The Government of India has proposed to issue Point of Taxation (for Services Provided or Received in India) Rules, 2010 in exercise of the powers conferred on it under Sec. 94 (2) (hhh) of the Finance Act, 1994.

The purpose of these rules is to introduce clarity and certainty in the matter of levy and collection of Service Tax particularly in situations of change of rate of service tax or imposition of service tax on new services. At present there is lack of clarity as to the date from which the changed rate or a new levy of service tax become payable and tax payers as well as tax officials face uncertainty in this regard as the provisions are not explicit. Similar uncertainty prevails in regard to cases of continuous supply of services. So far these issues have been addressed by CBEC through clarificatory circulars that accompany such changes. A need has been felt to put the regulatory framework on a transparent, clear and durable basis and hence these rules.

The other major change proposed to be brought about through these rules is to link the payment of tax to provision of service, raising of the invoice or payment for service provided or to be provided, whichever is the earliest. Currently the payment of service tax is linked to receipt of payment for the service, which is at odds with regime in force in Central Excise and VAT laws implemented by the states. In both Central Excise and VAT, tax payment is required on accrual basis - upon manufacture and clearance of goods in the former and issue of invoice in the latter. In neither case is the tax payment linked actual receipt of payment for the goods. The GST regime is likely to follow this practice and it is necessary to align the service tax regime with it so that transition to GST will be smooth. The change in the point of payment of tax will also simplify accounting for the taxpayers.

Explanatory Notes to Draft Point of Taxation Rules

Rule 1: Preliminary

Rule 2: Contains the definitions for the Rules.

Rule 3: Provides that the taxable event shall be the provision of service, including future provision. This would mean that the service, even though promised to be provided at a future date, shall be taxable. The rule also lays down that, if the service provider issues an invoice or receives any payment before providing service, the service, to the extent of the amount mentioned in the invoice, or the amount of payment, shall be deemed to have been provided. It means that the service provider shall be liable to pay the tax to the extent of amount mentioned in invoice, or the payment received, even if the service has not been provided at that point of time.

Rule 4: Prescribes that rate of tax applicable in the case of advances received shall be the rate applicable when the advance is received. This essentially clarifies the treatment of advances, and is in line with the provisions in these Rules that the tax payment shall be linked to the issuance of invoice, or the payment received, whichever is earlier. This would bring in certainty that once tax is charged on payment / invoiced amount, such determination of tax would be final & there would be no need to re-open the same. However, interest free deposits shall not be covered within the ambit of this rule.

Rule 5: Determines the point of taxation where there is a change in rate of tax. In other words, it prescribes the applicable of rate of tax in the cases where the tax rate changes between the occurrence of different events, viz., provision of service, issuance of invoice, and receipt of payment. This Rule only covers the change in rate of tax, including any service which was exempt and becomes taxable, and does not cover the services which become taxable for the first time. The provisions of this rule can be summarized in tabular form as shown below (Please note that the words ‘Before’ and ‘After’ mean “before the change in tax rates” or “after the change in tax rates”, as the case may be).

The principle followed in the above rule is that wherever two points of taxation have occurred, whether before the change in tax rate or after the change in tax rate, the earlier event of the two would be the point of taxation, with the exception of clause (ii), where a deviation has been made. For this clause too, although the point of taxation would be the date of invoice, the same would be invalid if the payment has not been received within 30 days.

Rule 6: Rule 6 is specifically provided for conditions where a service (which is not a continuous supply of service) is charged to tax for the first time i.e. becomes taxable for the first time. The rule provides that:-

(a) If an invoice has been issued and payment received before a service becomes taxable, no tax would be charged even if the service is provided after the same has become taxable. This provision is consistent with the other similar provisions in these rules, and ensures that a financial transaction which has achieved finality before a service was taxable shall not be reopened for collection of tax.

