The firm's international tax newsletter offers a monthly analysis of cross-border developments that reflects the dynamic business environment in which multinationals operate.
April 2006
Cost-Plus Contracts and the Arm’s Length Principle
This article looks at whether cost-plus pricing methods for low-risk outsourced services are appropriate from an economic perspective. The related question of whether cost-plus contracts for compensating intercompany service transactions reflect arm's length behavior also is addressed.
March 2006
Changes to Japan’s Business Entity Forms to Become Effective
As from May 2006, a number of important changes to the Japanese Commercial Code (“New Company Law”) will become effective. The private company or YK (Yugen Kaisha) will be abolished, the joint stock company or KK (Kabushiki Kaisha) will be a more flexible entity and it will be possible to establish a Japanese Limited Liability Company or LLC (Godo Kaisha). The Ministry of Economy, Trade and Industry (METI) already established a Japanese limited liability partnership or LLP (Yugen Sekinin Jigyo Kumiai) effective 1 August 2005. The following highlights changes to the types of entities available to investors in Japan.
December 2005/Janaury 2006
ECJ Rules in Marks & Spencer
In its much-anticipated decision in the case of Marks & Spencer plc v. Halsey, the European Court of Justice (ECJ) has decided that cross-border loss relief claims between group companies established in EU countries should be allowed, but only in the restrictive circumstances where the subsidiary has exhausted all possibilities available in its state of residence for offsetting the losses.
November 2005
Draft 2006 Finance Bill is a mixed bag for taxpayers
The French government's draft 2006 finance (budget) bill contains both good news and bad news for companies. On the plus side, the research and development (R&D) credit would be expanded and improved, and the local business tax would be capped. However, those benefits would be counterbalanced by the introduction of new thin capitalization rules and changes to the minimum corporate tax.
October 2005
Korea proposes revisions to tax laws
On 26 August 2005, the Ministry of Finance and Economy (MOFE) announced proposed amendments to the tax laws, including changes to the Law for Coordination of International Tax Affairs (LCITA), the Corporate Income Tax and the Tax Incentive Limitation Law. The draft is expected to be submitted to the National Assembly for approval in the very near future, and, if approved, the revisions will be effective in 2006. Several of the proposals are designed to prevent tax avoidance and treaty shopping.
September 2005
U.K. court decides on procedure for cross-border group relief claims
The U.K. House of Lords (the Court) on 28 July 2005 issued its decision in Autologic Holdings plc and Others v. HMRC, settling on the procedure taxpayers must follow in making cross-border group relief claims based on EC law. The Court decided that, before resorting to litigation before the High Court, taxpayers must first exhaust the normal procedure for making the claims if the normal statutory route is still available.
July/August 2005
Impact of 1 July 2005 on payments between associated enterprises in Switzerland and the EU member states
Adopted in 2003, the EU Savings Directive (Directive) originally was intended to apply as from 1 January 2005. Because this date was conditioned on the EU concluding “equivalent” agreements with five non-EU member states and a number of EU dependent or associated territories and those agreements were still under negotiation in 2004, the Council postponed application of the Directive to 1 July 2005.
June 2005
Circular introduces restrictions on offshore investment by PRC individuals
The State Administration of Foreign Exchange (SAFE) recently issued a Circular (Circular 11) that could have a severe impact on PRC individuals who make investments in offshore companies or acquire Chinese companies indirectly through an offshore company. Under the Circular, overseas investments by PRC individuals are now subject to approval procedures similar to those that apply to Chinese companies.
April 2005
U.K. Government Proposes Major New Corporate Tax Anti-Avoidance Provisions
In the 2005 U.K. Budget on 16 March 2005, the U.K. government announced extensive new anti-avoidance provisions designed to limit opportunities for companies in the U.K. to minimize their corporate tax liabilities. The U.K. government published its 2005 Finance Bill on 24 March that would enact measures announced in the Budget.