Mutual Legal Assistance in Tax Matters

Abstract

The mobility of taxpayers, the number of cross-border transactions and the internationalization of the financial
instruments have developed significantly in the last few decades. In
today’s increasingly borderless world, countries are working more
closely together to prevent abuses of the global financial system in the
area of taxation. Furthermore, the process of globalization presents
significant challenges to tax administrations around the world and makes
it difficult to establish correct assessment of taxes by the states.
Therefore, the strengthening of mutual legal assistance as a mechanism
for administrative cooperation between countries remains one of the
outstanding issues in international taxation law. The concept of mutual
legal assistance in tax matters among states has developed alongside
the international tax law, through double taxation conventions that are
result of the international organizations` great effort (mainly of the
Organization for Economic Cooperation and Development: OECD) to
encourage collaboration among domestic tax administrations through
different agreements.