Vanderbilt Journal of Transnational Law


Simone M. Haug

First Page



Tax avoidance through international treaty shopping has become a subject of intense controversy in the international community. By shrewdly structuring businesses, corporations are currently able to take advantage of tax exemptions contained in tax treaties, though the countries that have joined the treaties never intended for them to benefit from such provisions. Many nations, including the United States, view this practice as tax treaty abuse. In response to such abuses, many countries are now incorporating strict anti-treaty-shopping provisions in their bilateral tax treaties.

Ms. Haug begins the Article by describing the practice of treaty shopping and, specifically, the various methods of tax treaty abuse. She then examines the different approaches countries are taking to prevent such abuses. After assessing the utility and feasibility of countries' attempts to combat treaty shopping, the author concludes that, while strict anti-treaty-shopping provisions in bilateral treaties may be somewhat effective, the only way to truly control tax avoidance is to harmonize the international tax system. To achieve this goal, the author argues, countries must either increase their treaty networks or enter into a multilateral tax convention. Due to countries' concerns that such a convention would adversely affect their sovereignty, however, Ms. Haug is not optimistic that such a solution will come to fruition.