General Anti-avoidance Rule Research Articles

The Proposal for an EU Anti-avoidance Directive: Some Preliminary Thoughts

On 28 January 2016, the European Commission made public a package of measures aimed to tackle tax avoidance and abusive practices in the European internal market. The package includes a detailed proposal for a new European Union (EU) Anti-avoidance Directive addressing six main issues: deductibility of interest; exit taxation; switch-over clause; General Anti-avoidance Rule (GAAR); Controlled Foreign Corporation (CFC) rules; and hybrid mismatches. This article provides a critical analysis of the Proposal for a Directive taking into consideration some of the implications of its implementation at stake. The final aim of this work is to contribute some elements that can improve the future debate on these matters.

TARYBOS DIREKTYVOS 2009/133/EB NUOSTATŲ, SKIRTŲ KOVOTI SU MOKESČIŲ VENGIMU, PERKĖLIMAS Į LIETUVOS TEISĘ

Straipsnyje atkreipiamas dėmesys į tai, kad Lietuvoje, įgyvendinant 2009 m. spalio 19 d. Tarybos direktyvą 2009/133/EB dėl bendros mokesčių sistemos, taikomos įvairių valstybių narių įmonių jungimui, skaidymui, daliniam skaidymui, turto perleidimui ir keitimuisi akcijomis ir SE arba SCE registruotos buveinės perkėlimui iš vienos valstybės narės į kitą, į Pelno mokesčio įstatymą nebuvo tiesiogiai perkelta jos 15 straipsnyje įtvirtinta norma, dėl skirta kovoti su mokesčių vengimu. Atlikus išsamią šio direktyvos straipsnio analizę, pateikiamas vertinimas, ar šio straipsnio perkėlimas buvo reikalingas.

General Anti-Avoidance Rules (GAARs) A Key Element of Tax Systems in the Post-BEPS Tax World? The UK GAAR

This book chapter discusses the background to the UK General Anti-Avoidance Rule, analyses the wording of the legislation and looks at its relationship with double taxation treaties and EU and OECD developments.

Improving the Chinese General Anti-Avoidance Rule: A Comparative and Functional Approach

Seven years after its introduction in 2008 with the enactment of the new Chinese Corporate Income Tax Law, the Chinese general anti-avoidance rule (GAAR) has become a complex and incoherent piece of legislation. Despite its current shortcomings, the international impact of the Chinese GAAR is expected to grow significantly given China’s increasingly proactive participation in the G20’s fight against international tax avoidance and its embrace of the OECD’s Base Erosion and Profit Shifting (BEPS) initiative. Against this background, this research takes a comparative-functional approach to analyse and evaluate the functioning and efficacy of the Chinese GAAR. The comparative-functional approach is used to critically compare the Chinese GAAR with the GAARs of the Netherlands and the United Kingdom. These jurisdictions were chosen for reasons that are both practical and theoretical, as the comparators both have a large amount of reliable and openly accessible literature and jurisprudence, and strike a balance between civil law jurisdictions and common law jurisdictions. The analysis reveals that for a number of legal, institutional and cultural reasons, the Chinese GAAR is not working as effectively, and is not as balanced, as it could be. On these grounds, the article puts forward some suggestions for reforms on a legal and administrative level that could lead to a more balanced application of the Chinese GAAR. The article does not advocate judicial reforms.

China and BEPS: From Norm-Taker to Norm-Shaker

This article considers the implications for China of the G20/OECD Base Erosion and Profit Shifting (BEPS) initiative and the international implications of China's BEPS measures. More specifically, the article examines China's transfer pricing, anti-treaty shopping and general anti-avoidance rules. It suggests that China is transforming itself from a taker of international norms to a shaker of such norms.

A Common GAAR to Protect the Harmonized Corporate Tax Base: More Chaos in the Labyrinth

The analysis of the general anti-avoidance tax rule in five countries of the European Union (United Kingdom, Austria, Germany, Sweden and France) shows clearly the frailty and weakness of the theoretical and jurisprudential constructions designed to fight this international problem. The research also displays a high degree of judicial discretionary, a worrying level of legal uncertainty – as a result of the introduction of tax rules linked to vague and imprecise concepts – and an inefficiency in the revenue collection unacceptable. Furthermore, the article analyses the structure and function of the common general anti-avoidance rule (EU-GAAR) approved by the European Parliament, its scope and the problems that it’s possible interaction with another anti-avoidance rules (introduced by the domestic law, community law and conventional law) could generate. The author considers that the labyrinth which derives from the principle of non-discrimination on which the ECJ is trapped is also the labyrinth on which is trapped the cross-border application of the Member States GAAR’s and SAAR’s. The adoption of an EU-GAAR not solves the problem and only increases the chaotic juxtaposition of ineffective anti-avoidance rules.

GAARs and Treaties. From the Guiding Principle to the Principal Purpose Test. What Have We Gained from BEPS Action 6?

