Journal of Politics and Governance

The current system of international taxation, based upon residence-based taxation, source-based taxation and separate entity accounting, has been found inadequate and outdated, even amounting to “fiscal imperialism” by developed countries. From automatic information exchange between transacting countries, to differential reserve requirements for dealings with offshore businesses, from greater transparency in accounting, to introduction of ‘Limitation on Benefits’ clauses into tax treaties, to greater pressure on low-tax jurisdictions to cooperate-- there are a great number of proposed measures. OECD has been pressing for international cooperation to enforce a uniform global tax system, which abolishes harmful tax practices, including tax havens. This paper provides a critique on corporation as a vehicle for tax planning especially in the backdrop of Vodafone judgment and proposed Direct Tax Code.