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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.

In the second part of International Tax Review’s survey of oil and gas taxation, Peter Poulos of KPMG, Melbourne examines how Australia’s tax regime applies in the context of the energy industry, and highlights international considerations

The Japanese prime minister Ryutaro Hashimoto has announced a three-year plan to reduce corporation taxes. The aim is to bring taxes down to the same rate as in other industrialized nations. Recent reductions have cut the effective rate to 46.36%. However, there is uncertainty over the strength of the goverment's commitment to low taxes. Jonathan Stuart-Smith, senior manager at Deloitte Touche Tohmatsu in Tokyo notes that: ?Some of the tax cuts announced so far are only temporary but the government is coming under increased pressure to make them permanent.? There are fears that the government may be tempted to increase taxes again once the economy shows signs of recovery. Japan has a high level of public debt and the government is committed to halving its budget deficit to within 3% of GDP. Last year's fiscal austerity law has been delayed to accommodate the reductions, but the government may not allow further delays in future years.

Telewest Communications, the UK's second-largest cable company, has agreed a £649 million ($1 billion) bid for General Cable, the UK's sixth-largest cable company.

ICI is to sell Crosfield, its worldwide silicas and catalysts business, to WR Grace and Company for $455 million.

Deloitte & Touche in the US has acquired the assets of Real Estate Tax Services Inc. When the acquisition is complete, Real Estate Tax Services will operate in 25 US offices of Deloitte & Touche, as Deloitte & Touche Property Tax Services.

US investment groups Blackstone and Colony Capital are to acquire the British Savoy Hotel group for £520 million ($840 million). Deloitte & Touche in New York and London is advising Blackstone. Partners Paul Herrera and Ken MacFarlane are handling tax questions. The Savoy Hotel group is advised by accountants Coopers & Lybrand and by law firm Slaughter & May.

British Gas has completed the sale of its Pipeline Integrity International business to companies formed by Mercury Asset Management Private Equity for £90 million ($147 million). Pipeline Integrity International provides high resolution inspection and maintenance services for oil, gas and chemical pipelines. It works in more than 30 companies.

Citicorp and Travelers Group are to merge in a transaction worth $166 billion, which will create the world's largest financial services company. The new company will be called Citigroup Inc. The deal calls for Citicorp shareholders to exchange each of their shares for 2.5 shares of Citigroup in a tax-free exchange. Travelers shareholders will retain their existing shares. The shareholders of each company will own 50% of the combined enterprise.

New Decaux has announced a £475 million ($770 million) bid for UK billboard and bus shelter advertising company, More. New Decaux is advised by Linklaters in London and Paris. Tax partners Martin Lynchehan and Neal Todd are providing tax advice.