Institute of Chartered Accountants of India

Inching towards Tax Certainty: Neoteric Domestic Dispute Mechanism for Cross-Border Taxation

The Research Report on “Inching towards Tax Certainty: Neoteric Domestic Dispute Mechanism for Cross-Border Taxation” revealed that the prevailing dispute mechanism in India on cross border taxation matters has its flaws and has certainly not fostered tax certainty. Significant disputes have been rising exponentially year on year due to rapid growth of Multi National Entities (MNE). Further, the main causes of tax disputes are “inconsistent application or interpretations, unclear tax policies and rules, resource constraint, complex administration procedures, insufficient understanding of international tax law, enforcement not in accordance with tax treaties, unintended consequence of domestic practice, inadequate transparency etc.”

Considering the significance that tax certainty brings, the existing state of affair is not sustainable and does not augur well for all the stake holders concerned. Therefore, a change in the existing approach or introducing new alternative mechanisms may be considered for a better future. The research work also throws light on the architecture of the dispute mechanism framework consisting three layers of structure (Dispute Prevention, Containment and Resolution Mechanism) to fuel the said purpose.

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