The issue of General Anti-Avoidance Rules and treaties is a legal problem as old as double tax conventions themselves. However, the BEPS Project, materialized in 15 Actions and particularly in the Final Report of BEPS Actions 6, involves a radical change in the very physiognomy of the problem. Apart from the inclusion of a Limitation-on-benefits rule in the OECD Model, the most groundbreaking innovation arising from BEPS Action 6 would be the incorporation, also to the Model, of a GAAR (the Principal Purpose Test). This article will examine the pros and cons of the PPT vis a vis the old paradigm. It also seeks to analyze some new problems originating from the very existence of the PPT.

Introducing a General Anti-Avoidance Rule (GAAR)

Introducing a General Anti-Avoidance Rule (GAAR)

The Dawn of a General Anti Avoidance Rule: The Italian Experience

Italy has recently introduced a GAAR in its tax system. While the wording of the clause is not original, considering the experience the other countries might have about it, it is the context in which the provision shall operate that arose the interest of the firs commentators. The article considers is particular the ways in which it will be arguably applied, taking into account the similar (although tailor-made) regulations that address the phenomenon, and that that have not been repealed by it. Treaty based, EU inspired, special law enacted clauses are still there and may potentially collide with the GAAR, making the overall outcome unpredictable for the Interpreter and for the taxpayer as well.

Możliwości zapobiegania agresywnemu planowaniu finansowemu

Tax planning strategies are growing more and more sophisticated over time. Formany OECD member states, these strategies applied by multinational corporationsresult in an immense loss of tax revenue. Therefore counteracting aggressive taxplanning has become a priority of tax policy for both the OECD and the EuropeanUnion. The aim of this article is to analyze selected aggressive tax planning schemes.It also presents definition of aggressive tax planning, reviews its instruments andscale. Moreover it indicates and describes the means to combat aggressive tax planning, such as transfer pricing regulations, institution of controlled foreigncorporation, general anti avoidance rules and thin capitalization provisions.

A Good Tax System Won't Be Good Without a Gaar – New Zealand vs China – A Case Study Approach

New Zealand's income tax law has included a general anti-avoidance rule since income tax's first enactment in the Land and Income Assessment Act 1891. China has just introduced a GAAR (中国的一般反避税条例) from 1 February 2015 in response to OECD’s税基侵蚀和利润转移( BEPS )项目. This paper uses a case study approach to illustrative how important a GAAR to supplement a good tax system by examining a potential scheme for the minimisation of tax liability of non-resident individuals and immigrants to invest in New Zealand properties by way of using a foreign trust structure, and the alienation of income from a taxpayer who bears tax at high rates to one who is taxed at low rates, while recognising possible risks of tax avoidance. This paper concludes that such scheme is likely to survive the specific anti-avoidance provisions but it will be caught as an incidence of tax avoidance in terms of the general anti-avoidance provisions under s BG 1 of the Income Tax Act 2007. China would never be too late but she lost 4.8 billion US$ revenue every year in the past.

Implications for the concept of ‘tax benefit/advantage’ as prescribed in the Australian and British general anti-avoidance rules in tackling tax base erosion and profit shifting

An increasing number of multi-national enterprises have arranged their corporate structures in a way which sharply reduces or completely eliminates their tax liabilities, both at home and abroad. This practice, referred to as base erosion and profit shifting (BEPS), has become a pertinent feature in the international tax domain. In response to this growing problem the Organisation for Economic Cooperative Development released an Action Plan in July 2013. In the coming years, BEPS is likely to remain high on political agendas around the world and it is expected that many countries will implement the OECD’s Action Plan recommendations and introduce or enhance their own general anti-avoidance legislation as a strategy to counter BEPS. This paper specifically examines the recent amendments to the Australian general anti-avoidance rule and the recently introduced British general anti-abuse rule in 2013 with regard to the definition of ‘tax benefit/advantage’. An analysis of tax benefit/advantage concept within the respective anti-avoidance rules is compared and contrasted to the wide definition of tax benefit stipulated in Action Item 12 of the OECD Action Plan. The likely consequences and some policy implications for tackling BEPS and tax avoidance generally are canvassed.

Predication: The Test For Tax Avoidance in New Zealand From Newton to Ben Nevis

General anti-avoidance rules in income tax legislation are a blunt instrument. They can operate most effectively when decision makers move directly from the rule, such as "Arrangements with the purpose of tax avoidance are void against the Commissioner" to the facts, for example, "Objectively, do these facts demonstrate a purpose of avoidance?", or to paraphrase Lord Denning's test, "Viewing these facts objectively, can one predicate an avoidance purpose?"New Zealand courts adopted Lord Denning's "predication test" in 1966, but later cases confused things by trying to incorporate sub-rules into the exercise of looking for an avoidance purpose.Parliament codified and strengthened the predication test in 1974. Inland Revenue Department archives show that strengthening and codification of the test was what was intended and the language of the amendment confirms this intention. Nevertheless, later judgments misunderstood what the predication test entailed, and mistakenly thought that Parliament intended the 1974 amendment to abolish the test and to replace it with something else.In 2009 the Supreme Court delivered its judgment in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, the first case on tax avoidance to come before the Court. The Court said that the 1974 amendment abolished the predication test, but its reasoning in deciding the Ben Nevis case was in effect an exercise in predication.It would be useful to employ a name for the Supreme Court's approach to tax avoidance because a name would enable people to refer to the Supreme Court's test without circumlocution. "Predication" is the appropriate name because of its accuracy as to the meaning required and because of its historical antecedents.

