Abstract

Every businessman, every company and every investor are all under a constant search of devising a process of saving tax. No one wants to give their hard earned income to the government because for them, they can multiply that money manifold through investment and that will lead to their benefit. One of the processes devised for it is through the help of tax havens and Double Tax Avoidance Agreements (DTAA). With the advent of Globalisation and expansion of businesses the entities come to different countries to do trade, the now arises is which government will tax them? Will there be double taxation? Will the person pay such tax? No, and so for this, the concept of DTAA was developed. But the picture does not end here and as any person will want, the people (investors) found a way to escape this liability of tax and there it started tax evasion. The governments, when they took notice of it, were in a fix as to how to avoid these and hence took steps to curb it. But are the steps taken by the authorities sufficient in dealing with this problem? To find answers to these questions this paper examines the role of in facilitating the Foreign Direct Investments and the misuse of this DTAA in generation of black money and tax evasion by round tripping and treaty shopping, the measures taken by government and their effectiveness and the suggestions by researcher to curb this problem.

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