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US-based multinationals represent the largest proportion of companies investing in the UK. How will substantial changes to the UK advance corporation tax system affect these companies? By Lawrence Pollack, David Porter, and Frances Corrie, KPMG New York and London

UK firm British Petroleum is to merge with US oil company Amoco in the world's largest industrial merger. The new company will be known as BP Amoco and will be worth around $110 billion. The equity split will be 60% to BP shareholders and 40% to Amoco shareholders.

California-based toy company Mattel is to buy Wisconsin doll maker Pleasant Company, for $700 million.

The future is a different country for international corporate tax planners; they do things differently there. Or at least it will be for those used to dealing with the UK’s present corporation tax system.By Susan Symons, PricewaterhouseCoopers, London

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.

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.

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

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.

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

France and Switzerland have signed a new protocol to the existing income tax treaty of 1966/1969, which entered into force on August 1 1998. The major changes are outlined below. Nevertheless there is still uncertainty as to whether the protocol will have an impact on the Swiss branches of French companies in regard to the French anti-abuse legislation. This point is still being discussed.