International Finance & Treasury Issue Archives

Download PDF of June 15, 2010 Issue of International Finance & Treasury
17 Jun 2010

IN THIS ISSUE:

Tax Extenders Bill for 2010 Raises Concerns

The legislation contains some revenue-raising provisions which embody new concepts that would add considerable complexity to the international tax rules, and that could apply quite harshly to what have been widely accepted international tax planning techniques. Page 1

A Look at Mexico’s NAFTA Origin Verification Procedure

Recently, the Mexican Customs administration has been applying a verification procedure via origin questionnaires in a manner that severely limits an exporter’s ability to properly prepare its response. IF&T explains how Mexico’s Customs administration may be going astray. Page 1

Key Directions of Russian Tax Policy for 2011-2013

The main emphasis of the Directions is in line with the mainstream of current national policy: the stimulation of innovation. In order to stimulate modernization and innovation in Russia, it is proposed to provide targeted benefits only for certain activities. Page 3

Obstacles to Latin America’s Private Equity/Venture Capital Market

Latin America’s buoyant economic performance and increased political stability have led to a belief that the political and macroeconomic landscape is less risky than in the past. Matt Cole of North Bay Equity is not sure that’s true. Cole offers his outlook on the risks involved in investment in an exclusive interview. Page 8

Foreign Exchange

Forecasts of 60 corporate treasurers are provided for the North and Latin America regions. Page 10

IN THIS ISSUE:

Interview with Governor Henrique Meirelles
Henrique Meirelles, Governor of the Central Bank of Brazil, offers his outlook on the Brazilian economy for the rest of 2010 and in the longer term, including opportunities for foreign investors, private equity and bottlenecks in terms of future growth, in an incisive interview. Page 1

Modifications to FDIC’s Safe Harbor Rule for Securitization of Bank Assets
The Federal Deposit Insurance Corporation recently released a “Proposed Safe Harbor Rule” that aims to reflect comments received by the FDIC from industry participants. One chief concern included what many saw as the FDIC’s unilateral approach to financial reform. Page 1

Increase in NAFTA Verifications by Government of Mexico
While the rules governing NAFTA audits apply equally in all three NAFTA parties (the United States, Canada and Mexico), each Government conducts its NAFTA audit in a slightly different manner. IF&T provides insight on the particularities of a NAFTA audit conducted by Mexico’s Tax Administration Service. Page 3

New EU Rules for Distribution and Supply Agreements
The EC’s newly adopted Vertical Re- straints Block Exemption Regulation (VRBER) is highly significant due to the ubiquity of vertical agreements in the EU. IF&T describes key changes for companies supplying or distributing in the European Union to consider. Page 10

IN THIS ISSUE:

Derivatives Transactions in Latin America

IN THIS ISSUE:

Canadian Government to Relax Sector-Specific Restrictions on Foreign Investment

The Canadian government recently announced plans to liberalize foreign investment restrictions affecting the telecommunications and uranium sectors. This and other developments affecting the potential scope for investment by non-Canadians are explored. Page 1

New Guidance on Thin Capitalization Rules by the UK

The guidance provides important insights to companies seeking to negotiate Advanced Thin Cap Agreements with the UK tax authorities. The release should be helpful to groups headquartered outside the UK when considering how to structure their UK operations. Page 1

Potential Impact of New German Bond Act on Asset-Backed Securities

For decades, stakeholders in Germany sought ways to amend the German Act on the Joint Rights of Bondholders. The new German Bond Act (“SchVG”) entered into force in 2009. IF&T describes some of the new features of the SchVG, highlighting some of the possibilities and risks associated with the new provisions. Page 3

IN THIS ISSUE:

Tax Changes in Asia-Pacific Affect Private Equity Investors

Certain tax planning tools traditionally used by private equity firms for structuring foreign investments, like tax treaties or low-tax jurisdictions, are under attack in some countries with significant ramifications for investors. PE investors must consider these tax and non-tax objectives in structuring an offshore investment. Page 1

How to Avoid Thin Capitalization Situations in Mexico

Mexico’s thin capitalization rules are fairly simple in the sense that they are a mechanical calculation, but there are still plenty of problem areas to consider. Fred Barrett of PricewaterhouseCoopers discusses the use of APAs, back to back loans and other considerations in an exclusive interview. Page 1

