Anti-Abuse Rules in International Tax Law and their Interactions

1. Introduction

As the fight against tax avoidance has gained a prominent place within global tax policy, countries have increasingly implemented various forms of anti-avoidance rules. Among these rules, domestic specific anti-avoidance rules (SAARs) have played a significant role as a tool to prevent tax avoidance behavior. However, despite this seemingly straightforward purpose, the nature of SAARs and their interaction with double tax treaties (DTTs) add complexity to the topic.

SAARs operate within the broader framework of international tax law governed by tax treaties. The relationship between SAARs and international commitments underscores the balance between domestic and international law. While countries retain the sovereignty right to implement domestic anti-avoidance rules, they must also respect the principle of pacta sunt servanda which emphasizes the binding nature of international commitments. This position raises questions about the balance between combating tax avoidance on the one side while upholding international obligations on the other side. Therefore, the practical application of SAARs raises significant legal questions regarding the extent to which SAARs can in...