In response to public opinion regarding tax evasion, the Fair Tax Mark was introduced in the UK in 2014 as an independent certification scheme to identify companies that pay tax “in accordance with the spirit of all tax laws” and do not use options, allowances or reliefs or carry out certain transactions “contrary to the spirit of the law”. [70] [71] The mark is managed by a not-for-profit organization. 7. GAAR and tax treaties They are limited to authorising States Parties to apply national anti-tax avoidance provisions. In cases where the tax treaty does not refer to domestic legislation, some jurisdictions unilaterally apply their own anti-avoidance measures, requiring us to first examine the normative hierarchy with respect to tax treaties and determine whether it is possible for the country to unilaterally protect itself against avoidance practices. Although it has been considered that the rules will be enforced by tax administrations, a North American precedent has admitted that it is the taxpayer who activates this measure, thus prioritizing economic reality[1]. According to the author, the anti-abuse rules of South American countries have their origin mainly in the German and Spanish systems and in Anglo-Saxon legal developments, and all are ancient, so it is very valuable to know their experience. According to the commentary on Art. 11 of the CIAT Model Tax Code (2015), these rules aim to avoid the use of shares for purposes other than those provided for by law or without justification other than tax reductions, unjustified tax credits or any type of tax advantage. In this delicate balance, we will examine the general anti-avoidance rule (GAAR). The anti-tax avoidance measures under the Anti-Tax Avoidance Directive, with the exception of the hybrid mismatch rule, are as follows: 5. Specific rules to combat tax avoidance.

Many SAARs address certain types of abuses: transfer pricing manipulation (PT), undercapitalization, deferral of dividend reporting for investments in foreign-controlled companies, abuse of tax treaties, etc. In the Tax Reform Act of 1986, the United States Congress imposed the restriction (pursuant to 26 U.S.C. § 469) on the deduction of passive losses and the use of passive business tax credits. The 1986 Act also amended the “risky” loss rules in 26 U.S.C. § 465. In conjunction with the leisure loss rules (26 U.S.C. § 183), the amendments reduced tax evasion by taxpayers who operated only to incur deductible losses. Similarly, this code provides for a “general anti-circumvention clause” in art. 11: Legislation known as the General Anti-Avoidance Rule (GAAR), which prohibits “aggressive” tax avoidance, has been passed in several countries and regions, including Canada, Australia, New Zealand, South Africa, Norway, Hong Kong and the United Kingdom. [5] [6] Moreover, legal doctrine has achieved a similar objective, particularly in the United States through the “commercial purpose” and “economic substance” doctrines used in Gregory v. Helvering and the United Kingdom in the Ramsay case.

The details may vary by jurisdiction, but these rules invalidate tax evasion which is technically legal but not for commercial purposes or contrary to the spirit of the Tax Code. [7] In addition to the GAAR, there are numerous targeted anti-tax avoidance provisions throughout tax legislation. These rules are intended to deny the benefit of any loss, repair or exemption that might otherwise be available. When a certain type of transaction or series of transactions is performed. Targeted anti-tax avoidance rules are used by the Ministère du Revenu for more specific or limited types of transactions than those to which the GAAR applies. In December 2010, the new coalition government commissioned a report to examine whether there should be a general anti-avoidance rule for the UK, recommending that the UK introduce such a rule, which was introduced in 2013. The rule prevents tax reduction through legal agreements if such schemes are only introduced for tax reduction purposes and would not otherwise be considered a reasonable course of action. [6] Since the late 1990s, New Labour has consulted on a general anti-avoidance rule (GAAR) for taxation before voting against the idea.

Public interest in GAAR increased until 2003, when evidence of the extent of tax avoidance by individuals in the financial and other sectors became evident, despite the Labour government`s announcement in its 2004 budget of a new “disclosure regime” as an alternative requiring tax avoidance schemes to be disclosed to tax authorities. [45] 4. Experience In the historical evolution of these rules, we note that tax rules and the judiciary have allowed tax administrations to reject abusive and fictitious transactions. An anti-tax avoidance measure is a provision that prevents a tax reduction through legal agreements where such schemes are introduced solely for the purpose of tax relief and would not otherwise be considered an appropriate solution. General anti-abuse rule: fight aggressive tax planning when other rules do not apply. Some countries, such as Canada, Australia, the United Kingdom and New Zealand, have adopted a general anti-avoidance rule (or general anti-abuse rule). Canada also uses foreign property revenue rules to avoid certain types of tax avoidance. In the United Kingdom, many provisions of tax law (so-called “anti-avoidance provisions”) apply to prevent tax evasion where the main purpose (or purpose) of a transaction is to obtain tax advantages. On 28 January 2016, the Commission presented its proposal for a Directive on combating tax avoidance as part of the Anti-Tax Avoidance Package. On 20 November, the Council adopted a resolution on 20 December. Directive (EU) 2016/1164 laying down rules against tax avoidance practices having a direct impact on the functioning of the internal market was adopted in June 2016.

Tax avoidance reduces government revenues, so governments with a stricter anti-avoidance stance try to prevent or limit tax avoidance. The obvious way to do this is to design tax rules in a way that reduces opportunities for tax evasion. In practice, this has not always been feasible and has led to an ongoing battle between governments changing legislation and tax advisors finding new opportunities for tax avoidance in the amended rules. [ref. needed] – It must be broad enough to cover more forms of tax avoidance. – It must exclude lawful commercial transactions. – The assessment of the purpose[2] must be objective. – Clear relationship with other rules, including specific anti-abuse rules (“Specific Anti-Prevention Regulation”, “SAAR”). – Provision as a last resort.

– Simple and easy to use.