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On July 9 1999, the Treasury formally withdrew the proposed and temporary regulations issued on March 23 1998, relating to the use of hybrid branch entities to avoid subpart F income. At the same time, the Treasury issued new proposed regulations on the treatment of hybrid branch transactions. The Treasury also officially withdrew the proposed regulations relating to the treatment of foreign partnerships for purposes of subpart F (Brown Group regulations) but did not issue any new regulations in their place. New regulations regarding the treatment of a controlled foreign corporation's (CFC) distributive share of partnership income will be proposed at a later date.

The Irish tax authorities have recently published details of the revised tax arrangements to apply to stock lending and repurchase (repo) transactions. Stock lending and repo transactions involve the temporary transfer of stock or securities from one party to another with the simultaneous commitment to reverse the transaction at some point in the future. From a tax perspective, there are two important aspects to stock lending and repo transactions.

The Tax Relief Act for the Years 1999, 2000, and 2002 introduced a new income tax withholding provision for payments made to foreign contractors. The new rules came into effect on April 1 1999 and require domestic and foreign persons to withhold 25% of the gross amount of payments made from this date to foreign contractors for a wide range of work performed in Germany or perhaps simply used there. While the problem which provoked the new withholding rules involved non-compliance by foreign construction firms with their German tax obligations, the withholding provision actually enacted applies to all sectors of the economy and can include purely intellectual work such as that of architects, engineers, or attorneys as well.

The Committee of Fiscal Affairs of the OECD has acted quickly to diffuse a potential row between itself and the BIAC (Business and Industry Advisory Committee) over last year’s report on harmful tax competition.

Canadian law firm Stikeman Elliott is advising British American Tobacco (BAT) on its offer to acquire Imasco, the Canadian consumer products group. BAT already owns 42% of Imasco, but is offering to buy the remaining equity for around C$ 10.3 billion ($6.9 billion). If the deal goes ahead BAT will keep Imperial Tobacco, Imasco’s tobacco business, but sell the group’s other subsidiaries.

The world of faceless tax advice moved one step closer when Ernst & Young announced the launch of the first on-line tax adviser. Endearingly named Ernie, the adviser will allow clients to ask tax questions and receive written answers on-line.

Fried Frank Harris Shriver & Jacobson is advising Procter & Gamble (P&G) on the acquisition of Iams, a petfood company for about $2.3 billion. The deal is subject to regulatory approval but should be complete within a month.

The Chicago and Los Angeles offices of Mayer Brown & Platt are advising Abbott laboratories on the acquisition of ALZA corporation. The transaction values ALZA, a research-based pharmaceuticals company, at approximately $7.3 billion. The deal follows ALZA’s earlier acquisition of SEQUUS Pharmaceuticals earlier this year.

International Tax Review’s annual survey finds the big five continuing to dominate. But our results also find that corporate tax work is growing rapidly, and that there is plenty of room for all to prosper. Rosie Murray-West and Oliver Ralph ask why demand is expanding so quickly

Germany’s high tax rates have forced both companies and individuals to seek refuge in tax havens. But years of legislation have restricted the opportunities. Hans-Jorg Fischer of Clifford Chance in Frankfurt presents an overall view of Germany’s tax haven regulations