DCILP Lecture: Cross Border Taxation Issues (A Conflict of Source Vs Residence Rule) - An International Perspective

Abstract

The concepts of taxation, essentially important to any governmental set-up, have been modified over time to suit the rapid changes in the economic system. One such example which could be taken here is that of multinational corporations (MNCs) or business entities operating in several tax jurisdictions. Their income and activities being based in multiple jurisdictions may be liable to tax in all of them but, to adhere to the principles of clarity in law and avoidance of double taxation, various concepts emerged, like that of the Permanent Establishment, Taxation of Royalty or Fees for Technical Services etc.  Such concepts aim at not only bringing predictability for the taxpayer but to balance the conflicting interests of, mostly, the developed nations and the developing nations. In addition to this, certain jurisdictions provide various tax concessions and benefits which can be manipulated by the tax payers so as to have income rendered untaxed.

The global tax landscape has seen a paradigm shift. Countries are becoming more inward looking and wanting to shore up their tax collections by enacting laws to ensure source-based taxation. India being the largest market economy trying to prevent large Multinational enterprises from shifting the profit to favorable jurisdictions. There has been a concerted effort by OECD where countries like India, who are not member of OECD have adopted the Base Erosion and Profit Shifting (BEPS) guidelines to boost their tax collection by taxing the source.

In the course of this paper, the author seeks to briefly discuss the dimensions of market economy like India and the problems so faced by the taxation regimes in relation of Cross Border Issues. Various recommendations have emerged from academicians and experts, the most prominent of them being the OECD/G20 Base Erosion and Profit Shifting. The Author will be discussing the taxability of Active Income and Passive income and their implication under Double Taxation Avoidance Agreements specifically in relation of India & UK double taxation treaty.

Speaker

Dr. Manoj Kumar Singh is working as Associate Professor. He has a teaching experience of 17 Years at National Law University, Jodhpur, India (NLUJ) in the field of Taxation. He is postgraduate in law from Banaras Hindu University, Varanasi. He has professional experience as lawyer of two years. He has attended/organised workshops and conferences at various levels in relation to Corporate Law and Taxation. His area of interest is Taxation and commercial Laws. He is Executive Director, Centre for Tax Laws. He is Placement Director at NLUJ. He has published papers on various issues relating to Domestic and International taxation in the journals of National and International repute. Dr. Manoj Kumar Singh has done his doctorate (PhD)in the area of International Taxation from National Law University, Jodhpur in the year of 2012 on the topic “Double Taxation: Problem & Prospects (A study with special reference to Permanent Establishment)".