The increasing number of reforms in the international taxation regime, opens a floodgate of novel nature disputes, particularly arising from the evolving nature of taxation as nations gear up against the threats posed by multinational enterprises [“MNESs"] and their tax-evading practices. A particularly contested position arises herein, with respect to the role accrued on to arbitration as a dispute resolution method. The question arises as, in the realm of international tax governance, the fiscal sovereignty of nations intersects with the rights and obligations of taxpayers, particularly MNEs and transnational entities. This note delves into the intricacies of tax arbitration, examining its role in resolving disputes within the framework of Double Taxation Treaties [“DTTs"] and Bilateral Investment Treaties [“BITS"]. While reiterating the critique of prevailing preference for Mutual Agreement Procedure [“MAP”] over arbitration in Organization for Economic Development [“OECD”] and United Nations [“UN"] Models, the note concerns itself with interpretational disparities, sovereignty challenges, and the impact of global tax reforms like anti-Base Erosion Profit Shifting [“BEPS”] initiatives onto the overall arbitration landscape within international legal order. Emphasizing the need For standardized interpretation rules in tax arbitration, the paper advocates for the incorporation of institutional arbitration provisions into international tax models. The paper identifies peculiar disparities in tax-awards by different tribunals which span over a range of tax issues. With upcoming tax reforms in mind, the note seeks to resolve a glaring disparity concerning interpretational standards visible throughout popular tax-arbitral awards and also attempts 1o fit the transnational taxation shortcomings into the conceptual framework proposed.
TAXATION TURBULENCE: THE CONTROVERSY OF ARBITRATION IN INTERNATIONAL TAX DISPUTES
Chaitanya Chaturvedi
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