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UK businesses will be able to reclaim an estimated $160 million from HM Customs and Excise as a result of the European Court of Justice’s long-awaited ruling in the First National Bank of Chicago case. By Graeme Ross and Adam Lloyd, KPMG London

New regulations offer guidance to US corporations and their foreign subsidiaries conducting business in the European currencies that will be replaced by the Euro. Alan Granwell of Ivins, Phillips & Barker Chartered, Washington, DC looks at the options

On June 18 1998 the US Internal Revenue Service (IRS) issued final regulations relating to certain transfers of stock or securities by US persons to foreign corporations, pursuant to the corporate organization and reorganization provisions of the Internal Revenue Code. These final regulations are effective for transactions occurring on or after July 20 1998, however, taxpayers may elect to apply the final regulations retroactively to transfers of foreign stock or securities occurring after December 17 1987. For US federal income tax purposes, transfers of property by a US person to a foreign corporation are treated as taxable exchanges unless the transfer qualifies for one of the exceptions to the general rule. One of the more important exceptions to this general rule provides for nonrecognition treatment for the transfer of stock or securities of a foreign corporation that is a party to the exchange or reorganization.

Collection techniques: Ukraine goes for tax hostages...

Efforts to pass the final part of the Russian tax code could be hit by a protracted budget debate when the Duma reconvenes after its summer break. Part two of the code deals with specific federal, regional and local taxes. The Russian government hopes that it will be passed and enter into force at the start of next year. But the autumn session of the Duma is likely to be dominated by discussions over the federal budget (see International Updates, for further coverage of recent changes to the Russian tax system). Part one of the code has already been passed and will enter into force in January 1999. It deals with structural issues such as taxpayers' rights, the powers of judges in tax litigation and the burden of proof of guilt for the tax authorities. But the content of the final version differs significantly from the first draft submitted to the Duma in 1996. About half of the original was deleted and proposals relating to tax accounting, consolidated taxpayer groups and procedural items were lost.

US banks Firstar and Star Banc have agreed a merger worth $6.8 billion. The deal will create a bank with assets of $38 billion.

US telecoms companies GTE and Bell Atlantic are to merge. The deal will create a company worth approximately $121 billion.

Saks Holdings, the company which owns the famous Saks 5th Avenue store in New York is to merge with Proffitts, an acquisitive retail group based in Birmingham, Alabama. The new company will operate 330 stores across the US. The deal is worth $2.1 billion.

The merger of Price Waterhouse and Coopers & Lybrand into the snappily-named PricewaterhouseCoopers created plentiful work for both in-house and external tax advisers.

Amvescap, the UK financial services and management group, has made two offerings of notes on the London stock market. The offerings are valued at $250 million and $400 million.