(b) If any payment has been received prior to a service being chargeable to tax, no tax shall be chargeable if an invoice has been issued within 14 days of receipt of payment. The period of 14 days is the period also prescribed in Rule 4A of Service Tax Rules, 1994 and ensures that a payment is not shown as having been made earlier than it was actually made.

(c) The rule also clearly lays down that any service, which is a not a continuous supply of service, if provided before the service becomes chargeable to tax, shall not be subjected to tax.

Rule 7: Rule 7 deals with the continuous supply of services (eg., construction services, maintenance and repair services etc.), According to the proposed definition in rule 2 of these rules, ‘continuous supply of service’ refers to services that are supplied continuously for a period exceeding six months or services that are specified by the Govt. as continuous supply of services, subject to prescribed conditions, if any.

The proposed rule essentially prescribes that the rate of tax will be the rate applicable on the date the payment becomes due as per the contract, or, if the payment is linked to completion of certain events (milestones), when those milestones are completed. If none of the above two conditions is specified in a long term contract, then the service provider is required to pay the service tax at the time of raising of invoice, or receipt of payment, whichever is earlier.

This rule also provides that if any payment has been received in respect of non-taxable service, before it becomes taxable, the same would not be charged to tax, even if the service is provided subsequently

The only exception in this case pertains to the services in continuous supply of service a part of which is being provided before the service becomes taxable, (i.e the service becomes taxable during the currency of provision of service but payment for which is received after the service becomes taxable). Certain examples of this are

(a) The payment for construction services is made before the tax becomes applicable but the construction is started after the service becomes taxable.

(b) Part of the construction is done before the service becomes taxable but payment for the same is received after the service becomes taxable

(c) Water supply has been made in the month of March & April, the bill is raised in month of May, but the service has become taxable in the month of April Similar situations can be interpolated in other services which are supplied continuously.

In such cases, tax is liable to be paid on the basis of raising of invoice or the date provided for payment in the contract or the actual payment, as the case may be.. This Rule is drafted keeping in view the fact that the extent of service provided during a particular period of time in continuous supply of the service is difficult to determine.

It has been prescribed that the clauses of the rule shall be read sequentially. Thus, if there is a date of payment prescribed in the contract, the tax becomes due on that day irrespective of the fact if the payment has been received or not. In case, the date of payment is not prescribed in the contract, but payment is linked to achievement of milestones, then the tax becomes payable even if no payment has been received by the service provider. However, if no date of payment is prescribed in the contract, or if the payment is not linked to achievement of any milestones, then the tax would be payable whenever the service provider issues an invoice, or receives a payment (whichever is earlier).

Rule 8 and 9: Provides for points of taxation for “associated enterprises” and the treatment of royalties and similar payments.

The Rule is as under:

(1) These Rules shall be called the Point of Taxation (for services provided or received in India) Rules, 2010. They shall come into force on the date of their publication in the official gazette.

(2) In these Rules, unless the context otherwise requires,-

(a) "Act" means the Finance Act, 1994 (32 of 1994);

(b) " associated enterprises" shall have the meaning assigned to it in section 92 A of the Income Tax Act, 1961 (43 of 1961) ;

(c) "continuous supply of service" means any service which is provided, or to be provided, under a contract, for a period exceeding six months ,or where the Central Government, by a notification, prescribes provision of a particular service to be a continuous supply of service, whether or not subject to any condition;

(d) " Invoice" shall have the meaning assigned to it in Rule 4A of the Service Tax Rules, 1994 and shall include any bill or challan as prescribed therein;

(e) " Point of taxation" means the point of time when the tax becomes payable to the Government;

(f) "taxable service" means a service which is subjected to service tax, whether or not the same is fully exempt by the Central Government vide powers conferred under Section 93 of the Act;

(g) 'taxable event" means an event which causes the tax liability to arise, namely, the provision of service, issuance of invoice or the receipt of payment.

