ABSTRACT

The globalization of economies has considerably broadened the range of cross-border financial activities, introducing distinct issues to tax administration and compliance. Tax evasion, enabled by tax havens, profit shifting, and insufficient information flow among jurisdictions, compromises the integrity of global tax systems. International tax agreements have become essential instruments for addressing these difficulties by enhancing cooperation, boosting transparency, and assuring fair allocation of tax revenues across countries.

This manuscript examines the efficacy of international tax agreements in curbing tax evasion, concentrating on their structures, execution, and consequences. The study commences with an exhaustive examination of fundamental ideas within the international tax framework, encompassing double taxation, the function of tax havens, and the differentiation between substance and form in financial agreements. “It analyses the hierarchical hierarchy of tax administrations, highlighting the authorities’ capabilities and obligations in India to combat tax evasion via discovery, evidence collecting, and reassessment processes.

The research subsequently examines the development and importance of international tax treaties, focusing on key frameworks such as the OECD Model Tax Convention, the UN Model, and regional accords. The research assesses India’s strategy regarding tax treaties by juxtaposing its model conventions with global benchmarks. Essential provisions, such as those concerning permanent installations, the eradication of double taxes, and information exchange, are analysed comprehensively.

The function of international organizations, like the OECD and UN, together with initiatives like the Base Erosion and Profit Shifting (BEPS) project and Tax Inspectors Without Borders, is examined to assess their impact on establishing worldwide standards for tax transparency and enforcement. The dissertation also emphasizes peer review systems and the application of international standards to evaluate compliance and responsibility across states.

The conducts a critical examination of the current landscape, identifies deficiencies in existing frameworks, and offers ideas to enhance international tax agreements and collaborative initiatives. The study seeks to enhance the worldwide dialogue on combating tax evasion by promoting openness, improving information exchange, and rectifying deficiencies in tax treaties.”  This research highlights the essential function of international tax agreements in harmonizing national interests with global collaboration, facilitating fair tax collection, and preserving economic stability in a progressively interconnected world.

Introduction

The phrase ‘International Taxation’ is an oxymoron.[1] Various interpretations of this term include ‘International Tax,’ ‘International Tax Law,’ and ‘International Tax Regime,’ among others. There is no entity known as ‘International Tax’ since no international organization possesses the authority to impose taxes. “This word denotes the complex interaction of national tax regulations, multinational taxpayers, and cross-border transactions. This interface, occasionally derived from national statutory law and at other times from bilateral or multilateral treaties, seeks to address two critical questions in this domain: the total tax liability on income generated from transnational transactions and the appropriate government(s) to which this payment should be remitted. The responses provided by the government to these inquiries influence not only the money generated by the impacted nations but also frequently determine the extent and trajectory of multinational investment endeavors.

            In a strict sense, the term ‘International Tax Law’ may be considered a misnomer.[2] There exists no codified legislation pertaining to the imposition and collection of income tax across all countries or specific countries of the globe. Nonetheless, the term ‘International Tax Law’ has gained prominence and is extensively utilized in tax literature to denote the components of a nation’s tax system that are activated when an individual under its jurisdiction engages in ‘international’ relations, specifically when a ‘foreign’ individual earns income subject to taxation in that nation due to its tax statutes, or when a ‘domestic’ (or resident) individual derives income from sources in another country.” Consequently, international tax law fundamentally comprises two components:

1. The provisions of the fundamental national tax legislation that pertain to the ‘foreign’ income of domestic taxpayers and the ‘domestic’ income of foreign entities;
2. The tax treaties, if any, established by that country with other nations and endowed with legal authority.

The combination of these two parts forms the ‘International Tax Regime.’ This regime is occasionally termed ‘International Taxation’ and at other times ‘International Tax Law.’

[1] Julie A. Roin, “The Economic Underpinning of International Taxation,” in Andrew T. Guzman and Alan O. Sykes (eds.), Research Handbook in International Economic Law, Edward Elgar Publishing Limited, Northampton, 2007, pp. 305-360, p. 305.

[2] I.P. Gupta, “Nature and Sources of International Law,” in International Law in Relation to Double Taxation of Income, Lexis Nexis Butterworths, New Delhi, 2007, p. 5.