Tax Treaty Arbitration

Abstract

Introduction: this article reviews the cross-border tax disputes resolution practice in Russia and evaluates the prospects for the development of new mechanisms for the resolution of tax disputes arising from cross-border relations, including tax arbitration. In recent years, the development of international instruments for eliminating double taxation and resolving tax disputes within OECD and G20 multilateral formats as well as bilateral agreements on avoidance of double taxation have led to the growing interest in this paper’s topic. The purpose of this paper is to determine / identify an optimal mechanism for the cross-border tax disputes resolution in Russia, taking into account the current domestic legal regulation and international commitments in the field of cross-border taxation. Methods: given the nature of this research, we have used the general scientific and individual scientific research methods. We have also used legal research methods such as comparative legal and formal legal methods, logical, systemic, and functional interpretation. The recent academic literature on the particular aspects of this research has been investigated too. Analysis: the practice in the application of international tax agreements in Russia demonstrates that the cross-border tax disputes are mainly resolved within the framework of domestic judicial procedures. Mutual agreement procedures and tax arbitration are not common mechanisms for resolving cross-border tax disputes in Russia. Meanwhile, the international investment disputes affecting particular aspects of taxation are often dealt through international arbitration institutions. Results: as a part of the commitments made under the Multilateral Instrument (MLI), Russian Federation considers arbitration and mutual agreement procedures only as possible alternative ways to settle cross-border tax disputes arising from international tax agreements. Based on the well-known cross-border tax disputes resolution practice, we conclude that none of the states could completely isolate itself from the international arbitration procedures in the current circumstances. This is true even if such state did not include the arbitration clause in its tax agreements and did not make the commitments on tax arbitration under the Multilateral Instrument (MLI).

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“…A group researchers offer insights into resolving cross-border tax disputes in Russia, emphasizing the significance of international instruments for eliminating double taxation and resolving tax disputes within OECD and G20 multilateral formats as well as bilateral agreements on avoiding double taxation (Vinnitskiy et al, 2018). The study underscores the importance of exploring alternative mechanisms for resolving crossborder tax disputes and highlights the potential of tax arbitration in addressing the challenges and complexities of international tax agreements.…”

“…Another pivotal study by explores the cross-border tax dispute resolution practice in Russia, evaluating the prospects for developing new mechanisms for resolving tax disputes arising from cross-border relations, including tax arbitration (Vinnitskiy et al, 2018). The study analyzes the application of international tax agreements in Russia and assesses the efficacy of mutual agreement procedures and tax arbitration in resolving cross-border tax disputes.…”