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Taxand's Take - Your regular update on the latest issues affecting multinationals

30 Sep 2010

Welcome to the latest edition of Taxand's Take - your regular update on the topical tax issues affecting multinationals. Accessible online this newsletter is sent to you every two months. And Taxand's Take will give you just that - informed opinion on the latest tax changes and how they affect you.

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INDIA - Direct Taxes Code Bill Introduced: Impacts on Multinationals Identified


On 30 August 2010, the Indian Government introduced a Bill enacting the Direct Taxes Code ("DTC"). The DTC is set to replace the current Income-tax Act, 1961 ("the Act") from 1 April 2012. The new DTC will provide clarity through a more stringent set of rules and as such should prove a welcome boost to investment into India.

Taxand warns however that multinationals will have to seriously scrutinise their tax planning and tax compliance procedures: if they don't closely align themselves with the new policies they could be penalised, particularly as regards the revised rules on residence of foreign companies and the introduction of General Anti Avoidance Rules (GAAR).

Mukesh Butani, Taxand Asia Leader said: "The Direct Tax Code of India is a necessary step in bringing Indian regulation in line with other leading global economies. It replaces flexibility and uncertainty with clarity and precision and will be attractive to companies already located in India or looking at investing in the Indian Subcontinent. Multinationals will however be forced to focus additional resources on tax planning and compliance with the Indian authorities under the new regime, although there should be a marginal reduction in overall compliance costs given the lowering of corporate tax rates."

Taxand India assesses the key issues set out in the revised DTC and its impact on multinational companies.

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MALAYSIA / GERMANY / INDONESIA - Time to Act Fast: Changes to Malaysian Tax Treaties Impacts Existing Structures


The tax treaties between Malaysia and Germany and Malaysia and Indonesia were recently amended leading to interesting changes to both tax treaties. Both treaties now exclude Labuan from their scopes and incorporate changes to the withholding tax rates which has a direct impact for multinationals. Taxand Malaysia reviews the changes to the treaties with Taxand Germany and Taxand Indonesia to identify the impact on existing investment structures and to advise why businesses need to act quickly as a result.

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NETHERLANDS / JAPAN - New Dutch - Japanese Tax Treaty Signed Benefits Investors


For more than 400 years, Japan and the Netherlands have had a very good trade relationship. The new tax treaty between Japan and the Netherlands is of great importance due to significant inward and outward investment to and from Japan through Dutch companies. Taxand Netherlands and Taxand Japan review the changes to the treaty and impacts on investments going forward.

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LUXEMBOURG - Investment Fund Tax Regime Improved = Welcome Change



The investment fund tax regime will be improved for master feeder funds and foreign funds managed in Luxembourg. Both fund types are expected to grow after the Directive on Undertakings for Collective Investment in Transferable Securities ("UCITS IV Directive") comes into effect on 1 January 2011. The draft law which implements the UCITS IV Directive introduces some positive tax changes for the Luxembourg investment fund industry. Taxand Luxembourg presents these changes and explains the related opportunities they represent.

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UK / US - The Same, But Different: Compensation Tax Issues for Employers and Employees


Business confidence is cautiously returning, and with it comes a change in organisation's business focus towards increasing employee engagement and retention of key employees. These human resource challenges are typically addressed through a combination of initiatives, particularly creative remuneration structures. The difference currently, is that these challenges are being addressed against a background of low bonuses, static annual pay, underwater or unvested stock plan awards and budget cutting strategies as well as an environment of potentially increasing personal tax rates and shareholder scrutiny. Taxand UK and Taxand US discuss the current environment in their respective countries and propose tax efficient compensation ideas for employers and employees to consider.

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The global financial crisis and the ensuing deficits being faced by a number of governments across the world has given rise to a number of extraneous and peculiar taxes, some of which have undoubtedly been implemented as a means to plugging holes in public finances. Here we take a look at some of the stranger taxes we have come across...

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The information contained in this document is intended only to be a guide. It must not be relied on in, or applied to, specific situations without previously seeking proper professional advice. Even though all reasonable care has been taken in its preparation, Taxand and all of its firms do not accept any liability for any errors that it may contain or lack of update before going to press, whether caused by negligence or otherwise, or for any losses, however caused, or sustained by any person. Descriptions of, or references or access to, other publications within this publication do not imply endorsement of them. As provided in the US Treasury Department Circular 230, this tax newsletter is not intended, or written by any Taxand firm, to be used, and cannot be used, by a client or any other person or entity for the purpose of avoiding tax penalties that may be imposed on any taxpayer.

Taxand firms have produced this tax newsletter in connection with the marketing of our tax services relating to matters discussed therein. Each taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. Taxand is a global organisation of tax advisory firms. Each firm in each country is a separate and independent legal entity responsible for delivering client services.


(C) Taxand Economic Interest Grouping 2010


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