(3) For the purposes of these rules.--

a) A provision of service shall be treated as having taken place at the time when service is provided, or is to be provided.

b) If, before the time prescribed in sub-rule (a), the person providing the service issues an invoice or receives a payment in respect of service to be provided, the supply shall be, to the extent covered by the invoice or the payment made thereof, deemed to be have taken place at the time the invoice was issued or the payment is received, as the case may be, whichever is earlier.

(4) Treatment of advances.--

Wherever any advance, by whatever name it is known, is received by the service provider towards the provision of taxable service, the tax becomes payable on the date of receipt of each such advance.

Provided that no tax shall be payable on an interest free refundable deposit.

(5) For the purposes of these Rules, if there is a difference in date and time between the raising of invoice, date of payment and providing of taxable service, and the tax rate changes during such period, the point of taxation shall be determined in the following manner

a) Where a taxable service has been provided before the change of rate*, but the invoice for the same has been raised and the payment received after the change of rate, the point of taxation shall be the date of payment or issuance of invoice, whichever is earlier.

b) Where the invoice has been raised and service provided prior to a change in tax rate*, the point of taxation shall be the date of raising of invoice, provided the payment for the invoice is made within 30 days of raising of invoice. In other cases, it would be the date of payment.

c) Where the invoice has been raised prior to the change of tax rate*, but the service has been provided and the payment for the invoice made after the change in tax rate, the point of taxation shall be the date of payment.

d) Where the invoice has been raised and the payment for the invoice received before the change of tax rate*, but the service provided after the change of rate, point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier.

*(Note:- change in tax rate includes withdrawal of exemption)

(6) Where a service, not being a service covered by rule 7 of these rules, is taxed for the first time -

a) no tax shall be payable to the extent the invoice has been issued and payment received before such service becomes taxable, even if the service is provided at a time when it is taxable;

b) no tax shall be payable if the payment has been received and invoice has been issued within the period prescribed under rule 4A of the Service Tax Rules, 1994.

Provided that no tax shall be payable on any service which has been provided before the service becomes taxable.

(7) Continuous Supply of service.--

a) Continuous supply of service, the whole or part of which is determined or payable periodically or from time to time, shall be treated as separately supplied at the following times;

i) If the date of payment is prescribed in the contract, the date on which the payment is liable to be made by the service receiver, irrespective of whether or not any invoice has been raised or any payment received by the service provider;

ii) If the payment is linked to the completion of an event, the time of completion of that event;

If the date of payment is not prescribed in the contract, each time when the service provider receives the payment, or issues an invoice, whichever is earlier.

Provided that, for the provision of services covered by this Rule, no tax shall be payable on the payment received before any service becomes taxable, provided that such payment is covered by clause (i) or (iii) above.

Provide further that the clauses (i) to (iii) shall be read sequentially for the purposes of this rule.

(8) The point of taxation in respect of associated enterprises shall be the date on which the payment has been made, or the date of debit or credit in books of accounts, or issuance of debit or credit notes, whichever is earlier.

(9) In respect of royalties and similar payments, where the whole amount of the consideration for the provision of service was not ascertainable at the time when the service was performed, and subsequently the use or the benefit of these service by a person other than the supplier gives rise to any payment of consideration, the service shall be treated as having been provided each time that a payment in respect of such use or the benefit is received by the provider, or an invoice is issued by the provider, whichever is earlier.

The amendments proposed in the Bill, inter alia seeks to

(i) make the provisions of the Act in conformity with World Intellectual Property Organisation''s WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty (WPPT) and to ensure protection to the copyright holders against circumvention of effective technological measures applied for purpose of protection of their rights and circumvention of rights management information and to provide for punishment for two years and fine for violation of such rights;

(ii) provide exclusive rights and moral rights to performers in conformity with the WIPO Performances and Phonograms Treaty (WPPT);

(iii) provide for definition of new terms, namely commercial rental, Rights Management Information and visual recording and to amend the existing definitions of the terms author, cinematograph films, communication to the public, infringing copy, performer and work of joint authorship;

(iv) make provision for storing of copyrights material by electronic means in the context of digital technology and to provide for the liability of internet service providers;

