General Anti-Avoidance Rules and Legal Certainty in Sweden, USA and China – A taxation determined by legal culture?

Sammanfattning: The occurrence of taxpayers implementing arrangements without commercial purpose to avoid tax laws and reduce their taxation, id est tax avoidance, is counteracted in most legal systems with different methods. Most jurisdictions have implemented not only Specific Anti-Avoidance Rules ("SAARs"), but also General Anti Avoidance Rules ("GAARs") to counteract tax avoidance. The topic of this thesis is GAARs and the conflict between their application and taxpayers’ legal certainty. In the light of this conflict, the thesis examines GAARs in three different legal systems on three continents. Sweden, United States and China all apply a common method to counteract tax avoidance: statutory or judicially developed GAARs. This thesis investigates these three GAARs and examines their purpose, design, legal frameworks and application in the light of legal culture and legal certainty by examining each country's government, political governance, legal system and tax law interpretation. The thesis further analyzes how each GAAR in the light of legal culture affects taxpayers’ legal certainty. To achieve this purpose the thesis explores the significance of legal certainty in the countries, what impact GAARs have for taxpayers’ legal certainty, and how legal culture impacts on legal certainty in the application of GAARs. The study shows that the GAARs applied in Sweden, United States and China are very similar in terms of design, purpose and the criteria for application, as well as with regard to the fact that their effectiveness is conflicting with taxpayers’ legal certainty. Despite the fact that the three countries' GAARs are similar, there are however significant differences between their consequences for taxpayers’ legal certainty. The conclusions are that the importance given to taxpayers’ legal certainty vary between the countries, and in the context of GAAR application, there are conflicting interests that may limit taxpayers’ legal certainty. The differences are largely attributable to the legal cultures of Sweden, the United States and China, and the political ideologies dominating each country respectively have proven to have a major impact on the significance given to taxpayers’ legal certainty.