Treaty Shopping and Anti-Abuse: Law, Policy, and Enforcement

• Sigit Haryoko; Naufal Akbarsyah Gunawan
• 2026
• Hukum

Tax treaties are designed to reduce double taxation and support cross-border economic activity, yet engineered structures can divert treaty benefits to parties who are not entitled to them. This book explains treaty shopping and traces the evolution of anti-abuse approaches from formalism toward greater attention to economic substance, the purpose of transactions, and the legitimacy of treaty benefits. Readers are introduced to a range of instruments, including BEPS, the Multilateral Instrument, the Principal Purpose Test, Limitation on Benefits, and beneficial ownership, as well as the interplay among these instruments in enforcement. The Indonesian perspective is enriched by the experience of Japan, the United States, India, and other jurisdictions, demonstrating that there is no single solution to treaty abuse. The book emphasizes balance: the tax base must be firmly protected, while legal certainty, due process, and the investment climate must also be safeguarded.