Taxpayers’ Lack of Standing in International Tax Dispute Resolutions : An Analysis Based on The Hybrid Norms of International Taxation

Assume a hypothetical but very plausible scenario in which you had invested substantial fortune and efforts in a cross-border transaction. You entered this transaction after a thorough field study and you even consulted some tax experts in order to estimate your potential tax burden. The tax advisors succeeded in calming you down by drawing your attention to the fact that the transaction will be carried out in a state that has signed a bilateral tax treaty with your resident state. That means that you will avoid the problem of double taxation. Willingly you carried out the transaction and the outcome is quite successful and even exceeded your expectations. You are aware that you have to share your success with the tax authorities and pay income tax. Though, suddenly you realize that since your transaction is quite complicated and unusual both states claim full share and you face double taxation. You know that there is a procedure stipulated in the treaty enabling the states to resolve problems of double taxation. Now, it is your money at stake, but the two contracting states exclude you from their negotiation. To put it gently, you are not satisfied with this conduct; you believe it is unfair since it is your money and you should have standing in the procedure. I am awfully sorry to inform you but I believe you should not. If you are interested to know why I believe that you and other taxpayers should not have a standing in conflict resolutions arising due to double tax treaties you are welcome to read this paper