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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.

Norwest, the Minneapolis-based bank, has made an agreed bid to buy San Francisco-based Wells Fargo, in a $31 billion stock swap.

US pharmaceutical groups Monsanto and American Home Products has announced a merger worth $34 billion. American Home Products will have a 65% stake in the new company. Annual sales will be about $3 billion a year.

Jefferson Smurfit Corporation of St. Louis, US is to merge with Stone Container of Chicago. The merger is worth approximately $2 billion and will create one of the world's largest paperboard and paper packaging companies. It will be known as Smurfit-Stone Container Corporation and will be worth approximately $11 billion.

Van Kampen American Capital Senior Income Trust, has made a $1.6 billion initial public offering, the second-largest closed-end offering in history.

Since the early 1990s, non-resident corporate income taxpayers in Spain have benefitted from important domestic law exemptions pertaining to different types of income from Spanish sources.

US paint maker PPG Industries has agreed to purchase two coatings businesses from UK chemicals company Courtaulds. The deal is worth approximately £200 million ($320 million). PPG had been bidding against Dutch group Akzo Nobel for control of the whole of Courtaulds. Akzo Nobel is now expected to take control of the remaining areas of Courtauld's businesses (see International Tax Review June 1998, page 6).

During the last few months there have been a number of changes to the Russian tax law, arising from changes to the legislation and from judicial decisions. The major changes are outlined below.

Canadian drinks and entertainment group Seagram has agreed to acquire Polygram, the Dutch music and film company for $10.6 billion. Seagram will buy 75% of PolyGram from Philips, the Dutch electronics company, and the remaining 25% that is in public issue. The acquisition will be partly financed by the sale of Tropicana, Seagram's fruit juice subsidiary.

Several new international reporting initiatives have been enacted following Canada's 1995 federal budget. These include expanded reporting rules for foreign affiliates, and new reporting requirements in respect of contributions to or distributions from non-resident trusts.