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The OECD negotiates that difficult line between legitimate tax planning activities and outright non-compliance with tax laws. By Richard M Hammer, chairman, Committee on Taxation and Fiscal Policy of the Business and Industry Advisory Committee to the OECD, and Jeffrey Owens, head of Fiscal Affairs, OECD

Significant exemptions from withholding tax were offered to Singapore’s software importers in the recent budget speech. While some legal issues remain unresolved, increased certainty should boost this area. By Kenny Foo, Baker & McKenzie, Singapore

The Chinese government has announced several reforms that aim to balance the tax system in China in preparation for the country's entry in to the WTO later this year. According to reports from the Xinhua national news agency, the Chinese Ministry of Finance intends to alter its sales tax policy to create a level playing field for foreign and domestic financial companies.

The Chilean government has announced a package of broad tax reforms. On April 19 in Santiago, Finance Minister Nicholas Eyzaguirre unveiled 15 reforms aimed at boosting foreign investment in the country, encouraging savings and strengthening the country's ailing stock market. According to Eyzaguirre, the proposals will be submitted to Congress by May 21 of this year, although they could take several months to be passed. Included in the reform package is the removal of the 15% capital gains tax paid on the disposal of shares. The new tax rate will affect local and foreign investors but will only apply to frequently traded issues. It will be effective on stocks bought and sold in the stock market from April 19 and aims to increase liquidity in the market. There are also plans to exempt the stock of new companies with high predicted growth from capital gains tax for three years.

Mexico's president looks set for a battle as he takes his controversial tax reform package to Congress. On April 3, Vicente Fox announced a series of proposals aiming to increase revenue without raising taxes. The most controversial of the changes is the elimination of the 0% rate of value-added tax (VAT) on food and medicines. This will leave a uniform VAT rate of 15%.

Following annual consultations with businesses and representative organizations, the UK Inland Revenue has announced details of the UK's treaty priorities for 2001/2002. In an official statement, UK Paymaster General Dawn Primarolo stated that while the country's top priority is to finish the double taxation treaty with the US, there are also plans for completing work on treaties with countries including France, Jordan and South Africa. She also stated her intention to hold talks about new or updated tax treaties with Croatia, Iran, Saudi Arabia and Slovenia.

4/F, Syciplaw-All Asia Capital Center

Asia Pacific Regional Office

The Russian parliament has passed the profit (corporate) tax chapter in its first reading. The long-awaited chapter was passed by the Duma on April 5 2001 and amendments are being made in preparation for the second reading, which should take place by the end of May. The draft has been jointly prepared by the government and the Duma tax committee. The changes, which should be passed for the third and final time by the summer and will come into force in January 2002, have, on the whole, been welcomed by business as they come closer than before to creating a tax on profit rather than income. Domestic finance institutions will be particularly boosted by the measures.

After losing a number of tax lawyers in recent months, Baker & McKenzie is hitting back. Following last month's recruitment of Juan Pablo Godoy in Colombia, the firm has recruited its first tax partner for the Houston office and is in negotiations for further lateral hires throughout the US.