Asia
China’s economic growth in the last quarter of 2004 was 9.5%. This was much higher than the 8.6% growth rate that was predicted by economists. It is the fastest rate since 1996. As a result China may be compelled to raise interest rates. In addition, the rapid growth rate has increased China’s need for raw materials which, in turn, has elevated prices of raw materials around the world.
Economists predict that China’s economy will surpass the U.S. during the next 20 to 40 years. It is already the third highest trader in the world. Progress could potentially be slowed down by such things as environmental problems and energy and water shortages.
Source: Andrew Browne & Matt Pottinger, China’s Economy Grows 9.5%, Renewing Fears of Overheating, 245 Wall St. J. A2 (Jan. 26, 2005); Charles Hutzler, The Outlook: China on Path to Overtake U.S. Economy, 245 Wall St. J. A2 (Jan. 24, 2005).
The Closer Economic Partnership Arrangement (CEPA) is a free trade agreement between China and Hong Kong that grants easier access to Chinese markets for Hong Kong-made products and Hong Kong-based service companies. 90% of the products exported to the Chinese mainland since January 1, 2004, bearing the “Made in Hong Kong” tag, have been exempt from tariffs. Click here for more information.
Japan’s Ministry of Finance announced that trade with China in 2004, including figures for Hong Kong, totaled 22.2 trillion yen ($215.4 billion) and surpassed trade with the U.S. ($200.5 billion.). This is the first time since the end of WWII that Japan’s top trade partner has not been the U.S. With the highest GDP in Asia, China will likely be the most important business partner for Japan over the next ten years. Click here for more information.
Europe
The Netherlands is joining a widespread effort to reduce corporate tax rates. It lowered its rate from about 34% to 31.5%.
The enticement is to become more competitive for foreign investment. Other countries that have cut their corporate taxes are: Ireland, Portugal, Austria, Germany, and Poland. Switzerland also has low taxes. Ireland cut its corporate tax rates from 24% to 12.5%. Portugal’s rate dropped 10%. Austria’s rate dropped 9%. Germany’s rate dropped 18%. Poland’s rate dropped 8%. All of this has happened over the past six years and puts these countries’ current corporate tax rates at between 12.5% (Ireland) and 38.3% (Germany).
The U.S. rate of about 40% (including both federal and state taxes) is higher than any European country.
Source: Glenn R. Simpson, Dutch Join Europe’s Push to Cut Corporate Taxes, Draw U.S. Firms, 245 Wall St. J. A2 (Jan. 28, 2005).
Compliance with emerging worldwide data privacy legislation continues to pose challenges, particularly for organizations operating in multiple foreign jurisdictions. Uruguay recently enacted new data privacy legislation aimed at protecting personal data held by commercial entities. Several new Asian data privacy laws are being considered. Data privacy issues increasingly affect businesses operating in the United States. Click here for more information.
Kirton & McConkie’s International Law Practice continues to grow with the additions of Latin America experts Toney Bentley and Scott Isaacson. Mr. Bentley and Mr. Isaacson have provided legal support for the purchase of many real estate properties, including significant investment properties, in many foreign states, and have developed close contacts with local legal experts in real estate acquisition throughout Latin America. They have supervised the formation of commercial as well as nonprofit legal entities in many countries, and have worked closely on the many legal issues involved in doing business in foreign countries, such as labor, tax and immigration laws.
Click here Mr. Bentley and Mr. Isaacson's personal profiles.
