Arbitration in Tax Disputes

Abstract

Taxes, in general, are considered matters of public order that the state is responsible for enforcing. As a rule, arbitration is not permitted in matters related to public order. However, under the weight of economic conditions, the interconnectedness of international economic relations, and external pressures from major organizations and countries, coupled with the sluggishness of conventional judicial procedures in cases brought before ordinary courts, as well as the existence of situations where the principles of justice necessitate arbitration for resolution, a shift has occurred. Practical experience has shown that, in recent years, there has been a particular interest from tax administrations and various international organizations in resorting to arbitration as a means of resolving tax disputes. This is achieved through the formation of arbitration committees specialized in the subject matter of each dispute, which expedite the resolution of conflicts between tax administrations and taxpayers. Such efficiency is vital, as taxes hold a special significance for the public treasury, being the most important source of state revenue, while also representing a financial burden on taxpayers, constituting a lien on their assets in favor of the state. This growing interest was initially evident in international matters, leading to the establishment of specific and well-defined arbitration procedures under numerous international agreements. Some countries have even gone so far as to incorporate arbitration procedures for tax disputes into their domestic laws.