Tax Effects of Treaty Shopping and OECD’s BEPS Implications

Abstract

This article evaluates the reasons as to why tax treaty abuse and specifically treaty shopping have been less mooted in the international tax landscape, before the experience of the global economic slowdown. Dawn of the 21st century witnessed the international community be much intensively focused on global transparency in tax matters, and nations more concerned about the revenue loss due to tax avoidance methods adopted globally. Further, the article tries to make a logical connection between the treaty shopping, tax avoidance and tax evasion, without getting deeply into the technicalities of Limitation on Benefits and Principal Purposes Test rules proposed by OECD in BEPS Action Plan 6.

Is Tax Avoidance Caused by Political Connections and Executive Characteristics?

“…Political connections are measured by analyzing the index of political connections claimed by the company. According to Shukla et al (2020)'s research, the political connection index is obtained by performing the natural logarithm of the number of political connection scores claimed by the company. According to the structural hierarchy of government roles and the sta-tus of civil servants in Indonesia, every politically connected firm employee will be awarded a score.…”

Corporate tax planning, the use of SPV, board independence, and firm value

“…This provides opportunities for firms with international operations to do tax-treaty shopping, which refers to the conduct of firms seeking benefits from existing bilateral tax treaties in various countries around the world. According to Arel-Bundock (2017) and Shukla et al (2020), firms with international operations actively engage in tax-treaty shopping and subsequently develop complex and sophisticated corporate structures in many countries to optimize their taxes by channeling their international transactions through SPVs established in countries that have advantageous portfolios of bilateral tax treaties.…”

A Review on Research During COVID 19 and Call for Research on Marketing During the Pandemic

“…This issue debated on how important it is to have financial wellbeing and financial strategies for both developed and developing economies during the turbulent times. Along with different financial strategies, unique themes like tax effects (Shukla et al, 2020) and automation of fund audit (Sadangi et al, 2020) were also included in this issue. As the pandemic continued, the world began to worry about the uncertain environment.…”