Taxpayers want to reduce their tax debt through various means at their disposal. It can take the form of tax planning, aggressive tax planning or tax evasion. There has always been a fierce fight between tax authorities and taxpayers in cases of aggressive tax planning or tax evasion. Over the years, the legislature has put in place several specific anti-avoidance rules (SAAR) to block well-known tax evasion techniques. (5) In order to reassure global investors, the Committee proposed in its draft report that the GAAR provisions should not be invoked to verify the authenticity of the company`s residence in Mauritius. Mauritius is the preferred route for foreign investment because of the liberal tax system and the tax system in the island state. India has reached an agreement to avoid double taxation with Mauritius. (3) GAAR allows tax authorities to characterize a trade agreement or transaction as an “illegal circumvention agreement” when they believe that it was concluded primarily for tax evasion. As soon as an agreement is declared “ineligible,” tax authorities can refuse tax benefits. Most aggressive tax evasion regimes could be considered inadmissible.
The approval body issues instructions, upon receipt of a reference from the Member of the Commission, which it considers to be an unauthorized circumvention system under Chapter X-A for the declaration of the agreement, including the indication of the previous year or the years in which such a declaration of agreement is applicable as an unauthorized circumvention scheme. No instruction is given unless the notator and the notator have the opportunity to be heard when the descriptions of care detrimental to the notator`s interest or the interest of the turnover are, if any, prejudicial. It is recognized that DIE GAAR, in the name of tax evasion, will give too much discretion to the tax administration. Since it gives tax authorities unbridled power to challenge transactions or agreements, this can lead to an increase in tax disputes. Since the burden of proof is tested to demonstrate that the purpose underlying the conclusion of a transaction or agreement is not to obtain tax benefits, the notator must maintain the proper presentation of the company`s reasons and document the evidence in order to avoid such situations. 3. Tax evasion – tax evasion is an illegal arrangement on financial matters to evade tax debt. This is a flagrant violation of the provisions of a tax law. It should be noted that there is a very small line between tax evasion and tax evasion.
Tax evasion becomes tax evasion where there is a criminal provision in the law for a particular transaction agreement. Before we move on to the discussion on GAAR, we first know: “What is the difference between tax evasion and tax evasion.” An unauthorized circumvention system is one that, in accordance with the GAAR provisions, attracts general measures to avoid tax evasion. These rules are designed in a targeted way by businesses and individuals to avoid a tax. Therefore, if the tax official believes that the primary objective or one of the main objectives of an agreement is to obtain a tax benefit, and even if one of the four controls mentioned above is fulfilled, he is entitled to declare it as an unacceptable circumvention scheme and to redefine the entire turnover in a more favourable way to maximizing tax revenues.