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Sales of goods manufactured in the US or other countries are still the most common way to cover the Mexican demand for raw materials or already processed products. However, in the last few decades, the incorporation of subsidiaries in Mexico has been changing this situation – the product is available in Mexico for the Mexican client or even for export activities. Further, over the last few years, a different approach has entered the arena – the just-in-time idea – through which inventories are owned by a non-resident entity in a warehouse in Mexico. The first tax question for just-in-time holdings is that of whether a permanent establishment exists when the non-resident has a warehouse in Mexico to deliver goods to its clients, but closes every sale directly with the customer from abroad. The author takes the view that no permanent establishment has been created and therefore no income tax should be paid in Mexico.

Does article 17 of the OECD model convention have its basis in outdated and discriminatory assumptions about artistes and athletes? Hold on to your hats for a whistle stop tour of its development, its lack of fit with the modern world and reasons for its repeal. By Joel Nitikman, Fraser Milner Casgrain LLP, Vancouver

New Japanese tax rules permit business reorganizations to be achieved tax-free, provided certain detailed requirements are met. By Gary Peterson and Al Zencak, PricewaterhouseCoopers, Tokyo

In the first in a new quarterly series looking at global transfer pricing developments, the following article tracks recent changes in Europe, Asia-Pacific, Latin America, North America and Africa. By Bill Dodge and Giovanni DiCenso, Deloitte & Touche, Washington, DC

KPMG has set up a new team in New York to advise clients on Chinese tax law

Like many other members of the OECD and the EU, Spain has enacted very few special tax provisions that apply to e-business. However, to clarify and fix its position in the various international forums where the taxation of e-commerce is being analyzed, in early 1999 Spain's secretary of state for taxes set up a working group whose remit was to conduct thorough research in this area. In July 26 2000, the group submitted its final report and an updated summary was released in October 2000. Two specific issues are of significance to foreign enterprises operating in Spain arising out of the preliminary position on the subject adopted by Spain that departs from current popular opinion.

When a company acquires a fixed asset for a price higher than its fair market value, under certain circumstances the French tax authorities may adjust the taxable income of the buyer. They may also adjust the taxable income of the seller, using various provisions of the French Tax Code.

Finland levies asset transfer tax at a rate of 1.6% of the relevant market value on the transfer of Finnish securities. Excluded from asset transfer taxation are:

New transfer pricing and APA rules have been introduced in the Netherlands as a precursor to codification of the arm’s-length principle later in 2001. By Eduard Sporken, KPMG Meijburg & Co, Amstelveen

Failure to fulfil obligations – Deduction of input tax – Article 17(2) and Article 18(1) of the Sixth VAT Directive – Allowance for the use of a private motor vehicle for business purposes – Deductibility of part of the allowance.