Book Review

Title     :  ?Emerging Issues in International Taxation‘

Author :  H. Padamchand Khincha

International tax law is recognised as a
critical pillar in supporting the growth of the global economy. In an
increasingly connected world driven by the forces of globalisation and
technology, governments are finding the old structure of international tax laws
to be inadequate to cope with increasing legal arbitrage opportunities and
aggressive tax planning. This has resulted in a coordinated and comprehensive
action plan thereby triggering a flurry of developments in the field of
international tax. This book endeavours to deliberate upon critical
international tax aspects under the following six topics.

1.  Cross-Border Outsourcing

     In respect to cross-border
outsourcing, the discussion is restricted to generic issues arising in the
service sector and seeks to provide a tertiary view of both inbound and
outbound outsourcing.

2. Structuring of EPC Contracts

     EPC contracts are in trend
and newness in its operation has been the integration of multiple fields making
it an (in) divisible complex, matrix. These aspects have been articulated in the
backdrop of tax, commercial and statutory aspects. The nuances in tax treaty
applications and tax withholding have been discussed along with some case
studies.

3.  Inbound and Outbound
Investment Structuring – Impact of specific anti
avoidance rules including indirect transfer and Place of Effective Management
(POEM)

The book focuses on two amendments, mainly
indirect transfer as introduced in Finance Act, 2012 and POEM amendment brought
out by Finance Act, 2015 to determine the residential status.

This chapter is more of a ‘return to basics’
and deals with certain important and relevant terms such as through, transfer,
value, directly and indirectly.

The second part of this chapter dives into
the realm of POEM theorem with a lucid explanation of its intent. The author
discusses that a meeting that typically involves discussion, debate, approval,
supervision and execution can have a significant impact in reckoning the
residence of the company itself. The segment closes by demonstrating the
transition of the residence rule from ‘control and management’ to ‘POEM’ and
the interplay (nay friction) with the tax treaties.

A flashback to the ‘Direct Tax Code’ that
sought to bring in this concept helps to understand the Indian perspective for
the purpose of residence determination.

4.  Equalisation levy

     This chapter provides a
detailed commentary on various provisions governing the equalisation levy,
certain nitty-gritty and finer aspects that remain unanswered. The author
highlights that such legislation has raised more questions than answers. It
ends with a tertiary view of digital economy taxation across the globe and
covers flavours of 21 countries.

5.  Inbound Investment, General
Anti Avoidance Rule (GAAR) & Treaty Anti-Abuse Provisions

     This chapter has dealt
with the intent behind the legislation of GAAR that gives statutory recognition
to the philosophy of ‘Substance over Form’. It is divided into (i)
applicability, (ii) consequences, (iii) power of the statute; and (iv)
compliance and other aspects.

6.  Permanent Establishment
(PE) & Attribution of Profits – Issues & Recent Developments

     In this chapter, the
author has focussed on the Hon’ble Supreme Court’s decision in the case of
Formula One. The impermanence in a Permanent Establishment is the highlight of
this ruling. In the second part, the author discusses the interplay of
bilateral tax treaties, the multilateral instruments and a brief perspective on
PE in digital commerce.

By drawing on contributions from a range of
regimes, the book aims to provide a more balanced international approach. The
book gives elaborate illustrations by providing a diagrammatic flow of
transaction and tax implications thereof in India and outside with updated
judicial precedents.

Further, the issues arising in each of the
above chapters have been elucidated comprehensibly which in turn can help
professionals with practical analysis of real-world situations. However, the
content of the book could have been improvised by providing suitable options
for implementation on the issues raised. Further, the book may not sustain
readers’ interest as tax treaties are given as Annexures between chapters.

In a nutshell, the range of topics in the
book reflect extensively for international tax academics and practitioners. The
book covers more traditional international treaty topics, including chapters on
a static interpretation of treaties. One of the most exciting contributions is
the use of historical materials in interpreting tax treaties. _