Mohanish Verma, Ex IRS
The Supreme Court decision in the case of Tiger Global relating to Capital Tax gains on account of share transfers of Walmart India via the Mauritius route has been held to be taxable in India. While the detailed order is awaited the larger question of tax certainties in emerging economies like India for large multinationals has once again captured the economic headlines.
The cannons of taxation have always emphasized the element of certainty in any tax regime. Foreign investment is a crucial ingredient for economic activity and tax competitiveness including certainty is also closely watched by global investors and corporates.
While the OECD initiated the Model Tax Treaties in 1963, the United Nations a model in 1980. These models form the basis of all tax treaties. They are broad formats and guidelines for identifying specific areas and the details of various functionalities like withholding taxation capital gains, salaries, mechanisms of tax credits, TRC etc.
Broad Objectives of Tax Treaties
1. Facilitating cross border investment by removing impediments between tax regimes and ensure fairness in taxation.
2. Ensure avoidance of double taxation.
3. Treaties are also expected to ensure checking tax evasion and avoidance of double non taxation of entities.
4. Bringing synergy between taxation regimes and smoothening tax processes and systems.
5. Resolving disputes and exchange of information along with multiple ancillary objectives.
6. Tax certainty is another very important objective for long term sustainable investment and resource mobilization1.
Interpretation and Opinions of legal provisions.
Matters of interpretation between tax regimes are subject to the Vienna Convention of Law of Treaties, May 1969. The fate of the entity which is impacted on account of a new or unprecedented interpretation under a domestic law is a subjective area. This is a critical issue not addressed by the treaties, and is addressed by the domestic laws.
One of the basic principles of tax treaties is also to ensure that the entity is paying fair tax in some tax regime. Large multi-nationals or investors cry hoarse on some occasions along with their strong lobbies, when such fairness principles are highlighted through court decisions.
The United Nations and OECD Models Conventions and Treaties along with commentaries are only guidelines and not legally binding on any economy or regime2. This only emphasizes the importance of domestic laws over such treaties. Tax treaties do not provide any immunity to any entity against interpretation of specific facts and situations, which may involve “unfair tax practices” and even “double non taxation”.
Tax treaties are focused towards ensuring fairness for all and also facilitating mechanisms, processes and systems to promote international economic activity as well as fair share of taxation for the economies. Whether the entity Tiger Global has paid fair taxes in another country and is being asked to pay in India again? If so, then the issue certainly deserves serious attention. However, if no tax has been paid by them anywhere, the mindset of stakeholders needs to change.
Gaps in International tax laws.
In a global context the principles of tax fairness across entities and tax regimes have been seriously taken up through OECD, UN, BRICS and many regional forums for highlighting the misuse of low tax regimes by many entities by designing structures and mechanisms as well as financial arrangements to suit them. On multiple occasions Amazon, Google, Starbucks (2012, UK)3 and other multinational corporates have been fined by domestic tax regimes on account of unfair trade practices relating to tax evasion.
Lack of certainty in international tax laws and mechanisms has resulted in huge tax losses to many economies including US, UK and other developing and developed ones. Resource generation by economies is an extremely crucial subject related to fair taxation. The pillar one and pillar two initiatives by OECD along with fresh initiatives from UN for a global minimum tax and enhancement procedures and processes will facilitate plugging misuse of loopholes and gaps resulting in tax evasion also. Unilateral taxation like Digital Service Tax in EU, Equalization Levy in India, and similar taxes and levies in UK, Italy, Australia and others have not been appreciated. However better and acceptable taxation models must quickly be evolved, to ensure that entities are not lured to manipulate through self-acclaimed tax experts only to be exposed eventually.
Intent and Sovereignty.
If the intent of the entity and its advisors is “round-tripping” or paying no taxes in any tax regime, the same does not deserve any sympathy or support. The details in the Tiger Global judgement will certainly provide more insights on these aspects. It is also important to keep in mind that this case may not be comparable to the Vodafone case which highlighted a retrospective amendment. This is related to the Apex court’s findings and analysis of a specific set of facts which clearly establishes the intent of the entity to indulge in round tripping. After carefully analyzing the India- Mauritius Treaty and its multiple amendments and clarifications, the apex court in India has emphasized the importance of the Indian sovereign state and protection of national interest, as core principles behind this decision.
The message is strong for everyone who does not support tax fairness and expects to use some gaps in international tax regulations to benefit till infinity. Tax treaties are always designed with a fair intent and beneficiaries including multinationals must adhere to the spirit.
The Indian Tax Regime is competing.
Attracting investments and funds through low tax economies has always remained a taboo for tax regimes like India and ironically the investments in India is still being routed through economies like Mauritius, Singapore, Dubai and other low tax economies. The Indian tax regime has to compete with lower taxation, smoother processes and tax friendliness to match global players.
India also had major FDI inflows during April 2000-September 2025, coming from Singapore at Rs. 13,21,127 crore (US$ 186.82 billion) with a total share of 24%, followed by Mauritius at 24% with Rs. 11,22,807 crore (US$ 183.66 billion), the USA at 10% with Rs. 5,50,451 crore (US$ 77.27 billion), the Netherlands at 7% with Rs. 3,77,095 crore (US$ 54.93 billion), and Japan at 6% with Rs. 2,93,864 crore (US$ 45.61 billion)4.
The headlines of Tiger Global may tilt towards sympathy for the entity-but for ensuring fairness to all, the various commentaries on the issue must be objectively assessed in national and global interests. Not paying taxes anywhere is indefensible.
(The author is an Ex- Principal Chief Commissioner of Income Tax and an ex Visiting Researcher at Georgetown University, Washington, D.C. The views are personal)
Note:-
1 https://www.un.org/esa/ffd/wp-content/uploads/2015/10/TT_Introduction_Eng.pdf (last visited 15th January, 2026)
2 Ibid.
3 https://fortune.com/2016/03/11/apple-google-taxes-eu/ (Last visited 16th January, 2026)
4 https://www.ibef.org/economy/foreign-direct-investment (Last visited 16th January, 2026).
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(The author is an Ex- Principal Chief Commissioner of Income Tax, IRS. He was also a Visiting Researcher at Georgetown University, Washington DC and has various publications on taxation and public policy issues. The views are personal.)
