The Resource From the revenue rule to the rule of the "revenuer" : a tale of two Davids and two Goliaths

From the revenue rule to the rule of the "revenuer" : a tale of two Davids and two Goliaths

Label
From the revenue rule to the rule of the "revenuer" : a tale of two Davids and two Goliaths
Title
From the revenue rule to the rule of the "revenuer" : a tale of two Davids and two Goliaths
Creator
Subject
Language
eng
Summary
Domestic courts have traditionally refused to enforce the tax claims of foreign governments, under the doctrine known as "the revenue rule". With the accelerating pace of international trade in the late 20th century and the proliferation of cross-border tax evasion strategies, countries found it mutually advantageous to include provisions in their bilateral tax treaties allowing each treaty partner to assert certain domestic tax claims in the other country's courts. At a time when, as a result of global trade, reciprocal recognition of foreign laws in domestic courts has become routine, the revenue rule is increasingly perceived as a relic of a bygone era. Such reciprocity only reinforces the international nature of law enforcement. Formal and informal partnerships of law enforcement officials operate to their mutual advantage in the same way that international trade enhances domestic economies. Given that the scope of domestic legislation has broadened to the point where virtually every cross-border transaction implicates a variety of domestic and foreign laws, law enforcement officials who are frustrated by the revenue rule have relied on breaches of criminal or quasi-criminal laws and regulations in an effort to thwart tax evasion. In two cases involving widely differing circumstances, David McNab and David Pasquantino were prosecuted in American courts under US criminal statutes for alleged breaches of foreign laws; the Pasquantino case involved the alleged evasion of Canadian tax laws. These cases have shown that Canadian tax law enforcement officials can now circumvent the revenue rule by asking American law enforcement officials to lay charges for criminal fraud or conspiracy, even though Canadian tax evasion is the predicate illegal activity that forms the underlying basis of the charge and no finding of tax evasion has been made in a Canadian court. To engage American criminal law, enforcement officials only have to show that there was a wire transfer of funds through an American bank, or some other tenuous connection to the United States, as part of what may otherwise be a transaction between Canadians or other nationals. Since there is some difference of opinion as to where the line between lawful tax avoidance and illegal tax evasion should be drawn, Canadian tax advisers and their clients should be concerned about American criminal courts interpreting Canadian revenue laws. This article examines the historical reasons for the judicial recognition of the revenue rule, the recent case law that has signalled its erosion, and the public policy reasons for and against the continued recognition of the rule in a world of globalized trade, e-commerce, and widespread international tax treaties. The author concludes, contrary to the recent trend in academic and judicial opinion, that there remain strong policy reasons to maintain the revenue rule with all its force and vigour
Citation source
In: Canadian tax journal = Revue fiscale canadienne. - Toronto. - Vol. 56 (2008),
http://library.link/vocab/creatorName
Bishop Debenham, D
Geographic coverage
International
Language note
English
http://library.link/vocab/subjectName
  • collection of tax
  • tax treaty
  • tax sovereignty
  • globalization
  • criminal law
  • case law
Label
From the revenue rule to the rule of the "revenuer" : a tale of two Davids and two Goliaths
Instantiates
Publication
Label
From the revenue rule to the rule of the "revenuer" : a tale of two Davids and two Goliaths
Publication

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