Converging the Global Standard of General Anti-Abuse Rule: Is There Room for an Application of the GAAR (ATAD) and PPT (MLI) in a Similar Fashion?
DOI:
https://doi.org/10.33119/ASCASP.2020.1.4Keywords:
global tax policy, tax avoidance, GAAR, PPT, OECD, BEPS, MLI, EU, ATADAbstract
Finding much needed funds from taxes to state budgets and an ever-increasing mistrust of politicians and public opinion to the tax optimization schemes of multinational enterprises (MNEs) and high net worth individuals (HNWIs) have sparked an unprecedented political enthusiasm to address international tax avoidance in the last decade. This enthusiasm morphed into a political mandate given by G20 to the OECD in 2012. Amid a plethora of anti-avoidance rules delivered by the OECD under the BEPS Project, the principal purposes test (PPT) and its derivative under the EU Anti-Tax Avoidance Directive (ATAD) – the General Anti-avoidance Rule (GAAR) – are pivotal. The purpose of this contribution is to take an attempt to answer the main research question: is there room for an application of the GAAR (ATAD) and PPT (MLI) in a similar fashion? The assumption positively verified under this study via the prism of tax policy and technical (legal) reasons is that the less dissimilar an application of the GAAR and PPT will be, the less tax avoidance and fewer disputes arising from this phenomenon appear. However, there is a major caveat: the GAAR and PPT must gravitate towards the General Anti-abuse Principle (GAAP) as follows from the jurisprudence of the Court of Justice of the European Union’s (CJEU) rather than to the OECD’s version of the GAAR in the MLI (PPT). Only such an interpretative approach may ensure the right balance between fiscal interests of countries and individual economic freedoms of taxpayers. This contention stems from an analysis of the wording and structure of the GAAR and PPT, tax policy aims articulated in the preambles to the MLI and ATAD, the Court of Justice of the European Union’s (CJEU) case law, the OECD’s Commentary, and the relevant literature.
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