Many governments around the world are following policies leading to a State takeover of private enterprises and economic sectors that were previously left to private initiative. If your company’s investments are not protected by adequate investment treaties, your company may have no effectual remedy in the event of nationalization adversely affecting those investments. Page 3

Tax Reform in Japan

Important changes to international taxation in Japan include revisions to the tax authorities’ manual on transfer pricing taxation and changes concerning the taxation of a Japanese party and its joint venture affiliate. Page 5

IN THIS ISSUE:

US-Latin America Trade to Remain Low-Priority Item in 2010

The Office of the United States Representative released a report discussing the Obama Administration’s trade priorities for 2010. However, US legislators criticized the report’s lack of detail, in particular with regards to a timeframe for passage of pending US-Latin America FTAs with Colombia and Panama. Page 1

Representative Offices of Foreign Enterprises Face More Restrictions

After representative offices in some locations were found to have submitted false documentation in registration among other things, Chinese officials released a Notice to better regulate the unlawful behaviors. The Notice provides restrictions in four main areas. Page 1

Tax Measures in Canada’s 2010 Federal Budget

While the lead-up to and media coverage of the federal budget recently introduced was heavily skewed towards deficit control, there was no shortage of significant tax proposals in the Budget. IF&T discusses these and other business tax measures contained in the Budget. Page 3

Mexico’s Supreme Court Ruling on Flat Tax Law

The Mexican Supreme Court of Justice recently ruled that the IETU law is constitutional and thus a valid tax. The effect of not considering the IETU as creditable internationally represents a potential unrecoverable cost for foreign companies doing business in Mexico. Page 10

IN THIS ISSUE:

Understanding Brazil’s New Thin Cap Rules
When thin capitalization rules refer to net equity, does this mean only stock and paid-in capital, or are retained earnings also to be included? F&T interviews PWC’s Jorge Gross concerning this and
other issues arising from Brazil’s new thin cap rules. Page 1

IN THIS ISSUE:

The Latest IRS Audit Enforcement Effort Requires Companies to Report on Themselves
The IRS has recently announced disclosure requirements for businesses with uncertain tax positions. The measures will require taxpayers to fully describe, in specific detail, any FIN 48 uncertain tax positions, including a company’s estimate of its tax liability if the position is disallowed. Page 1

Barroso II Commission Brings New Opportunities and Challenges
The European Parliament voted to approve the 27 Commissioners who have been nominated by President José Manuel Barroso to serve for a five-year period. The parliamentary vote was the final stage of a confirmation procedure during which the new Commissioners offered insight into priorities likely to dominate the agenda. Page 1

Important International Tax Changes in Obama Budget
The administration proposals, which were recently announced, did not include proposed eliminations of the “check the box” election that had been proposed a year ago. New measures would levy a tax on “excessive returns” on transfers of intangibles to related CFCs that are located in low tax jurisdictions. Page 3

Good and Bad News on Trade Restrictions
The World Bank confirmed recently what has already been suspected. The worldwide economic downturn has sparked a sharp increase in the number of new requests for restrictions on imports. But the Bank’s report also reveals, unexpectedly, that fewer of those requests are resulting in the actual implementation of such measures. Page 9

IN THIS ISSUE:

US Export Control Reform
Perhaps the stars are aligned for meaningful export control reform as never before, given President Obama’s support for reform. Most of the recommendations the industry supports can be accomplished
without legislation. However, past efforts have failed to produce results. Page 1

IN THIS ISSUE:

World Bank’s View on Chinese Financial Reports and its Implications for Users

China has taken giant strides to converge with international financial reporting and auditing standards in recent years, according to a World Bank study. However, more effort is needed to enhance the capacity of regulators. Page 1

U.S. Commitment to International Trade Appears Flimsy

The U.S. is threatening a trade war with both its second largest trading partner and the largest holder of U.S. government debt: China. Absent a more coherent view of the U.S.-China economic relationship, one can expect increasing tension and continuing reciprocal standoffs over random goods. Page 1

The Cyprus Tax Regime: “This is Why Its Hot”

Located at the crossroads of Europe, Asia and Africa, Cyprus has surged in popularity since joining the EU and has gained increasing attention among European holding company jurisdictions. IF&T examines how companies can use Cyprus in their international tax planning. Page 3

2009 Changes to Canada’s Merger Review Laws

In the past year, Canada has reformed the foreign investment review and competition laws affecting M&A transactions. The Canadian government’s Bill C-10 overhauls the merger review process under the Competition Act, among other things. Page 8

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