Search results for

In ?an open letter on eight priorities for British business? to Prime Minister Tony Blair, John Ormerod, UK managing partner of Andersen, has recommended that the UK corporate tax rate be reduced to 25%. The letter, dated June 12 says: ?Britain will lead the network economy world if we nurture the creation of new, innovative businesses and allow them to flourish.?

The International Tax and Investment Organisation (ITIO) has warned the OECD to involve small countries properly in discussions or face the effective collapse of its ?harmful tax competition initiative?. With the OECD's Fiscal Affairs Committee due to spell out the future of the OECD's tax at the end of June, the ITIO is insisting that the OECD involve small and developing economies (SDEs) fully in the process of setting any new international standards.

Suite 4700

Russia's lower house of parliament, the Duma, has approved the draft version of Chapter 25 (Profit Tax) of the Tax Code. As a result, Russia will probably abolish all tax incentives in favour of a significantly reduced tax rate (24%), thus simplifying its notoriously complex tax regime. According to Deloitte & Touche in Russia, the latest text of the draft suggests that companies that were previously granted certain regional tax incentives on the basis of an investment agreement may continue to apply these benefits until the agreement ends.

Investors in China need to keep a wary eye on the country’s forthcoming changes to its tax regime. While enhanced transparency looks more likely in the future, so does the removal of certain preferential rates enjoyed by foreigners. By Alan Tsoi and Patrick Su, Deloitte Touche Tohmatsu, Beijing

In response to the increasing focus of the UK Inland Revenue on combating serious tax fraud, UK tax consultancy WJB Chiltern has launched the Raid Protection Plan. The plan offers an emergency support service in the event of a raid by the Inland Revenue or HM Customs and Excise. Although it is aimed primarily at professional advisers such as accountants and solicitors, the scheme has the added bonus of then being available to those advisers' clients at no additional cost.

In Japan, there are two tax regimes that apply to determine the deductibility of transfer pricing adjustments: the transfer pricing regime, a well-known global tax issue; and the donation/contribution regime, a unique system which has long existed even before the transfer pricing regime was introduced in Japan. Under Japan's donation/contribution taxation regime, if a donation/contribution transaction does not involve any consideration from a counterparty (ie without a reverse contribution), the difference between the fair market value/price and transaction price of the goods/services transaction is considered as a non-deductible expense when calculating taxable income. Thus, if retroactive year-end transfer pricing adjustments are made, unless the taxpayer recognizes the arm's-length price and determines a reasonable way to make the adjustment in advance, it is possible that the donation/contribution regime could be applicable.

News that the UK Inland Revenue has set a target of finding more than three-quarters of people they investigate guilty will radically boost the tax insurance market, according to Composite Legal Expenses.

A decision handed down in early May 2001 by Germany's highest tax court indicates that key provisions of the proposed regulations on transfer pricing documentation requirements have no legal foundation and are therefore invalid. (See articles on the proposed regulations by Alexander Vögele in the January and February 2001 issues of International Tax Review, pp. 38 and 17 respectively.) Further delay in issuing final documentation regulations may now be expected as the Federal Ministry of Finance strives to assess the impact of the Federal Tax Court (FTC) decision on its transfer pricing policies.

While the deregulation of India’s insurance industry is a welcome move, confusion over the tax aspects may prevent it from achieving its full potential. By Subhankar Sinha and Vijay Kumar, PricewaterhouseCoopers, Mumbai