Foundation for International Taxation Conference, 2010: Day Two

This was the most awaited session in the sense that the chairperson for the first session was the tax guru, Mr. Soli Dastur, Senior Advocate, India. The day was dedicated to the Resolution of International Tax Disputes and country experiences in the same.

Mr. Jerome Libin, Partner, Sutherland Asbill & Brennan, US spoke on Advance Pricing Agreements and its forms such as unilateral, bilateral and multilateral. He listed the procedure for solving disputes through the Mutual Agreement Procedure (MAP). He suggested an alternative in the form of a Panel of Experts which would provide non-binding advice to the parties and try to reach a settlement.

Prof. Kees van Raad, Professor of Law, University of Leiden, The Netherlands focalized his presentation on arbitration as a method, to be invoked if the MAP fails. He confessed how arbitration could be used only as a mechanism to expedite the MAP process.

On similar lines, Mr. Dave Hartnett, Head of Tax, Her Majesty’s Revenue & Customs, UK threw light on how Alternative Dispute Mechanisms in Taxation had resulted in speedy dispute resolution and a higher tax collection for his department. In his opinion, the formulation of a litigation settlement strategy for his ‘customers’ – the taxpayer, seemed to be the most effective in resolving disputes.

Next was the erudite dissertation from Mr. Soli Dastur who pinpointed the loopholes in the existing and proposed provisions. He sought answers to questions such as: Whether matters pertaining TDS Deductions can be referred to MAP?; What happens to MAP procedures when the underlying treaty goes away?; If the same issue has been decided by different High Courts laying down different principles, which one would be followed?, inter-alia. Definitely some food for thought for the drafters!

In the session which highlighted the inter-country experience, the view of the judiciary was expatiated by Mr. R. V. Easwar, President, ITAT. This was followed by the New Zealand experience and the US experience where Ms. Carmel Peters, Advice Division, Inland Revenue, NZ and Mr. Marc Levey, Partner, Baker & MacKenzie, US shared their thoughts, respectively. Next, Mr. Porus Kaka, Senior Advocate was called upon to share his experience as a practitioner for 20 years, which he ably fulfilled. He also gave certain suggestions to improve the dispute resolution process in India.

In the following panel session, Ms. Anita Kapur, Director General of Income Tax (Administration), put forth the Governments’ stand on arbitration, and its non-inclusion in the Indian DTAA’s and other related matters. She expressed her view that the arbitration process was highly unfair as it is non-binding on the assessee. Her concern was that the method would also be used as a Damocles sword on the competent authority, which would not be able to function efficaciously under this constant threat. The other panelists included previous speakers who also discussed arbitration as an effective ADR mechanism and concluded the discussion for the day.