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On June 30 2000, the US Treasury issued final regulations under section 894 regarding the availability of treaty benefits for US-source payments made to certain hybrid or fiscally transparent entities. Under the final regulations, a US-source payment to a fiscally transparent entity is generally not eligible for the reduced rate of withholding tax provided for under a treaty unless the payment is taken into account currently by a treaty country resident. The regulations only apply to US-source income that is not effectively connected with a US trade or business. The final regulations are effective for items of income paid on or after June 30 2000.

Pursuant to the Finance Bill 2000, the French tax authorities issued new guidelines (Inst. Adm. n°13 D 1 00, June 27 2000) commenting on the rules regarding the granting of rulings for tax-free spin-offs and split-offs (Apports partiels d'actifs and Scissions), as from January 1 2000. Under French tax law, it is possible to benefit from a tax deferral mechanism in the case of a demerger if certain conditions are met (among other things, the assets and liabilities contributed constitute a full and autonomous line of business; the company contributing the full and autonomous line of business undertakes to keep the shares received for three years; and commitments regarding the computation of future capital gains). When those conditions are not met, a ruling must be applied for to benefit from the regime. This is the case, for instance, when a foreign company contemplates contributing its French permanent establishment to a new French company.

Tax Reform 2000 – officially the Act for the Reduction of Tax Rates and Reform of Business Taxation, or the Tax Reduction Act (Steuersenkungsgesetz) – was enacted into law on July 14 2000, after the government outmanoeuvred the staunch CDU/CSU opposition in an interesting display of legislative finesse.

The Océ Van der Grinten case reopens the debate on the interaction of the EU Parent-Subsidiary Directive with the UK-Netherlands double tax treaty. Sabina Comis and Eelco van der Stok, from Freshfields London and Amsterdam, discuss the case and its implications

PricewaterhouseCoopers (PwC) is to launch a portal that will transform the entire organisation into an e-business and provide a sophisticated workspace for clients and staff alike.

Thorsteinssons, Tax Lawyers

The impending introduction of the goods and services tax (GST) in Australia from July 1 2000 will significantly affect the operational and tax compliance procedures of all Australian businesses. Outlined below is a summary of the more significant aspects concerning the interrelationship between the GST and Australian businesses who undertake transactions with international related parties.

The foreign sales corporation regime, payments to non-US residents, revised procedures for qualified and non-qualified intermediaries, and new tax treaties are all making the rounds in Washington. By John Turro of Ernst & Young, Washington DC

Spain has included within its corporation tax law an anti-abuse clause based on article 11 of the EU Merger Directive. But difficulties in translation have caused problems. Jesús López Tello of Uría Menéndez, Madrid describes the outcome

The Asia-Pacific region is fast catching up with the EU and US with its e-business initiatives. But each country sets its own pace – one jurisdiction's response may be very different from its neighbour's. By Colin Farrell and Alex Yuen, PricewaterhouseCoopers, Hong Kong