Despite arbitration tug of war, mutual settlement is key (The Hindu, GS-2, GS-3 Economics)

04 Mar Despite arbitration tug of war, mutual settlement is key (The Hindu, GS-2, GS-3 Economics)

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.
    
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Swarn Singh

Plutus IAS Current Affair Team Member