ANTI-AVOIDANCE MEASURES OF GENERAL NATURE AND SCOPE-GAAR AND OTHER RULES (original) (raw)

TAX AVOIDANCE IN EMERGING COUNTRIES: IS A GAAR A SUITABLE MEASURE?

Introduction. 1. Differences between OECD and emerging countries' tax systems. 2. The challenges and constraints to promote effective reforms and to counter noncompliance in emerging countries. 3. Is tax avoidance a problem that calls for a GAAR in emerging countries? 4. Conclusions. Bibliography.

General Anti-Avoidance Rules Revisited: Reflections on Tim Edgar's "Building a Better GAAR

Canadian Tax Journal/Revue fiscale canadienne

In addition to the requirement of a tax benefit or advantage, the application of most modern general anti-avoidance rules (GAARs) turns on two elements: a "subjective element," which considers the purpose for which the transaction or arrangement resulting in the tax benefit or advantage was undertaken or arranged; and an "objective element," which considers the object or purpose of the relevant provisions to determine whether the tax benefit resulting from the transaction or arrangement is consistent with this object or purpose. Although these two elements are present in most modern GAARs, the function of each element within these rules and the relationship between them are often poorly understood. Other unresolved issues concern the roles of artificiality and economic substance in the application of these rules, and the relationship, if any, between these concepts and the "subjective" and "objective" elements of the rules. A final set of issu...

Reconciling MLI Anti-abuse Treaty Rules with Existing Double Tax Agreement (DTA) and Domestic GAAR in Argentina

Kluwer international tax blog, 2022

Domestic responses against international tax avoidance have sharply increased in the latest years worldwide (in this sense, DAC 6-type rules are worth mentioning). In this contest, GAAR shopping by competent authorities and tax administrations is a great challenge. These agencies are often inclined to pile up anti-avoidance rules of a treaty or domestic nature without any hierarchy or prevalence of application, and to surf back and forth on them to enhance the scope of the taxable event and revenue collection to its maximum possible reach. As a refinement of previously existing domestic GAAR, bilateral and multilateral (MLI) treaty anti-abuse responses have established a set of standards for transactions under the treaty umbrella that might create an overlapping effect, and hence, increase uncertainty unless sound ordering principles are followed in their application. Some ordering principles are advanced in MLI itself, but others must be developed considering the nuances of each jurisdiction’s domestic rules and treaty network, as demonstrated in the attached discussion which is particularly focused on Argentina.

Domestic and Treaty-based GAAR and SAAR: Potential Conflicts and Ordering Principles MLI and Argentine Treaty and Domestic law

Application of general anti-avoidance rules (GAAR) and special anti-avoidance rules (SAAR), whether of a statutory or judicial nature, as well as their interrelationship in a purely domestic and international context has never been easy nor of precise contours. The situation becomes ever more complex when GAAR are allowed to be applied in a treaty setting to re-characterize taxpayers' transactions or re-determine the taxpayer to whom an item of income belongs. Besides, the creation of a new treaty GAAR by the OECD Multilateral Instrument (MLI) and its potential collision with (i) the widespread practice of applying domestic GAAR as a re-characterization and re-determination tool under treaty umbrella, as it is the case in Argentina, and (ii) the pre-existence of bilaterally agreed-upon treaty GAAR in the Argentine treaty network, make the task of searching for overlapping and developing ordering principles for the application of all these rules imperative.

Analyzing and Formulating a Statutory General Anti-Avoidance Rule (GAAR) in Indonesia

Jurnal Ilmiah Akuntansi dan Bisnis (JIAB), 2020

Dealing with the practice of tax avoidance in general, many countries have compiled and implemented their own general anti-avoidance rules (GAAR). This research aims to explore the potential of statutory GAAR in handling tax avoidance practices in Indonesia and SAAR formulas that are suitable for the Indonesian context. This qualitative research employed a case study approach. Results show that the application of SAAR and the principle of substance over form in Indonesia cannot yet be applied properly; thus GAAR is needed. It is expected that the implementation of statutory GAAR can accommodate the limitations of regulators in light of unknown and future tax avoidance schemes.

Does the South African GAAR criteria of the "misuse or abuse" of a provision included in Section 80A(c)(ii) of the Income Tax Act add any value?

2016

Tax planning, where taxpayers arrange their affairs so as to minimize the resulting tax liability, has evolved over the last couple of decades as a result of the change in the way business is conducted by virtue of globalisation and the development in technology. It appears to have become more and more aggressive as taxpayers have the opportunity to access tax benefits not only through utilising loopholes in domestic legislation, but also through international tax loopholes. Revenue Authorities have to respond to this by employing mitigating anti-avoidance mechanisms. One such mechanism employed in South Africa ("SA") is the use of General anti-avoidance Rules ("GAAR") found in s80A-L of the Income Tax Act No. 58 of 1962 ("ITA"). To combat certain shortcomings in this GAAR's predecessor and to stay abreast of international trends, for the first time ever, a Statutory Purpose Element has been included in GAAR. This Statutory Purpose Element, as included in s80A(c)(ii) of the ITA, evaluates the misuse or abuse of the provisions of the ITA as a means to identify impermissible tax avoidance arrangements. Essentially, this calls for the application of the modern approach to statutory interpretation, where the purpose and context of the provisions of the ITA are first identified, before the misuse or abuse of these provisions can be proven. This study evaluates whether the inclusion of this Statutory Purpose Element in GAAR, adds any value or provides any additional powers to SARS when applying GAAR, especially in light of s39(2) included in the Bill of Rights of the Constitution, of 1996, ("Constitution"). The Constitution, the supreme law in SA, already calls for the modern approach to be applied to any statutory interpretation and the findings of this study indicate that s80A(c)(ii) appears to be completely superfluous as it does not award any additional powers to SARS, which were not already granted by the Constitution. If anything, s80A(c)(ii) broadens the scope of GAAR to such an extent, that it most likely will only cause further confusion for taxpayers wanting to engage in tax planning.

Gaar As Tax Treaty Override – Slovak Perspective

DANUBE: Law and Economics Review, 2017

The article summarises the views on the interrelation of GAARs and tax treaties, abstracts defining criteria for the feasibility of GAAR as an anti-abuse instrument in tax treaty situations and applies these to the situation (legislation and case law) in the Slovak Republic. The aim of the article is to provide insight on the potential interrelation of GAAR rules with existing tax treaties and formulate policy advice that should be optimal given the facts at hand. It shows that GAAR in its current form would in general have limited effectiveness in tackling tax treaty abuse situations without it resulting in treaty override. This particularly applies to the Slovak Republic and likely to other states applying a monistic approach to international treaties, where the renegotiation of the treaty seems the only viable option. However, as in Slovakia the monist approach applies only to treaties ratified after July 2001, a different approach might be taken with respect to those that are st...