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Rajendra Nayak Ganesh Pai The Authority for Advance Rulings (AAR) in the case of Dana Corporation, USA (2009-TIOL-29-ARA-IT) recently examined the tax implications on transfer of shares of Indian companies under a reorganisation scheme.

Edward Rowe Carrie Aikenbereti The Fifth Protocol to the Canada – US tax convention included measures, effective from January 1 2010, to deny treaty benefits to so-called hybrid entities, which are treated as taxpayers in one state but fiscally transparent in the other.

Bob van der Made On January 11, the European Parliament started its official public hearings of the 26 European commissioners-designate, which were presented by European Commission president-elect Barroso in November. According to the EC (now Treaty on the functioning of the European Union - TFEU), members of the European Parliament (MEPs) have the right to endorse or reject the whole College of Commissioners. The proposed new commissioner for taxation and customs union, audit and anti-fraud is Algirdas Semeta. He has twice been Lithuania's Minister of Finance, from 1997 to 1999 and from 2008 to June 2009. He was heard by the European Parliament's budgetary control, economic and monetary affairs and internal market committees on January 12. Many MEPs were not impressed by Semeta's performance and it initially remained unclear whether he could muster enough support.

Galina Petkova Bulgaria officially published on December 1 2009 an amending Act to its Value Added Tax Act (VATA) providing for significant changes with regards to its VAT system. The amendments come into force from January 1 2010. The major amendments reinforce further Bulgaria's compliance with European regulations, and attempt to develop a more simplified and accessible VAT approach. An overall picture of the transformation in Bulgaria's VAT regime can be seen from the wide-ranging scope of the changes.

Eylem Philippou Bosnia and Herzegovina owes much of its recent successes to the daring nature of its people. With the help of the international community a lot has been done to rebuild Bosnia and Herzegovina (BiH) since the end of war in 1995. The Dayton Peace Agreement (The General Framework Agreement for Peace in BiH), signed in 1995, outlined the political divisions and governmental structure in the country, which consists of two entities: the Federation of Bosnia and Herzegovina (FBiH) and the Republica Srpska (RS). Later, the District of Brcko (a district with a special status) was established on March 8 2000.

Nélio Weiss Philippe Jeffrey On December 16 2009, Brazil's Executive Branch published provisional measure (PM) 472 which, among other provisions, includes new thin capitalisation rules. Interest paid or credited by a Brazilian entity to a related party (individual or legal entity), not resident or domiciled in a tax haven jurisdiction, may now only be deducted for income tax purposes if the interest expense is viewed as necessary for the activities of the local entity and the amount of debt granted by the related party does not exceed twice the amount of its participation in the net equity of the Brazilian entity. A second test also needs to be performed including the total amount of debts with any foreign related party. If under either a debt or equity test a 2:1 ratio is exceeded, the portion of interest related to the excess debt amount will not be deductible for Brazilian income tax purposes. Similar provisions are also applicable to interest paid or credited by a Brazilian entity to an individual or legal entity (whether or not a related party) resident or domiciled in a tax haven or favourable tax regime jurisdiction. In these cases, the interest expense will only be deductible for Brazilian income tax purposes if the expense is viewed as necessary and the amount of the debt does not exceed 30% of the Brazilian entity's net equity.

Wojciech Pietrasiewicz, Tomás Vavrák and Hana Skalická of Allen & Overy discuss discriminatory withholding taxation in the Slovak Republic, Poland and the Czech Republic. Taxpayers who have an investment in Central and Eastern Europe should be aware of the possibilities, including retrospective, for easing their tax burden.

By International Tax Review

The Indian Supreme Court has granted a tax holiday to one taxpayer after ruling that the duplication of software from a master copy to a blank disc constitutes a manufacturing process.

By Erin Kelechava