(v) enhance the term of copyright for photographers to life plus sixty years instead of only sixty years as at present;

(vi) introduce copyright term of seventy years for principal director;

(vii) extend the copyright term for the producer for another ten years that is from sixty years to seventy years if he enters into an agreement with the principal director;

(viii) give independent rights to authors of literary and musical works in cinematograph films;

(ix) clarify that the authors would have rights to receive royalties and the benefits enjoyed through the copyright societies;

(x) ensure that the authors of the works, in particular, author of the songs included in the cinematograph films or sound recordings, receive royalty for the commercial exploitation of such works;

(xi) allow the physically challenged persons to access to copyright material in specialised formats;

(xii) make provision for compulsory licensing for certain entities for publication of copyright works in other formats.

(xiii) introduce statutory licensing for version recordings of all sound recordings to ensure that while making a sound recording of any literary, dramatic or musical work the interest of the copyright holder is duly protected;

(xiv) introduce a system of statutory licensing to broadcasting organisations to access to literary and musical works and sound recordings without subjecting the owners of copyright works to any disadvantages;

(xv) make provision for compulsory licence (through the Copyright Board) to publish or communicate to the public such work or translation where the author is dead or unknown or cannot be traced or the owner of the copyright work in such work cannot be found;

(xvi) make provision for formulation and administration of copyright societies by the authors instead of the owners;

(xvii) make provision for formulation of a tariff scheme by the copyright societies subject to scrutiny by the Copyright Board;

(xviii) provide for continuous payment of royalties by aggrieved party pending the appeal before the Copyright Board and the Copyright Board may fix interim tariff pending appeal on the tariff scheme;

and (xix) strengthen enforcement of rights by making provision of control of importing infringing copies by the Customs department, disposal of infringing copies and presumption of authorship under civil remedies.

This Bill was introduced in the year 2009 in the Rajya Sabha was passed on 3rd August 2010 as Bill No. VI-C. The Industrial Disputes (Amendment) Bill, 2010 amended the Industrial Disputes (Amendment) Bill, 2009. The amendment proposals in the Industrial Disputes (Amendment) Bill, 2010 inter-alia, seek to amplify the definition of 'appropriate Government', enhance the wage ceiling prescribed for supervisors, provide direct access for workman to Labour courts or Tribunal in case of individual disputes, expand the scope of qualifications of Presiding Officers of Labour Courts or Tribunal, setting up of Grievance Settlement Machinery and empowerment of Industrial Tribunal-cum-Labour Courts to enforce decree.

This Bill is to amend the New Delhi Municipal Council Act, 1994 and to provide, inter alia, that,--

(a) the Member of Parliament representing the New Delhi area in the Lok Sabha shall be made a member of the New Delhi Municipal Council with voting rights;

(b) the number of members of the Legislative Assembly, who are members of the Council, be reduced from three to two;

(c) the number of Members representing certain fields be increased from two to four;

(d) out of thirteen members there shall be at least three members who are women and two members belonging to the Scheduled Castes in the Council, out of which one shall be from the nominated Members representing certain fields.

In view of proposed inclusion of the Member of Parliament, referred to in sub-paragraph (a) of the preceding paragraph, in the New Delhi Municipal Council and two Members of Legislative Assembly being the members of the New Delhi Municipal Council, it is further proposed to amend the aforesaid Act to revise the procedure for presiding over the meetings of the Council.

According to the new rules on ‘time of supply’, service tax will also be levied at the point of raising invoice. At present, service tax is charged only when the amount is received. However, it has been proposed in the new rules that it be levied when the consideration is received or when the invoice is raised, whichever is earlier.

"There will be a change from cash system to accrual system. This is similar to taxation in case of goods and direct tax," a finance ministry official told Business Standard. The rules, approved by Finance Minister Pranab Mukherjee, wolud be put up for public comments very soon, he added.

