Noteworthy International Tax Developments

Mexico: In December 2010, Mexico issued a new decree impacting maquiladora operations by revising the definition of a maquiladora eligible for benefits under the IMMEX regime. The decree provided some helpful clarifications, but also imposed more stringent requirements for newly established (post-2010) maquiladora’s. Japan: Proposed 2011 tax reform in Japan would reduce corporate tax rates by approximately 5%, effective for years beginning on or after April 1, 2011. As a revenue offset, the proposed reform would limit certain deductions and credits, including net operating loss carryforwards. Hungary: Hungary recently enacted tax legislation that reduced the corporate tax rate from 19% to 10% beginning in 2013 and also eliminated withholding taxes for interest, royalties and service fees. Puerto Rico: Puerto Rico just enacted a new income tax code that, among other changes, reduces the corporate tax rate from 39% to 30% and provides flow-through tax treatment for partnerships. Canada: The federal corporate tax rate in Canada was reduced to 16.5% for 2011. Malta: The U.S. – Malta income tax treaty entered into force in November of 2010. Former Dutch Antilles: The Netherlands Antilles was dissolved in October of 2010 and, with it, its tax regime.