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On January 18 2001, Vietnam's Ministry of Finance issued the long-awaited circular clarifying the application of enterprise income tax to branches of foreign entities in Vietnam. The changes are effective February 1 2001. The circular increases the enterprise income tax rate applicable to foreign branches from 25% to 32% of taxable income. Taxable income for these purposes is defined as the total revenue of the branch less deductible expenses. Administrative expenses allocated from the head office to the foreign branch will be deductible, provided the foreign branch submits the audited financial statements of the head office to the local tax authorities. Royalty payments and commissions, including interest paid to a head office and interest payments relating to legal or chartered capital, may not be deducted. An exception to the non-deductibility rule applies to interest paid by foreign branches of banks.

Russian Prime Minister Mikhail Kasyanov has decided the fate of profit tax in Russia. Part two of the Russian tax code came into effect in January 2001, following the implementation of part one in 1999. But, while part two announced changes in VAT and personal income tax rates, and part one dealt with tax administration, the government failed, in either section, to agree on a new profit tax chapter. Two sections of the Russian government each produced a draft profit tax chapter and on February 7 2001, Kasyanov decided which of the two versions to develop. A working group is now amending the draft chapter, but it is unlikely to come into effect before January 2002.

Professional services firm Arthur Andersen has changed its name to Andersen. The rebranding is effective immediately.

Ireland became the first member of the EU to be formally told to correct its budget on February 12 2001. At an ECOFIN meeting in Brussels, the EU recommended that Ireland take action to correct its budget, on the grounds that it goes against the Broad Economic Policy Guidelines agreed to by EU members, and threatens to increase inflation. The warning is a response to Irish Finance Minister Charlie McCreevy's 2001 budget that announced tax cuts and increased public spending.

As President Bush's proposed 10-year $1.6 trillion tax cut comes before the US Congress, the business community is considering how it can best ensure its share of the spoils. At present, the only element of the proposed cuts that has a direct effect on business is the proposal to extend permanently the US research and experimentation (R&E) tax credit. However, the timing could be perfect for business to lobby for more.

Landwell & Associés, the legal arm of PricewaterhouseCoopers, has won an appeal at the Paris high court to overturn a decision by the French National Bar Council to ban some of the structures applying to multidisciplinary practices (MDPs). The Bar Council's decision, made last year, had three main proposals: lawyers cannot practise in a law firm that has the same name as an audit firm. This affected Andersen Legal but was not an issue for Landwell; lawyers cannot belong to an organization or firm that is part of a network where there are non-regulated professions. While lawyers and accountants are regulated, consultants are not. This would harm Landwell because it is networked with PwC; and a law firm associated with an accounting or audit firm cannot work for any shared clients, even if the clients have authorized it. The court of appeal held that the bars did not have the authority to set the regulations in place, as it would require a legal process to modify or replace existing laws that permit MDPs. The verdict is good news for the big five firms functioning as multidisciplinary practices and should lead to further discussion about establishing full regulations applying to MDPs.

The Swedish Ministry of Finance has proposed that capital gains taxation on shares qualifying for the participation exemption be abolished. In general, the participation exemption will apply to shareholdings in Swedish or foreign companies, which are quoted on a stock exchange if the holding is at least 10% and the shares are held for a minimum period of 12 months.

In tax terms, cyberspace is relatively unchartered territory for Latin America. Jorge A Gross, Nicasio del Castillo, Manuel Solano, Eduardo Pupo and German Jimenez of PricewaterhouseCoopers’ Latin American Business Center take a look at regional developments

Structuring a demerger to attain maximum tax benefits and to minimize exposure to stamp duty is imperative. Mike Hardwick, John Lindsay and Claire Hopes, Linklaters & Alliance, London, give an insider's guide to the National Power/Innogy deal

Tighter documentation requirements are the essence of Germany's new draft transfer pricing regulations. There are major risks, but also double rewards for taxpayers who respond in timely fashion. By Alexander Vögele and William Bader for KPMG, Frankfurt