‘Time of supply’ rules will also address the issues such as management services, leasing of equipment, and hiring of staff, which are in continuous supply of services. Such services are provided on an ongoing basis and, at times, it becomes difficult to compute service tax liability if service charges change at any point.

The rules will help identify the point at which new tax rate should be considered if the amount changes midway in a continuous service. For instance, if a tuition is continuous for 12 months and the fee or tax rate changes in between, the rules will explain till what point the existing tax rate would be paid.

The government is also working on ‘place of supply’ rules, which will clearly define what should be considered the place of supply for levying service tax. The rules, however, may be delayed as these are being considered in preparation of Goods and Services Tax (GST), which has not seen much progress.

Official sources said the rules did not hold relevance if GST was not there. In the exiting tax regime, service, being a federal issue, was taxed by the Centre and the place of levy did not affect its revenue receipts. In GST, the place of supply would be defined to avoid disputes among states in inter-state transactions.

"We are studying international practices. We have to see if the place of supply rules are actually required before GST is introduced," said the official.

The Task Force of 13th Finance Commission on GST had also given suggestions on ‘place of supply’ rules based on international tax practices, especially in the European Union.

RBI sets up working group to address implementation issues in IFRS

The RBI has constituted a working group to address the implementation issues and to facilitate formulation of operational guidelines in the context of IFRS convergence for the Indian banking system. Six sub-groups have been formed to deal with the following issues:

• Classification and measurement of financial assets

• Classification and measurement of financial liabilities and hedge accounting. This group would also look into the balance sheet issues of corporates and their implications.

• Amortized cost and impairment

• Fair value measurement

• Presentation, disclosures and balance sheet formats

• Derecognition, consolidation and residuary issues

Finance Minister Pranab Mukherjee, has proposed a three-tier structure for the new direct tax regime on 21.07.2010, quoting NCAER estimates that, "Well-designed GST will see an increase of 2 to 2.5 per cent in the GDP."

GST will subsume all the indirect levies like excise, VAT, local taxes, et cetera

The Centre and the States have agreed to leave out alcohol, petroleum products and electricity duty out of the proposed Goods and Services Tax (GST) system.

The consumers of these products will not be affected by any tax rate changes arising out of the implementation of the GST.As currently, alcohol and electricity are State subjects for taxation purposes. Petroleum products are already out of the existing VAT (value added tax) regime, and sales of these products are subject to sales tax determined by the States. At present, it is only the States that can levy tax at the retail stage, and not the Centre.

The Government has set up a Committee headed by Deputy Governor, Reserve Bank of India, Ms Shyamala Gopinath, to undertake a comprehensive review of the National Small Savings Fund (NSSF).

This is in keeping with one of the recommendations of the Thirteenth Finance Commission, that the design and implementation of the NSSF be examined with a view to introducing transparency, market-linked rates and other necessary reforms.

Good Petroleum illustrative financial statements

The International GAAP® illustrative financial statements is now available. This publication contains an illustrative set of consolidated financial statements of a fictitious group of oil and gas companies for the year ended 31 December 2010. These illustrative financial statements are based on IFRS in issue at 31 May 2010. Good Petroleum (International) Limited's activities include oil exploration and field development and production and refining petroleum products. This publication focuses on IFRS disclosures specific to the oil and gas industry.

The Oklahoma legislature has passed several abortion measures, a number of which required overriding the Governor's veto. One of the laws prevents a patient from suing her doctor for failing to reveal the presence of a fetal abnormality.

The structure of this law is different in kind from that of other abortion restrictions, and it accordingly calls for a separate analysis. I will here analyze how the Oklahoma law differs from garden-variety abortion restrictions and whether we ought therefore to view it in a different light.

Senate Democrats turns focus to Gulf spill response

WASHINGTON (AP) - Senate Democrats hope to pass a narrow energy bill next week that responds to the oil spill in the Gulf of Mexico and takes steps to improve energy efficiency, after abandoning plans for a sweeping measure that caps greenhouse gases blamed for global warming.