Kelsen, the Principle of Exclusion of Contradictions, and General Anti-Avoidance Rules in Tax Law

The philosopher Hans Kelsen is most famous for his theory of expounded in his book of that name. For most of his scholarly life, Kelsen argued that, as part of the pure theory, two norms that contradict one another within the same legal system breach the philosophical principle of exclusion of contradictions and therefore cannot both be valid at the same time. On some occasions he went further and argued that neither of two such norms can be valid. Famously, Kelsen changed to the opposite opinion later in life. Both Kelsen's original and his ultimate positions on the principle of exclusion of contradictions shed light on an area of law that he never considered: general anti-­avoidance rules in income tax law, known as GAARs are increasingly common in tax statutes. One cannot argue that GAARs give rise to what logicians call contradictions. Nevertheless, from a practical and substantive point of view the effect of a GAAR could loosely be described as akin to a contradiction of norms, in logical terms a breach of the principle of exclusion of contradictions. For instance, a GAAR may prevent a taxpayer from relying on a relieving provision in a tax statute, on the grounds that such reliance amounts in the circumstances to tax avoidance. For this kind of reason, people criticise GAARs because they are seen as breaching the principle of certainty, one of the foundations of the rule of law. General principles in Kelsen's work shed light on the way in which GAARs operate and on the way in which they fit into the legal systems of which they form part. Although the effect of a GAAR has something in common with the effect of a breach of the principle of exclusion of contradictions, the unusual nature of tax law justifies the existence of GAARs. (author's abstract)

Proportionality and Fair Taxation

This article is a summary of the findings of the book Proportionality and Fair Taxation published by Kluwer International in 2014, in which the author investigated the role of proportionality principle coupled with the standard of reasonableness in assessing specific tax issues and the overall fairness of particular taxes and tax systems. Among those issues, the author points out equality and non-discrimination, retrospective taxation, tax penalties and sanctions, specific and general anti-avoidance rules, as well as the application of proportionality in tandem with reasonableness to Double Tax Conventions, human rights, and tax related rules of international trade.

General Anti-Avoidance Rules (GAARs) A Key Element of Tax Systems in the Post-BEPS Tax World? Spanish Report.

According to the questionnaire provided by the organizers of the conference several questions are answered in relation to the Spanish GAAR.

Towards an Improved Design of the Chinese General Anti-Avoidance Rule: A Comparative Analysis

In this article, the authors examine the operation of the Chinese general anti-avoidance rule (GAAR) and compare it with GAARs in other regimes. Their analysis suggests that in China there are still fundamental problems with the legislative design of the GAAR, with the manner in which it is being administered by the revenue authorities and with the manner in which it is being interpreted by the judiciary. Greater certainty, consistency and clarity is still required.

NSFR Seminar 2014 – National Report for Sweden

Abstract This article aims to give an overview of the rules concerning taxation of companies in Sweden and of trends in the taxation of companies that have been evident in the last few years. It focuses in particular on issues that are connected with the so-called BEPS discussion, for instance interest deduction limitations, CFC rules, general anti-avoidance rules and other rules intended to protect the national tax base. It also sets out to describe other important features of the Swedish tax legislation in regard to companies, such as the rules on taxation of inbound and outbound dividends, interest and royalty.

The international Challenges and Finnish Corporate Taxation

Abstract One of the main trends in Finnish corporate taxation during the last ten years has been the lowering of the corporate tax rate. The decision to lower the corporate tax rate to 20% from the beginning of 2014 also changed the approach in reforming the corporate taxation as it was decided to stay on the grounds of a broad tax base and not to make loopholes in it with targeted exceptions. The Finnish corporate taxation contains also some provisions that act as incentives for investment and the establishment of companies. However, the focus has been lately on the rules with purpose to protect the national tax base. Therefore, article handles both the specific anti avoidance rules and the application of the general anti avoidance rule on the cross-border transactions. Some particular challenges and the exchange of information are also taken into account before the conclusion with some ideas and aspects on future reforms.

Time to stop avoiding the tax avoidance issue in Croatia? A proposal based on recent developments in the European Union

The paper takes a tax policy perspective in analysing the approach to tax avoidance in Croatia and expounding its existing shortcomings. It is argued that Croatia is yet to develop a coherent legislative framework suitable for curbing tax avoidance in an equitable, efficient and simple way. One instrument that has hitherto been ignored is the general anti-avoidance rule (GAAR), a keystone of anti-avoidance policies in other countries. The authors propose the introduction of a specific GAAR, based on recent developments in the European Union (EU), in Croatian tax legislation. This proposal is supported by multiple tax policy arguments. Special emphasis is placed on the requirements of legal certainty, a traditional weak spot of the Croatian tax system. The proposal is put in the context of the persistent quest for a sustainable public finance system in times of crisis.