Tax Treaty Case Law around the Globe 2016

S. 133Chapter 10 India: Sale of Airtime and Agency PE

D.P. Sengupta

10.1. Introduction

The current principles of international taxation developed almost a century ago were predicated upon certain assumptions that are obviously no longer valid. The methods of doing business are continuously changing in line with the changes in technology. Besides, international trade and commerce has expanded beyond imagination and non-OECD countries are also playing an important part therein. In such a scenario, it is obvious that a system of international taxation designed primarily for a group of homogeneous countries will come under severe strain. The OECD’s Base Erosion and Profit Shifting project is ample testimony to the fact that the system requires complete overhaul. However, the current efforts seem to be restricted to preventing some of the worst forms of tax avoidance by multinationals, leaving other important areas involving distribution of taxing rights unchanged. The unsatisfactory results prompt many countries to resort to novel ways of looking at issues and assert taxing rights.

The most important source of income in the context of international trade is obviously business income and the corn...