washington DC

A ruling by Germany's highest tax court in May of this year compels the German tax authorities to rethink their proposed transfer pricing documentation regulations. By Alexander Vögele and William Bader, KPMG, Frankfurt

Chile recently introduced new tax law provisions. Whilst foreign institutional investors gain an exemption, a new thin capitalization rule along with limitations on certain taxplanning techniques show the authorities’ more stringent approach to the subject of tax avoidance. By Leon Larrain and Miguel Zamora, Baker & McKenzie, Santiago

The avoir fiscal system and the new German half income procedure may make it attractive for non-German shareholders of French corporations to channel their dividend income through a German resident corporation. By Hubert Schmid and Thomas Dammer, Clifford Chance Pünder, Frankfurt

China’s government is signaling its emphasis on tax law enforcement in its New Law. Companies may want to make sure their tax affairs are in good order. By Yunfang Wendy Guo, KPMG’s International Chinese Tax Center of Excellence, New York

Certain guiding principles need to be followed when interpreting the provisions of a double taxation treaty vis-à-vis domestic tax law. This article considers the international context set out by article 9 of the OECD model, and its application to Indian domestic law. By Vispi Patel, Deloitte Haskins & Sells Mumbai

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