I. Executive Summary
Many jurisdictions have adopted a generalanti-avoidancerule (GAAR) while others are considering the introduction of one or are otherwise seeking to fine-tune their existing rule . Countries with a GAAR include the UK, France, Germany, The Netherlands, Belgium, Canada, China, Singapore, Italy, South Africa, Kenya and Australia. The introduction of a GAAR also continues to be topical in many other jurisdictions such as India and Poland. Australia has also recently amended its GAAR to address specific base erosion and profit shifting
Tax avoidance continues to attract attention globally with strong support for tax law reform at all levels. This Tax Law IMF Technical Note focuses on some of the key design and drafting considerations of one specific legal instrument (being, a statutory general anti-avoidance rule (GAAR)) which is often considered by authorities to combat unacceptable tax avoidance practices. A GAAR is typically designed to strike down those otherwise lawful practices that are found to be carried out in a manner which undermines the intention of the tax law such as where a taxpayer has misused or abused that law. However, the objective of combating unacceptable tax avoidance can itself make the legal design of a GAAR complex. This is simply because the phrase “tax avoidance” means different things to different people. Whatever the form of a GAAR, it should give effect to a policy that seeks to strike down blatant, artificial or contrived arrangements which are tax driven. However, the GAAR should be designed and applied so as not to inhibit or impede ordinary commercial transactions. This Tax Law IMF Technical Note discusses and explores how drawing a line between those arrangements which should be caught by the GAAR is a matter of degree and can be delicate.
years in accordance with the announcement in the Budget for fiscal year 2015-16 which was presented to Parliament by the Finance Minister on 28 February 2015. Accordingly, the GAAR would be applicable from financial year 2017-18. Further, when implemented, the GAAR will apply prospectively to investments made on or after 1 April 2017.
3 On 27 April 2015, the amended version of the proposed Tax Code (Ordynacja Podatkowa) was published in Poland which no longer contains the provision of generalanti-avoidancerules (GAARs) that were planned to be introduced into
Aggressive tax planning
Compliance risk management
Corporate income tax
Foreign Account Tax Compliance Act
Great Britain Pound
Her Majesty’s Revenue and Customs
High-wealth individual compliance
International Monetary Fund. Fiscal Affairs Dept. and International Monetary Fund. Legal Dept.
Global Forum on Transparency and Exchange of Information for Tax Purposes
Global Intangible Low Taxed Income (under the TCJA)
Low Income Country
Limitation of Benefit
Location Specific Rent (rent uniquely associated with a specific location)
Country in which the purchaser is located (same as destination country)
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
help reduce poverty and inequality.
New expenditures related to the implementation of the authorities’ priority social and economic goals require strengthening of the revenue side of the state budget. To this effect, a wide set of measures are being taken, including, inter alia, a new tax on the financial institutions’ assets (already implemented) and a comprehensive strategy to improve tax administration and fight tax evasion. The strategy includes (i) an introduction of a GeneralAnti-Avoidancerule against tax avoidance; (ii) a reduction of the limit on cash
’s strategic objective concentrates on supporting long-term, inclusive economic growth while maintaining sustainability of public finance and complying with domestic and EU fiscal rules. The government aims to mobilize more revenue through better tax compliance. Recently implemented or planned measures aimed at limiting tax fraud include i.a.:
The GeneralAnti-AvoidanceRule - in force since 2016;
The Fuel Package - set of measures aimed at preventing tax fraud in intra-EU liquid fuel trade - in force since August 2016;
Merging the tax and customs administration