Summary: 1. Treaties (i) India / Bhutan (ii) Vietnam / Serbia 2. Cases (i) New Zealand: Alesco - Application of GAAR to an optional convertible note financing structure - Under the “financial arrangements” tax rules, an interest-free convertible note generates a tax deduction for notional interest - This outcome is contrary to Parliament’s intention - Thus, GAAR applied to deny deduction (ii) India: Siemens - German company used sophisticated machinery and technology to test electrical circuit breakers - Not “technical services”, because no direct human involvement - Thus, fee paid to German company not subject to withholding tax 3. India (i) Vodafone Case - The two sides are still negotiating a settlement - After the final settlement of the Vodafone case, the Finance Minister will introduce into Parliament proposed amendments to section 9(1)(i) (indirect share transfer), based on the Shome Committee’s recommendations (ii) Tax Residency Certificates (TRCs) - Last week’s Budget: TRCs will be a necessary, but not sufficient, condition to claim treaty benefits - Finance Minister’s press release: • India tax authorities will not “go behind” the TRC and question the residency status • Mauritius: Circular 789 continues in force - Apart from residence, other conditions must be satisfied for treaty claims – for example: • Beneficial ownership • Absence of permanent establishment in India • Purpose (iii) Cadbury - Indian excise tax authorities have accused Cadbury of avoiding $45 million in excise taxes - 10 year excise tax exemption granted to companies which set up new, stand-alone factories in Himachal Pradesh by 31 March 2010 4. In brief (i) Australia: - Consultation on moving large companies to monthly tax payment (ii) Malaysia: - Treasury Management Centre – application guidelines - Limited liability partnerships – registration guidelines (iii) New Zealand: - Consultation on tax treatment of subdivided shares - Consultation on determination of “subscriptions” amount for amalgamated companies (iv) Singapore: - Tax authorities issue e-Guide on the taxation of property developers
