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China's finance minister, Xiang Huaicheng, has announced the end of the mainland's development zones, which are the country's main incentive attracting foreign investors.

French law firm Gide Loyrette Nouel is reeling from the shock of losing six of its partners to UK law firms. Among them was tax partner Siamak Mostafavi, who has become Allen & Overy's first tax partner in Europe.

British Aerospace has made an agreed £7.8 billion ($12.48 billion) bid for General Electric's defence group, GEC Marconi. The stock and debt acquisition will create the world's third-largest defence company.

Amongst other goals, such as deduction of borrowing costs or tax-efficient unwinding, the additional step-up depreciation of the underlying assets is an important factor in any acquisition. The tax savings of such additional depreciation increase the cash flow of the target and, therefore, are essential for financing an acquisition.

Specific international agreements and general trends toward global economic consolidation mean that Canadian business is now more than ever an important part of a highly integrated north American – and increasingly globalized – economy. Nevertheless, unlike the situation in the EU, the Canadian income tax system has undergone little if any change to harmonize its application with the tax systems of its major trading partners.

A potential acquirer is often interested in using its stock to purchase a certain portion of a US target's businesses. In this circumstance, the acquisition commonly employs the so-called "Morris Trust" structure. In such a structure, the target corporation first distributes the stock of a controlled subsidiary (which would typically hold all of the target's "unwanted" businesses) to its shareholders, and then, holding only the desired business, the target corporation is acquired for stock by the acquiring corporation.

The London office of Lovell White Durrant is representing Australian insurance group AMP in a deal valued at £2.7 billion ($4.3 billion).

New York firm Sullivan & Cromwell is advising SBC Communications in the acquisition of Comcast Corporation's wireless subsidiary.

Corporate streamlining and transfer pricing risks

The end of 1998 saw the Brazilian government proposing significant reforms to the country's social security and tax systems as a means of regaining international credibility and to spur domestic growth in the face of a global, soon to be followed by a domestic, crisis. According to the government, the introduction of a fiscal austerity programme is crucial to prevent an exacerbation of the economic recession.