Fundamentals of International Taxation

International taxation is one of the most ambiguous and litigation prone domains of taxation which has gained tremendous attention globally in the last few years. Revenue authorities have been aggressive in attacking creative and tax evasive structures and have proactively framed rules to check leakages. Rapid digitisation and the explosion of e-commerce have questioned the very basis of taxation principles creating enormous opportunities for interpretation and evasion. The OECD Action Plan (2015) on BEPS has provided significant guidance to countries in shaping up their domestic legislation and India has proactively embraced these recommendations progressively in the succeeding budgets.

The fundamental legislations for assessing the tax impact on any international taxation is the Double Tax Avoidance Agreement (DTAA) between the source country and the country of residence, and of course the domestic law of the land. DTAAs between different countries have different treatments for similar income groups like royalties, capital gains etc. However, to gain a basic understanding of the various clauses of DTAA, the UN model convention together with its commentary, has been considered as the base in this edition. The rationale for selecting the UN model is the fact that India has adopted this model for most of its DTAAs. UN model, unlike the OECD, was formulated for developing economies which import capital and primarily provides for source based taxation. Illustrations of various India specific DTAAs have been provided wherever there is a divergence from the model convention to the extent considered relevant.

Apart from analysing the various clauses of UN Model Convention, the second part of the book, deals with the upcoming areas and complementary aspects of international taxation like GAAR, BEPS, etc. to give the reader a comprehensive perspective on the subject.

The purpose of the book is to give a reasonable understanding of the subject on international taxation and the focus has been to make the subject as simple as possible. Conscious effort has been made to avoid exhaustive reference to judicial precedents and a lot of reference has been taken from the published sources of OECD and UN.