Justice, Equality and Tax Law

S. 1841. Introduction

Each country, in its sovereign capacity, has the power to decide how to manage its taxing rights. However, in light of the need for international cooperation and in order to enhance foreign tax policy, states may be willing to limit some of their own tax sovereign rights through multilateral or bilateral agreements, e.g. bilateral double tax conventions (DTCs) or bilateral investment treaties (BITs), and including an arbitration clause in them such as a dispute resolution mechanism (DRM).

International tax law does not seem to provide sufficient guidance on how the international tax system should be designed in a way that is considered fair and equitable. Therefore, the purpose of this work is to analyse if, indeed, arbitration and what type of arbitration as a DRM in tax matters can achieve fairness and equality, mainly for taxpayers, when states resolve questions of double taxation and domestic tax disputes.

The author provides an overview of tax arbitration plus the taxpayer’s position in international instruments that include arbitration within a mutual agreement procedure (MAP) to prevent double taxation (Section 2.). Section 3. presents examples of domestic tax arbit...