Published Paper Details:

ABSTRACT: Double tax treaties are international agreements between sovereign states that are governed by the Vienna Convention on the Law of Treaties (VCLT) general international law standards. The main objectives of tax treaties addressed is to avoid or eliminate double taxation as well as to prevent tax evasion. The double taxation concept has always been seen as one of the major obstacles in international trade. To be eligible for the benefits of the Double Taxation Avoidance Agreement (DTAA) between two nations, a person must be a resident of one of the countries. Treaty Shopping occurs when a resident of a third nation takes advantage of a DTAA between two countries. The resident of a third nation obtains the residency of a country in order to profit from the DTAA of that country with the other country, similar to shopping. Countries are engaged in an effort to design anti-abuse rules to prevent the avoidance of taxation, specifically the design of rules to prevent the circumvention of the residence principle in order to obtain treaty benefits that are not supposed to be granted to taxpayers that are not residents of the contracting states. In this research, scholar will analyze the rules designed by the tax treaty regime in order to prevent treaty shopping. The Anti Treaty Shopping mechanisms that would be presented are the Beneficial Ownership concept, the Limitation on Benefits Provisions and the Principal Purpose Test.