04 Mar Despite arbitration tug of war, mutual settlement is key (The Hindu, GS-2, GS-3 Economics)
Posted at 04 Mar 2021 in Current Affairs, Economy, Governance, GS Paper II, GS Paper III 0 Comments
Issue:- Foreign companies like vodafone and cairn energy from U.K. went against indian government in permanent court of arbitration.
- Major issues was tax avoidance
- What is tax avoidance
- When tax structure loopholes are exploited by the companies, though it is not illegal but it is morally corrupt.
- Exploiting the DTAA, round tripling all are kind of tax avoidance.
- To tackle this government brought the GAAR (General anti avoidance rule)
- Intention of parties, which are the part of dispute, will be checked if the intention was to avoid the tax or to do a legitimate business.
- Why these issues must be tackled or such types of issues must be avoided.
- Resolving the issues will provide confidence to the investors.
- It will encourage the FDI.
- We must tackle the issues with the mechanism where both government and dispute parties are the part of structure.