China is willing to encourage multinationals to invest in China through mergers and acquisitions, which are at an early stage in the country but are becoming a major trend in foreign investment, the vice minister of commerce, Liao Xiaoqi, said. Overseas acquisitions are preferable to foreign direct investment, Liao said, because they seldom require new land for expansion in an economy already troubled by excess industrial capacity. In 2006 M&A accounted for less than US$5 billion, or 2.5% of total foreign investment in China. (Source: chinaeconomicreview.com)


US Trade Representative Susan Schwab, United Arab Emirates (UAE) Minister of Commerce and Planning, Shaikha Lubna Al-Qasimi and Minister of State for Finance, Mohammed Khalfan bin Khirbash have discussed ways to deepen the US–UAE economic relationship and improve bilateral trade and investment ties. The meeting took place recently in Washington under the auspices of the US– UAE Trade and Investment Framework Agreement (TIFA) Plus Council, a joint body created earlier this year. (Source: Tax-News.com)


On 20th, Jul China responded to a surprise acceleration in growth during the second quarter and a jump in inflation by announcing it would slash its tax on bank deposit interest income and raise interest rates. The moves had been widely expected after Beijing on 19th, Jul unveiled second-quarter growth in gross domestic product of 11.9 per cent and said consumer price inflation had hit 4.4 per cent in June, its highest rate in nearly three years. the State Council said it would cut the rate to 5 per cent from August 15. In a co-ordinated move, the People's Bank of China raised benchmark one-year deposit and lending rates by 0.27 percentage points with effect from 21st, Jul, the fifth such rise decreed since April last year. (Source: FT.com)


The British Virgin Islands Financial Services Commission has announced that several amendments are being readied to the new Business Companies Act that will, among other things, establish new, simplified provisions for the transitioning of bearer share companies to non-bearer share companies. The Financial Services Commission will be orchestrating a territory-wide series of public workshops in July to educate local company owners and other key stakeholders with regard to the new company regime and its implications. (Source: LawAndTax-News.com)


Vanuatu President, Kalkot Mataskelekele commenced a six-day visit to China lately in the hope of securing extra investment in the Vanuatuan economy by Chinese investors. Mataskelekele is hoping that Chinese businesses will increase investment in Vanuatu's agriculture, forestry, fisheries, telecommunications and infrastructure. (Source: Tax-News.com)


Company director Yeung Kwong-kei has been jailed for two years by the Hong Kong District Court for evading profits tax, the longest jail term ever imposed for tax evasion in the territory. The 46-year-old was the shareholder and director of a company. The company issued two types of sales invoices, one computer-generated and issued in the company's name, and the other handwritten and issued in name of a sole-proprietary business formerly operated by the defendant. The sole-proprietary business ceased operation in 1994. The total amount of profits understated was HK$5,953,620, and the total tax evaded was HK$961,978. (Source: Tax-News.com)


The United States and Vietnam on 21st, Jun signed a Trade and Investment Framework Agreement (TIFA) which aims to create a platform for the further expansion and deepening of bilateral trade and investment ties between the two countries. Under the TIFA, the United States and Vietnam will discuss implementation of the 2001 US-Vietnam Bilateral Trade Agreement (BTA) and Vietnam’s WTO commitments. They will also explore new initiatives to increase trade in industrial and agricultural products and services, and to encourage further investment between the two countries. (Source: www.ustr.gov)


The China Development Bank announced on 9th, Jul the subscription result of the first issue of renminbi (yuan) bonds in Hong Kong, which reflected a strong response from both retail and institutional investors, with an oversubscription rate of nearly two times. The Hong Kong Monetary Authority said it was pleased with the successful launch of the renminbi bond business in Hong Kong and the smooth operation of the subscription process. (Source: Tax-New.com)


The European Union has given Cyprus and Malta final approval to start using the euro next year, taking to 15 the number of nations sharing the currency. Finance ministers voted to allow the two Mediterranean nations to join the currency zone on Jan. 1. They also set an exchange rate of one euro to 0.585274 Cypriot pounds and 0.4293 Maltese lira when the two countries swap their existing coins and banknotes for the euro. Both joined the EU in May 2004. Only one other country that joined the EU at the same time -- Slovenia -- has so far adopted the euro. (Source: biz.yahoo.com)


