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Rajendra Nayak Ganesh Pai The Authority for Advance Rulings (AAR), in the case of K.T. Corporation (2009-TIOL-12-ARA-IT) and the Income-tax Appellate Tribunal (ITAT) in the case of Jebon Corporation (2009-TIOL-323-ITAT-Bang) have both recently examined whether the activities of a liaison office in India would constitute a permanent establishment (PE) under the provisions of the tax treaty between India and Korea. Under the provisions of the tax treaty, a PE is defined as not to include a fixed place of business engaged in carrying out preparatory or auxiliary activities.

Jobst Wilmanns Chayalaak Chutima On July 17 2009 the finance ministry released the first draft of a decree giving guidance on cross-border transfers of functions between related parties. This decree should be the final action in a ministerial campaign to ensure taxation of the actual value of functions transferred abroad in the course of international group restructurings. It follows a statutory order of May 2008.

Janne Juusela The Supreme Administrative Court ruled in its recent decision (KHO 64/2009) that a holding company established for the purpose of acquiring an industrial company, carrying no active business activities and having no employees was not deemed as a company carrying on private equity activities for Finnish tax purposes. This meant that the holding company was not entitled to deduct liquidation loss accrued from the liquidation of the acquired company. The fact that the company was established for the purpose of acquiring the industrial company and subsequent utilisation of the liquidation loss was taken into account in the ruling.

Sophie Stylianou Cyprus is considered a popular location for companies engaged in financing activities. No direct thin capitalisation rules are applicable, such as debt-to-equity requirements. Equally, from a transfer pricing perspective, as in cases of back-to-back financing transactions, the arm's length principle is applicable in Cyprus.

Stephen Nelson On June 4 2009, the State Administration of Taxation (SAT) issued a circular on the pre-tax deductibility of loan interest resulting from overdue paid-in capital (Guo Shui Han [2009] number 312). The circular provides that where the investor(s) does not contribute in time, the interest incurred for the amount of overdue paid-in capital cannot be deducted before enterprise income tax. The principle is that such liability should be born by the investor rather than the invested enterprise, and the interest is not a reasonable expenditure of the invested enterprise and hence cannot be deducted before tax.

Given the economic recession and in trying to mitigate the impact in the Chilean market, the government approved a bill – law 20.326 - in January 2009 which included some tax incentives. The bill proposes a transitory elimination of stamp tax, a temporary reduction of provisional monthly prepayment (PMP) rate, a regime to promote employee training and an advanced refund of the surtax.

Nélio Weiss Philippe Jeffrey A Brazilian court of second instance from the State of Rio Grande do Sul has recently issued an important decision in connection with the non-application of withholding income tax on remittance for services to beneficiaries located in a tax treaty country.

Landfill of waste – Special tax on the placing of solid waste in a landfill site – Late payments.

Ellen Geeraerts It is difficult for a company organising an event in Belgium (for example a trade fair, a seminar, a conference, and so on) to comply with all the applicable VAT formalities. However, event-organisers can now benefit from enhanced simplification measures. The Belgian VAT authorities recently published an administrative decision in which they further modify and formalise the simplification procedure as from July 1 2009.

President Barack Obama has revealed Michael Mundaca as his nominee for assistant secretary for tax policy, department of the Treasury.