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In the March issue of International Tax Review, we reported on the sweeping tax reform measures announced by the German government at the close of 1999. Following numerous changes, the government measure was passed by the German Parliament in mid-May 2000, but has stalled in the Federal Council of States, whose approval is needed for the bill to become law. The governing coalition of Social Democrats and Greens lacks a majority in the Federal Council, where the legislation was sent to a conference committee in an attempt to find a compromise. At the time of writing, three more negotiating rounds were scheduled before the end of June. The final deadline for action before the summer break is July 7 2000.

The Canadian government has deferred the enactment of a controversial proposal introduced in February 2000 as part of its attempt to tighten Canada's thin capitalization rules. The proposal was aimed at preventing foreign shareholders from using an excessive amount of debt when capitalizing their Canadian subsidiaries (see International Tax Review, April 2000, "Federal Budget 2000"). For Canadian companies with taxation years beginning after 2000, the government proposed that the maximum debt-to-equity ratio be reduced from 3:1 to 2:1. Debt will equal the average of the highest monthly amount payable to parent and certain other non-resident shareholders. Equity will be the aggregate of paid-up capital and contributed surplus, attributable to certain non-resident shareholders and computed as the average of the opening monthly balances, plus retained earnings computed at the beginning of the year. Moreover, the definition of tainted debt would have included loans from domestic and foreign third parties guaranteed or secured by the parent company or certain other non-resident shareholders. This controversial proposal would have adversely affected many Canadian subsidiaries of foreign multinationals that cannot borrow significant amounts, or borrow at a reasonable cost without a parent company guarantee. The proposal would also have affected many financial services companies that provide alternative sources of capital to Canadian businesses backed by non-resident parent guarantees.

Stikeman, Elliott

Akin, Gump, Strauss, Hauer & Feld LLP

Kirkland & Ellis

Accounting firm HLB Kidsons has announced that it is in merger discussions with Grant Thornton. If agreed, the merger will create the sixth largest accountancy firm in the UK with fees in excess of £230 million ($347 million).

The Netherlands is known as an attractive location for international tax planning structures, due to its widely spread tax treaty network. Tax treaties have been concluded not only with OECD member states, but many others besides. However, a notable exception to this list has been Portugal.

Australia's capital gains tax law once suffered from the accusation of protecting inefficient companies. Following the Ralph Committee recommendations, scrip-for-scrip rollover relief has been introduced to counter this. By Ian Dinnison of KPMG, Melbourne

The Argentine Congress has recently passed a law establishing a new legal framework for leasing contracts. Law No 25.248 was enacted by the Executive Power and published in the Official Gazette on June 14 2000. One of its main goals is to broaden the existing framework (Law No 24.441), which imposed many restrictions on a contract for it to qualify as a leasing agreement.

Jones Day Reavis & Pogue