China's new Enterprise Income Tax Law (New Law) will take effect January 1, 2008. The New Law unifies the income tax treatment of domestic and foreign enterprises by consolidating the Enterprise Income Tax Law, applicable to domestic Chinese enterprises, and the Foreign Enterprise Income Tax Law, applicable to foreign enterprises and FIEs.

Unification under the New Law will affect tax rules, tax rates and tax incentives. With respect to tax rules, for example, the prior salary deduction limitations applicable only to domestic Chinese enterprises are abolished. Certain new expense limitations, as well as new tax accounting rules, will apply uniformly to all enterprises.

This issue of World Tax Advisor addresses what is included in the implementation rules of the New Law as well as certain items that have been omitted. Guidance on the latter will have to await future circulars or amendments to the Rules.

Also in this issue:

• The good, the bad, the ugly in New Zealand’s proposed tax reform
• Brazil
  - Electronic filing of accounting records becomes mandatory
• Canada
  - Transfer pricing audits and implications for employers with cross-border employees
  - Update on elimination of withholding tax on Canada-U.S. cross-border interest payments
• China
  - New individual income tax return issued
• Denmark
  - Changes proposed to international taxation
• European Union
  - ECJ rules on German CFC rules for PEs and partnerships
  - ECJ holds Dutch dividend withholding tax rules incompatible with EC law
  - European Commission amends transition arrangements for BCCs
  - ECOFIN agrees VAT package to apply from 2010
• Germany
  - Annual tax act 2008 enacted
• Hungary
  - Participation exemption rules eased
• India
  - AAR rules transaction between nonresidents taxable in India
• Indonesia
  - Ministry of Finance issues import guidelines
• Japan
  - Supreme court rules on CFC losses
• Kenya
  - VAT imposed on commercial buildings
• Luxembourg
  - Law relating to EEA and new EU member states approved
  - Tax treaty concluded with Hong Kong SAR
  - Chamber of commerce contribution challenged
• Netherlands
  - Proposal targeting base erosion passes lower chamber of parliament
• Papua New Guinea
  - Parliament passes 2008 budget
• Sri Lanka
  - 2008 budget highlights
• Switzerland
  - New regulations redefine federal tax holiday regime
• United States
  - Planning for the weakened U.S. dollar
  - Mexican flat tax will be treated as creditable until further guidance

Visit the World Tax Advisor Archive for issues from the past six months.

 Subscribe to World Tax Advisor