The Permanent Court of Arbitration’s award against India in the cases of Vodafone and Cairn pushed India to read down a 2012 amendment to the Income-tax Act, 1961 which retrospectively taxed the telecom and energy giant. Tax Carve outs in Bilateral Investment Protection Agreements have been an area of concern for several developing nations that seek to import foreign capital.

Interestingly, on 3^rd April 2023, the Finance Minister Nirmala Sitharaman, while responding to questions in the Lok Sabha asserted that “it is the sovereign right of the Government to undertake retrospective legislation, if required, including legislation in respect of taxation.”

She clarified that it is the Government’s policy to provide a stable and predictable taxation regime that is investor friendly and spurs growth. She also mentioned that it has been the intention of the Government to not ordinarily bring out about any change in tax laws retrospectively which creates a new liability.

This poses several questions:

• What is the nature and extent of a sovereign’s right to tax?
• How true is it that decisions of investment courts are skewed in favour of investors and against host nations especially developing countries like India?
• Is there an ideal BIPA? If yes, what does it look like?
• Should India carve out tax measures from its future BIPAs entirely?
• How does carving out tax measures from BIPAs impact Indian investors investing in foreign jurisdictions?

The Vidhi Centre for Legal Policy & BMR Legal Advocates have worked on a new report titled “Tax Carve Outs under Bilateral Investment Protection Agreements: A Review”. The report discusses the evolution of investment protection measures around the world, the origin of BIPAs and the protections available under them, tax carveouts in BIPAs, past disputes that have shaped jurisprudence on the intersection of tax law and investment law, Model BIPAs and ongoing negotiations. The report recommends tangible reforms and lists various aspects that need deeper reflection.

Vidhi is delighted to invite you to the global launch of its report which will be followed by a panel discussion that will deep dive into the nuances of tax carve outs under BIPAs, the sovereign right to tax and deliberate on what India’s future BIPAs must look like.

Panellists

• J. A. K. SIKRI, Judge, Singapore International Commercial Court and Former Judge, Supreme Court of India;
• BALBIR SINGH, Additional Solicitor General, Supreme Court of India;
• BALASUBRAMANIAN K., Joint Secretary, Tax Policy Research Unit, Ministry of Finance, Government of India
• ANURADHA DUTT, Co-Founder & Managing Partner, DMD Advocates
• PRABHASH RANJAN, Professor and Vice Dean (Continuing Education), Jindal Global Law School will be in conversation with
• MUKESH BUTANI, Founder and Managing Partner, BMR Legal (Moderator).

For participants who cannot attend the event physically, a link to join virtually through Zoom will be provided upon registration.

For any questions, please reach out to yeesha.shriyan@vidhilegalpolicy.in