As a follow up to our December 27th, 2009 posting regarding proposed admission of Chile into the OECD, Chile’s admission to the OECD is now complete.
Chile’s economic future has brightened considerably merely by being admitted to OCED. From now on, Chile will have a seat at the table when free trade agreements and other economic covenants between major economies are up for discussion. The country’s economic fundamentals also appear strong. Chile expects, “…real GDP growth to average a solid 3.4% beyond 2010 through to the end” of a 10 year growth horizon. Unemployment stands at a modest (given the recession) 9%, while inflation has held steady at 4%. Additionally, Chile remains and is becoming an even more attractive foreign direct investment choice.
OECD – Chile signs up as first OECD member in South America
The Government today published a draft Tax Framework for business. Developed in discussion with the Business-Government Forum on Tax and Globalisation, the document is intended to provide greater certainty for large businesses about the Government’s approach to the development of tax policy.
The Government is seeking feedback on the draft, which sets out:
- The key principles underpinning the development of tax policy – including securing fairness, competitiveness and stability for the UK, and ensuring new burdens and complexities are not created for UK business
- The policy process the Government follows when developing tax policy, including consultation wherever possible.
The Chancellor of the Exchequer Alistair Darling said:
“The UK is a good place to do business and we want to keep it that way.
“Businesses want certainty on tax. That’s is why today I have set out, in collaboration with UK business, the Government’s key principles for tax policy and how we will engage with business when developing tax policy”
STEP – Treasury promises future tax predictability
In more news on the future expansion of the European Union, the EU Parliament yesterday urged the EU to open membership negotiations with the former Yugoslav Republic of Macedonia. The new EU Enlargement Commissioner, Stefan Fuele, also is in favor of beginning accession talks with Macedonia. Thus far, Greece has delayed membership talks with Macedonia due to objections to Macedonia’s name, which corresponds to a historial Greek region. The MEPs urged the EU to make the decision to open accession talks at the March 2010 summit. Greek, Cypriot and Spanish MEPs have been somewhat cool to the suggestion, with the Spanish EU Affairs Secretary, Diego Lopez Garcia, suggesting that Macedonia has work to do on issues of corruption, gender inequality, and minority rights.
In other EU accession news, negotiations on Croatia’s joinder may be completed by the end of the year. Turkish progress towards membership has been described as “piecemeal” due to ongoing issues regarding relations with Cyprus and protections for Kurds.
European Commission – Enlargement
In April 2009 the President signed into law the Companies Act (2008). The Act is due to come into force later this year. Meanwhile, draft Regulations have been published supplementing the framework established by the Act. Included in the Regulations are, for example, further rules regarding the requirement for certain companies to have a Social and Ethics Committee.
The Australian High Court has ruled in favour of protecting Australians, including Australian business, from the over reaching power exerted by quasi-judicial bodies and tribunals. The High Court has kicked in the teeth of the NSW WorkCover Authority, the NSW Industrial Relations Commission and the NSW government for creating and imposing an ‘oppressive’ regime of OHS criminal law that stripped people of basic human rights. In doing this, the High Court has warned all Australian tribunals and quasi-courts against thinking they can turn themselves into unappealable fiefdoms of power. The High Court has not created new law, but rather has enforced rights guaranteed under the Australian constitution. This is a fascinating article on the application of constitutional powers, utilized to protect business from the arbitrary and ultra vires actions of tribunals and quasi-judicial bodies.
Business Spectator – The limits of class warfare
Zimbabwe’s Prime Minister Morgan Tsvangirai rejected legislation signed into law by President Robert Mugabe that forces companies to sell more than half of their shares to black investors, saying it would “scare off” foreigners.
“The regulations would have scared off foreign investors, already jittery about Zimbabwe as an investment destination,” Tsvangirai said in a statement posted on his Web site yesterday. “Without foreign direct investment in Zimbabwe, it will be difficult to kick-start the national economy.”
While it is certainly shocking, given past Government action in Zimbabwe, that there is any awareness of the necessity to maintain or enhance foreign direct investment in that country, it is significantly more surprising that the Prime Minister was able to reject President Robert Mugabe revision to the company law.
Under the law, companies operating in the country with assets worth more than $500,000, including Anglo American Plc and Old Mutual Plc, must sell 51 percent of their local units to black investors within five years, according to a copy of the law distributed by Harare-based Veritas Trust yesterday.
For now, due to improper internal governmental consultation, and the action of the PM, that law will not come into force.
The Zimbabwe Telegraph – PM Tsvangirai rejects new investment law
Transparency International’s 2009 Corruption Perceptions Index (CPI) shows 180 countries ranked according to their perceived level of public sector corruption. The Corruption Perceptions Index (CPI) table shows a country’s ranking and score, the number of surveys used to determine the score, and the confidence range of the scoring. The rank shows how one country compares to others included in the index. The CPI score indicates the perceived level of public-sector corruption in a country/territory.
Transparency Internation – Corruption Perceptions Index 2009
For the purpose of protecting domestic interests, most states limit taxpayers’ ability to recognize interest on loans or credits as expenses reducing corporate profit tax payments, particularly where such interest is paid to a related entity outside the state. In tax practice such limitations are called “thin capitalization rules. This article reviews the prevailing judicial trends within Russia on the question of the application of the Thin Capitalization Rules, particularly in relation to the operative Double Taxation Treaties.
The Moscow Times – Russian Thin Capitalization Rules in Light of Double Taxation Treaties: Trends in Court Practice
The Australian government approved legislation to tighten rules preventing foreign investors from using complex takeover arragements to bypass relevant laws to gain control of an Australian company. The changes, approved yesterday, mean financial instruments such as convertible bonds will be treated as equity in considering whether a complex financing arrangement is being used to deliver influence or control over an Australian company, either currently or in the future.
The Australian – Parliament approves legislation to tighten laws on takeovers by foreign investors
In the summer of 2009, the Russian legislative authorities amended the federal legislation in order to recognize the validity of agreements among shareholders of Russian joint-stock companies. The Amendments recognize shareholders agreements as a special contractual type and list general issues which may be addressed in such agreements, basic legal restrictions, and disclosure requirements. This Article outlines the most important provisions of the Amendments and analyzes the possibility of their successful use in practice.
The CJELO – Recent Developments In Russian Corporate Legislation
