Document Type : Research Paper

Authors

Abstract

Bilateral tax treaties in the world are significantly spreading as a tool for
waiver of double taxation, which is an obstacle in the way of expansion of
international trade. In the text of the such treaties, the concept of "permanent
establishment" is predicted, which means a fixed place for doing business by the
companies residing in Contracting States in order to clarify tax liability of
entrepreneurs in both countries. Determination of the question of tax residence
has critical importance for recognizing tax liability of a tax payer and in
bilateral tax treaties, having a permanent establishment means residency and
tax liability in relation to the profit attributable to this unit. However, it has been
seen that transnational companies attempt to take fraudulently measures
through bilateral tax treaties to reduce their tax liability by abusing the concept
of permanent establishment. Organization for Economic Cooperation and
Development has introduced and published solutions and amendments to deal
with transnational corporations’ tax avoidance and tax evasion strategies the
application of which in Iran’s tax law system will be useful to determine the
competent tax jurisdiction and encountering ‘treaty shopping’ by transnational
corporations.

Keywords

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