Appendix A. Sample GAAR
Set out below is a sample GAAR. It is important to note that this sample GAAR is general in nature and in the form of a simplified legal provision. Importantly, it does not take into account the individual circumstances of any particular tax system. The ultimate form of any GAAR to be adopted by any given country would need to take into account the specific legal tradition and system—including any constitutional limitations—as well as the political and administrative structure and fiscal policies of the country concerned.
This is the case, for instance, with the ‘abuse of law’ doctrine developed by the EU Court of Justice in the areas of EU customs law (C-110/99 Emsland-Stärke), EU VAT (C-255/02 Halifax and others) and EU law as far as it applies to corporate income tax (C-196/04 Cadburry Schweppes).
In India, the applicability of its GAAR is to be deferred by 2 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.
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 general anti-avoidance rules (GAARs) that were planned to be introduced into the tax system.
In Italy, the new GAAR was introduced with the Legislative decree n. 128 of 2015 and was effective from 1 October 2015.
On 5 October 2015, the OECD presented the final package of measures intended to comprise a comprehensive, coherent and coordinated reform of the international tax rules. The package of measures was released in the context of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project (hereafter “the BEPS Package”). The BEPS Package was subsequently endorsed by the G20 leaders.
The Australian action follows the action taken by the UK to develop its own domestic instrument in the form of a diverted profits tax (DPT) which is aimed at the same purpose.
As opposed to the UK’s DPT which is designed as a standalone tax with its own charging and collection rules.