LOS ANGELES (AP) - Court records show a lawsuit between two film companies over the rights to the film "Precious" has been dismissed. and The Weinstein Co.and Lionsgate Films sued each other in February 2009 over rights to the film, which went on to win two Academy awards.

It has been announced that Taiwan and Singapore will initiate talks later this year on the feasibility of signing a bilateral economic cooperation agreement under the framework of the World Trade Organization.

The completion of such an agreement would represent a breakthrough for Taiwan following the signing of the economic cooperation framework agreement (ECFA) with China at the end of June this year. Taiwan has looked on the ECFA as ending its isolation, hopefully leading to talks on free trade agreements (FTAs) with other Asian countries.

It was said, however, that a future trade agreement with Singapore would not be called an FTA, to try and avoid giving any problem to China. However, Taiwan will now expect that it will accelerate its further integration into Asia’s regional market, through eventual trade talks with its other trading partners, particularly those within the Association of Southeast Asian Nations, of which Singapore is a member.

It was pointed out that a further benefit of a trade agreement with Singapore for Taiwan is that the two economies are complementary, rather than in competition. There should be no significant problems caused by the liberalization of trade in either agricultural or industrial products.

While Singapore is not a top export destination for Taiwan’s industrial products, it is likely that the latter’s service sector, particularly finance and transportation, would gain the most from an agreement.

The People's Bank of China has published a guide announcing measures to open up the gold market in China. The Central Bank said the gold market would be opened up in stages with the following moves:

More commercial banks will be permitted to import and export gold;

Foreign exchange trading restrictions will be relaxed for gold trading;

Chinese banks will be permitted to hedge gold positions overseas;

Overseas players may be allowed greater participation;

Shanghai Gold Exchange and Shanghai Futures Exchange will be encouraged to play a greater role in the market; and

The tax regime may be adjusted to facilitate trading and investment.

The initiatives were reported to be in response to increasing private demand in China, as domestic production is increasingly unable to satisfy domestic demand; China is the world’s leading producer of gold and also the second largest consumer after India. The improvement in the range of gold-based financial products could reduce the need to increase physical imports. The government itself is not seen to be a gold investment enthusiast, holding less than 2% of its reserves in gold.

Treasury Secretary, Timothy Geithner, has reiterated that the US administration’s policy is to let the tax cuts introduced by President Bush lapse for the wealthiest families, when they expire at the end of this year.

He said that the question is “whether to extend tax cuts for the middle class, which are due to expire at the end of the year; and whether to allow tax cuts for the top 2% of Americans, those with annual household incomes of at least USD250,000, to expire, as scheduled.”

“This decision,” he continued, “is about more than the impact on our future deficits and debt, although that is critically important. It's a decision that will impact economic growth and the faith of Americans in the fairness of our tax policies.”

He confirmed President Obama’s belief that “extending middle class tax cuts is an essential part of that commitment, and essential to continued economic recovery. These tax cuts save more than USD2,000 per year for a typical middle class family.”

“But given the size of the deficits and debt that we inherited, we must provide that tax relief in a fiscally responsible way,” he concluded. “We believe the best way to do that is by allowing the tax rate for the top 2% to go back to levels seen at the end of the 1990s.”

Permanently extending those top-end tax cuts would require the administration to borrow over USD700bn more over the next decade, adding significantly to an already unsustainable level of debt, according to Geithner.

He pointed out that the President has proposed to terminate or reduce some government programmes, and discretionary spending. As this would require “difficult choices and even painful spending cuts”, he said that “asking the top earners in our society to forgo an extension of recent tax cuts must be part of the compact that restores fiscal responsibility in Washington.”

The debate on the Bush tax cuts is, however, developing into a full-scale battle between the Democrat and Republican parties as the mid-term elections approach. The Republican party, and a number of Democrats, are taking the view that all of the tax cuts should be extended, including the top-end tax cuts, as they say that a tax increase for the more wealthy could affect the recovery.

