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The Spanish Corporate Income Tax Law (Law 43/1995 of December 27), in force since 1996, provides that charges for intercompany management services are deductible if, among other things, they are compulsory for the recipient company by virtue of a previous written contract.

The Second Chamber of the Netherlands parliament recently adopted a legislative proposal which, if enacted into law, will radically change the existing rules for taxation of employee stock option plans. The new rules will enter into force on the first day after the official publication of the new rules as approved by the First Chamber of Netherlands parliament in the Official Gazette of the Netherlands. The effective date will probably be somewhere in May or June 1998.

Approximately one year ago, the German government announced ambitious plans to broaden the tax base and cut tax rates to achieve net annual tax reductions exceeding Dm30 billion ($16.6 billion). This "great tax reform" has so far been caught up in political deadlock. Nevertheless, some significant legislation has emerged.

Since April 1996, the French tax authorities have been able to require specific information as regards intra-group transactions, according to a strict procedure (article L13B of the French tax code for tax procedures). If the response of the enterprise is considered insufficient, there is a risk of a fine of Ffr50,000 ($8,300) for each financial year the request concerns. The tax authorities can make their own tax basis assessment from whatever information is available to them (although the procedure remains adversarial).

The 1998 Japan Tax Reform has now been passed by the Japanese parliament (see International Tax Review February 1998) and became law effective April 1 1998.

Legislation to restrict trading in franking credits has recently been introduced into parliament, restricting the use of franking credits by Australia-resident shareholders. The restrictions apply where the company is effectively wholly-owned by non-resident or tax-exempt entities.

The first 1998 taxation notice released by the Ministry of Finance and the State Administration of Taxation on February 25 1998 – The Circular on Income Tax Issues Concerning China-sourced Guarantee Fees Derived by Foreign Enterprises – dealt a severe blow to foreign bankers, who recently lobbied successfully against withholding tax on interest.

Tax treaty negotiations in Latin America are proceeding at a rapid pace. Jorge Gross and John Salerno of Price Waterhouse LLP, Miami and Boston alert readers to the changes, and to the tax planning opportunities for multinationals

Argentina's Executive has announced a comprehensive package of fiscal measures, which has been submitted to Congress for approval.

Canada’s Technical Committee on Business Taxation finds an uneven tax system at odds with development priorities and a highly taxed service sector. By Stephen R Richardson of Tory Tory DesLauriers & Binnington, Toronto