Treaties on tax and treaties on trade intersect in various ways but traditionally have remained in largely separate legal spheres. A case study of the Double Tax Convention (DTC) between Australia and India and its interpretation in Australian courts demonstrates how tax disputes that begin under a DTC may eventually influence trade negotiations. In this unprecedented example, the judicial resolution in Australia of a dispute between an Indian taxpayer and the Australian government led to a major financial problem for Indian industry that persisted over several years. That problem was ultimately resolved in 2022 by an agreement reached between Australia and India in the context of concluding a Preferential Trade Agreement (PTA), leading to an important change (for India) in Australian tax law. This kind of cross-field resolution might become more common as countries seek to address multiple economic concerns in a single negotiation. However, doing so creates the risk of breaching other international legal obligations, as shown by an examination of Australia’s World Trade Organization (WTO) obligations that may be relevant to the agreement reached between Australia and India in this tax context.

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The Intersection of Treaties on Tax and Trade: A Case Study of Australia and India

  • Sunita Jogarajan,
  • Tania Voon

摘要

Treaties on tax and treaties on trade intersect in various ways but traditionally have remained in largely separate legal spheres. A case study of the Double Tax Convention (DTC) between Australia and India and its interpretation in Australian courts demonstrates how tax disputes that begin under a DTC may eventually influence trade negotiations. In this unprecedented example, the judicial resolution in Australia of a dispute between an Indian taxpayer and the Australian government led to a major financial problem for Indian industry that persisted over several years. That problem was ultimately resolved in 2022 by an agreement reached between Australia and India in the context of concluding a Preferential Trade Agreement (PTA), leading to an important change (for India) in Australian tax law. This kind of cross-field resolution might become more common as countries seek to address multiple economic concerns in a single negotiation. However, doing so creates the risk of breaching other international legal obligations, as shown by an examination of Australia’s World Trade Organization (WTO) obligations that may be relevant to the agreement reached between Australia and India in this tax context.