Recent changes in the tax laws affecting multinational corporations in certain trading partners of the United States

Article Abstract:

Changes in the tax laws of Brazil, Canada, the UK and Mexico will influence US multinational corporations' ability to minimize their tax loads. Brazil's 1991 Tax Reform Act removed most of the punitive taxation designed to deter multinational corporations from putting money in Brazilian companies. Canada's Finance Ministry intends to stimulate foreign investment by cutting the federal corporate tax rate and increasing the capital cost allowance rate. The UK will begin enforcing three EC direct taxes including the Mergers Directive. Mexico's 1992 Tax Reform Act is meant to entice further foreign investment.

United Kingdom, Canada, International business enterprises, Multinational corporations, Brazil, Tax policy

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Mexico - devaluation of the Mexican New Peso

Article Abstract:

The devaluation of Mexico's New Peso in late 1994 may result in the renewed use of the US Dollar Approximate Separate Transaction Method (DASTM) by US taxpayers with qualified business units that keep their books in Mexican currency. The DASTM is used to make periodic adjustments for currency in a hyperinflationary economy. The method requires the adjustments to take the form of income or deductions for liabilities and assets held in local currency. Taxpayers may still be using the method if it was elected in 1987-1991, and continued application depends on the type of tax year used.

Analysis, Accounting and auditing, Inflation (Finance), Currency devaluation, Devaluation (Currency), Inflation (Economics)

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United States-Canada treaty protocol

Article Abstract:

A protocol amending the US-Canada Income Tax Convention was signed in Aug 1994 and will act to reduce tax barriers and double taxation risks between the two nations. Provisions will reduce withholding taxes on royalties, branch profits, social security benefits and certain dividends. The agreement also establishes methods of avoiding double estate taxation that are based on the situs of the property being taxed. Third country access to the benefits of the Convention has been restricted.

Interpretation and construction, Laws, regulations and rules, Tax treaties, Transfer taxes, Social security, Withholding tax

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