1. Introduction 

Over last few years, the tax authorities from over 100 countries have actively participated in the OECD’s mega project for countering Base Erosion and Profit Shifting (BEPS). Many countries have amended their tax laws for preventing ‘tax avoidance’. While the 15 BEPS Action Items deal with specific aspects concerning base erosion and profit shifting, undoubtedly, they are not broad enough to neutralize all types of aggressive (or abusive) tax planning. Hence, the General Anti-Avoidance Rules (GAAR) in the domestic tax laws come into play.

In the current anti-avoidance tax environment, the tax authorities in many leading jurisdictions can be expected to increasingly invoke the GAAR.

A preliminary examination of the GAAR provisions in a domestic tax law may give an impression of simplicity, clarity, and ease of application. But that would be an illusion. Most GAARs are embedded with many subjective (or undefined or difficult to exhaustively articulate) terms, prerequisites and exceptions. For instance, ‘transaction’, ‘purpose’, ‘main purpose’, ‘dominant purpose’, ‘abuse or misuse of a tax provision’, ‘lack of substance’, ‘bona fide purpose’, etc. – the list can be overwhelmingly long.

There is already a very large number of judicial precedents, from various jurisdictions, on many intricate aspects of the statutory GAAR (i.e. the GAAR codified in a tax law, as opposed to the judge-made anti-avoidance law – particularly in the common law countries). In the author’s view, the precedents from Australia, Canada, New Zealand and South Africa have attained ‘critical mass’, and they are very important because of high persuasive value in other jurisdictions – particularly in India and the United Kingdom, where the statutory GAAR has been introduced relatively recently.

Hence, the author intends to commence a GAAR Series, wherein at least one important court decision (or may be more) would be analyzed in-depth every week. As a starting point, it would be helpful to take into account the ‘trigger events’ for applicability of the GAAR. For that purpose, this article examines the GAAR in Australia, Canada, India, New Zealand, South Africa, and the United Kingdom.