1. Double Taxation Avoidance Agreement (DTAA): Double Taxation Avoidance Agreement has been signed by India and 85 other nations, including DTAA between India and USA, to resolve these problems. It enables NRIs who work abroad to avoid paying taxes twice on their income from both their home country and their country of residence.
2. Tax avoidance: Tax avoidance operates within the legal frameworks, using permissible methods to reduce tax liability.
3. Tax evasion: Tax evasion is illegal and involves deliberate misrepresentation to deceive tax authorities.
4. Pigouvian Tax: A Pigouvian tax is a tax assessed against businesses that engage in activities that create negative side effects, such as environmental pollution. Eg- Carbon tax
5. Tobin Tax: It is a tax on foreign exchange transaction which is aimed at discouraging speculative transactions especially the international flow of short-term capital or hot money. However, it has not yet been implemented.
6. Sin Tax: A “sin tax” is an excise tax placed on certain goods at the time of purchase. The items subject to this tax are perceived to be either morally suspect, harmful, or costly to society. Examples of sin taxes include those on cigarettes, alcohol, gambling, and vaping.
7. BEPS: Base erosion and profit shifting (BEPS) refers to tax planning strategies used by multinational enterprises that exploit gaps and mismatches in tax rules to avoid paying tax. Developing countries’ higher reliance on corporate income tax means they suffer from BEPS disproportionately. BEPS practices cost countries USD 100-240 billion in lost revenue annually. Working together within the OECD/G20 Inclusive Framework on BEPS, over 140 countries and jurisdictions are collaborating on the implementation of 15 measures to tackle tax avoidance, improve the coherence of international tax rules and ensure a more transparent tax environment.
8. Global Minimum Tax: A Global Minimum Tax (GMT) applies a standard minimum tax rate to a defined corporate income base worldwide. EU members have agreed to implement a minimum tax rate of 15% on big businesses in accordance with Pillar 2 of the global tax agreement framed by the Organisation for Economic Cooperation and Development (OECD) in 2021.
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