China and Singapore has agreed to strengthen the cooperation between the two countries in various fields. Both sides agreed to push forward the negotiations on free trade agreement (FTA) which started last year, as well as to strengthen cooperation in energy conservation and environment protection such as establishing an eco-city in China by using Singapore's sophisticated technologies in these fields. (Source: Xinhua News)


Germany's upper house of parliament, the Bundesrat, approved on 6th, Jul the bill to cut the corporate tax rate, clearing its final legislative hurdle, local reports said. The corporate tax cut, one of key reforms of German government under Chancellor Angela Merkel, will be reduced from 38.7 percent at present to 29.8 percent from January 1, 2008. The legislation will ease the company tax burden in Germany, Europe's biggest economy, by about 5.0 billion euros (6.8 billion dollars) a year, according to a report by German news agency dpa. The law will also introduce a 25-percent capital gains tax from January 1, 2009, it said. (Source: bjnsr.com.cn)


The fourth batch of foreign banks to apply for local incorporation in order to have more access to China's consumer banking market hopes to receive final approval as early as possible. The six banks include JPMorgan, Germany's Deutsche Bank, South Korea's Hana Bank and Société Générale of France. JPMorgan has apparently already received initial approval from the country's banking regulator. The bank plans on sending the head of its international treasury and security services business to China to run the local operation. Given that these services are already available to JPMorgan's Chinese clients, it is suggested that local incorporation is a strategic move targeting areas such as derivative-product launches. (Source: chinaeconomicreview.com)


China tourism regulator is working on details to further open the market to foreign operators by lowering capital requirements and allowing subsidiaries. Foreign tour agencies will be treated on par with domestic counterparts when it comes to registered capital, a China National Tourism Administration official has said. Currently, they are required to have a minimum of 2.5 million yuan (328,000 U.S. dollars) in registered capital, compared to 300,000 yuan for domestic tours and 1.5 million yuan (197,000 dollars) for outbound and inbound tours for Chinese counterparts. The CNTA has also allowed foreign-funded travel agencies to set up subsidiaries in China starting July 1. (Source: english.china.com)


Barbados and the Seychelles recently started negotiations to complete an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (DTA). If a successful conclusion is reached, it will bring the total number of DTA’s entered into by Barbados to 17. The Seychelles has also expanded its DTA network in recent years, with concluded agreements in 18 countries and is actively negotiating for more treaties with various additional trading partners. (Source: Tax-News.com)


Foreigners are to be allowed to invest in China's defense sector, AFP reported. Outside investment, including money from overseas, can be channeled into firms producing less sensitive military equipment as well as goods for the civil and consumer markets. The move is part of wider efforts to bring stronger growth and shareholder reform to the long-protected industry. Defense-related companies are to be encouraged to raise funds on domestic and overseas capital markets, state media said. The end goal is to deliver a more market-oriented and innovative industry. However, any defense interests linked to national security are likely to remain closely guarded by Beijing. (Source: chinaeconomicreview.com)


It emerged on 12th Jul that Guangdong and Hong Kong have agreed to step up cooperation to raise public awareness of intellectual property in both regions, with seminars to be staged to show enterprises how copyright can be used as a tool for wealth creation, and for sharpening their competitive edge. Law-enforcement authorities in both places have also been working closely to suppress the flow of infringing goods. (Source: LawAndTax-News.com)


Thailand's Revenue Department has launched a crackdown on companies which transfer profits to offshore tax havens using artificial pricing to inaccurately declare taxable income. Thai transfer pricing rules were fairly primitive before new guidelines were introduced last year. The guidelines include three permitted valuation methods: Comparable Uncontrolled Price Method, Resale Price Method, and Cost Plus Method. The Revenue Department may now investigate whether the parties to a transaction are related parties and may use the permitted valuation methods to establish an arm's length price. However, there is little information so far on how the Department will apply the rules in practice, or on what negotiating mechanisms will be available in disputed cases. (Source: Tax-News)