Under a headline reading, “Democrats’ 2011 Tax Hikes to Hit Families Hard”, the top Republican on the House of Representatives Ways and Means Committee, Dave Camp, said that “raising taxes is the last thing that Congress should be doing right now – not on families and not on small businesses.”

A fellow Republican in the House, Mike Pence, said that he knew no-one “who thinks that raising taxes on job creators in this recession is a pathway towards recovery.” He added that “House Republicans will fight this tax increase with everything that we’ve got.”

Nick Sherry, Assistant Treasurer in the Labor government, has announced that, if re-elected, the government will reshape the governance of Australia’s taxation system and establish an advisory board at the Australian Taxation Office (ATO).

The Tax System Advisory Board (TSAB), as it will be known, will inform the Tax Commissioner and ATO Executive Committee on the strategy, direction, organisation, management, compliance planning, staff profile and information technology plans at the ATO. It will also to provide a new, direct and in-built voice for the business and taxpayer communities in relation to ATO decision-making and culture.

The Tax System Advisory Board, which will be similar to a strategic private-sector style board, will be made up of non-government members and will begin with a review of the ATO’s management practices to ensure the highest level of corporate governance.

Sherry pointed out the recent Henry review found that the governance of Australia’s tax system is fundamentally sound and there is general confidence in it. However, the review also identified ways to further increase the responsiveness, accountability and transparency of how the tax system is administered. He said that TSABs already exist in the United Kingdom, the United States and Canada, and establishing such a board was the key governance reform recommended in the review. A detailed consultation with the tax community on the TSAB will occur within 2010. At the same time, he confirmed that the Tax Commissioner would remain the independent head of the ATO with responsibility to undertake the administration of aspects of Australia’s tax system and deliver the ATO’s commitments to government and manage the ATO as a government agency.

A re-elected Labor government will also recommit, he added, to a principles-based approach to tax design to deliver a simple, transparent, responsive, accountable and accessible tax system, including continuing work to deliver Australia a single modern Income Tax Assessment Act.

Sherry said that the Board of Taxation has grown to become a well-respected part of Australia’s tax system, particularly by the business community. It provides both a business and broader community perspective that helps to improve the design of taxation laws and their operation. The Board has also shown itself to be capable of providing advice to improve the integrity and functioning of the taxation system.

A re-elected Labor government would therefore boost and reshape the role of the Board of Taxation by empowering it, in consultation with the government, to initiate its own reviews to examine how current tax policies and laws are operating. The government’s reform agenda to date has included the establishing of a permanent Tax Design Advisory Panel made up of private sector advisers to assist with the design of new tax measures; and of a Tax Issues Entry System for the public to directly raise issues relating to the care and maintenance of the Australian tax and superannuation systems.

The UK Treasury has announced that the Finance (No 2) Act 2010, which implements measures announced in June's emergency budget, has been enacted.

The second Finance Act sets a number of new tax rates announced by the Chancellor earlier in the summer, including the following:

Corporation tax - falls from 28% to 27% from the 2011 financial year;

Capital gains tax - confirms the introduction of the 28% rate for higher rate income taxpayers as from midnight on June 22;

Value-added tax - the standard rate will rise from 17.5% to 20% from January 4, 2011; and

Insurance premium tax - the standard rate increases from 5% to 6% and the higher rate increases from 17.5% to 20%, both on January 4, 2011.

Chancellor George Osborne also announced in the emergency budget that corporation tax would eventually be reduced to 24% in annual 1% increments following the first rate cut in 2011.

Interestingly, the second Finance Act also amends tax legislation so that Members of Parliament do not incur an income tax liability on expense claims arising from accommodation expenses, providing that claim is made pursuant to "the performance of the member’s parliamentary duties in or about the Palace of Westminster or the member’s constituency."

The cost of an overnight stay in a hotel does not, however, count as an accommodation expense unless the House of Commons was sitting beyond 1am.