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In a surprise move, the UK government announced a withdrawal of the Foreign Earnings Deduction in its March budget. This presents a major headache for many UK residents working overseas, and will significantly increase the costs of all those companies which have employees working abroad. Action needs to be taken now.

The UK Inland Revenue has called for an international task force to combat tax evasion. Nick Montagu, chairman of the Inland Revenue, believes that the G8 countries should create a combined detective force. Montagu cites electronic commerce as a new threat, which requires concerted global action if tax revenues are to be defended.

The European Commission has ruled out the establishment of a new tax on electronic commerce. Instead, the Commission wants to adapt existing taxes, particularly value-added tax (VAT), to transactions that take place via electronic systems such as the Internet. In a new set of guidelines on the taxation of electronic commerce, the Commission outlines four key principles:

The Indian government unveiled its 1998 budget on June 1. Although there was no cut in corporate income tax, there were a number of significant proposals: customs duties were increased by 4%. An 8% rise was originally planned but this was reduced following pressure from businesses; expenditure on intangible assets will not be eligible for a tax deduction; a scheme was introduced to reduce tax litigation. Companies that have litigation pending will be given the option to pay a flat rate of 35% on the disputed income. Companies that pay the sum will not have to pay penalties or interest for delaying payment. The scheme will operate between September 1 and December 31 1998; the government will clear all foreign direct investment proposals within 90 days. Proposals exceeding Rs1 billion ($23 million) will be specially monitored for rapid clearance.

Teleglobe, the Canada-based telecommunications group has made a successful bid to acquire US competitor Excel Communications. The merged group will have assets of $6.8 billion.

French telephone company Alcatel-Alsthom has agreed to buy DSC Communications, in a deal valued at $4.4 billion. DSC designs and manufactures systems for the telecommunications industry.

The US Treasury has been forced to withdraw a controversial measure designed to close down tax planning opportunities exploited by multinationals. Internal Revenue Service Notice 98-35 withdraws Notice 98-11 and announces modifications to the rules on hybrid entities.

The stars are out in ITR’s fifth survey of North America. Sophisticated clients demanding round-the-clock access and better value add pressure to the tax adviser’s role. Oliver Ralph and Phillippa Cannon identify advisers who excel under pressure

Does an annual tax on company assets, which is said to have effects which are economically equivalent to a capital duty, fall within the scope of Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital, in so far as it takes account of the amount of a company's subscribed capital?

Council Directive 69/335/EEC of 17 July 1969 – indirect taxes on the raising of capital – imposition of an ad valorem duty on the issue of the document recording the repayment of a loan – interpretation – does the prohibition of taxes on loan documentation cover those concerning repayment?