The United Arab Emirates will have introduced a sales tax by 2010 as the government begins to diversify its revenue base away from its dependence on the oil industry, an IMF official has said. The introduction of a sales tax like VAT would provide the UAE government with a "strong fiscal tool" and give other Gulf Cooperation Council countries a "non-oil consumption-based tax system." Standard Chartered Bank however, predicts that a sales tax could be introduced in the UAE within the next 18 months at a rate of between 3% and 5% as customs tariffs are removed to comply with trading agreements struck with the world's leading trading nations. (Source: Tax-News)


Hong Kong and China have signed a supplement on further services liberalization and economic co-operation under the Closer Economic Partnership Arrangement, introducing 40 liberalization measures in 28 services areas, including 11 new ones including elderly services, environmental services and public utilities. The new package of liberalization and co-operation measures will provide further and broader opportunities for Hong Kong business, and reinforce Hong Kong's comparative advantages in tapping the Mainland market's potential. All the services liberalization measures will come into force on January 1, 2008. The Mainland will work out and promulgate the necessary implementation rules and regulations as appropriate. (Source: Tax-News)


US and Panama have signed the United States – Panama Trade Promotion Agreement, a comprehensive trade agreement including important commitments on market access as well as ground-breaking labor and environment provisions. This agreement will eliminate tariffs on US exports to Panama and secure permanent duty-free access for exports from Panama to the United States. In addition, the agreement will help support democratic and economic reforms undertaken by Panama’s leaders and spur additional reforms of Panama’s domestic legal and business environment. (Source: Tax-News)


An attempt by private equity operator Carlyle Group to buy a stake in a small Chinese bank has been ruled out by Beijing. Chongqing City Commercial Bank said in its annual report that a US$43 million bid by Carlyle for an 8% holding was rejected because the regulators were unhappy with the purchasing vehicle. According to rules issued in 2003, foreign investors in Chinese banks must meet a minimum capital requirement of US$10 billion. Carlyle's purchasing vehicle, Carlyle Asia Partners II LP, had capital of US$1.8 billion after completing its fundraising in 2006. Private equity firms have largely been shut out of China's financial enterprises. Last year Carlyle pulled out of a Citigroup-led consortium that ended up securing about 80% plus management control of Guangdong Development Bank. (Source: chinaeconomicreview.com)


Acknowledging Gibraltar's relatively high headline rates of income tax, Chief Minister Peter Caruana has announced a dual income tax system and changes to the high-net-worth individual (HNWI) scheme, designed to make the tax system more attractive to expert workers employed in the jurisdiction's finance industry. From 1 July 2007, every taxpayer will be able to choose for each tax year between two systems, and to choose the one resulting in the lower tax payment. For HNWIs this scheme will remain largely intact, except that the minimum tax payable is increased from GBP14, 000 to GBP18, 000 per annum and the taxable income level is increased from GBP50, 000 to GBP60, 000. (Source: Tax-News)


China will increase mineral-resources taxes on copper, lead, zinc and tungsten ores from August 1. The move is seen as part of wider efforts from Beijing to encourage the efficient use of limited domestic mineral reserves. The tax will rise by between US$0.66 and US$0.93 per metric ton for copper ores, depending on quality; between US$1.30 and US$2.60 per metric ton for lead and zinc ores; and for tungsten ores, between US$0.93 and US$1.19 per metric ton. "The government has always hoped that by raising miners' production costs, it will urge them to be more efficient," said Li Yusheng, an analyst. (Source: chinaeconomicreview.com)


The updated regulations announced by Jim Flaherty, Minister of Finance, bring Canada’s anti-money-laundering and anti-terrorist-financing regime in line with new Financial Action Task Force standards. They also follow recommendations made in the 2004 Auditor General’s Report, and in a 2004 Treasury Board–mandated evaluation of the regime. The regulatory amendments implement new provisions of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which received Royal Assent in December 2006. (Source: Tax-News)


Hong Kong and Mainland authorities are working together to expand the Hong Kong's fund management industry, such as seizing Mainland business opportunities, human resources development, tax breaks, enhanced investor education and facilitating market growth. Under these changes, firms that are already licensed or registered in the US or UK as investment managers or advisers, and which only serve professional investors and have good compliance records, will benefit from an expedited licensing process. Additionally, persons nominated to be the Responsible Officers of hedge fund managers, who fulfill the necessary criteria, would be exempted from the local regulatory examination. (Source: Tax-News)