Addressing Potential Risks of Challenges by Tax Authorities
In an era of global transparency, digital surveillance, and inter-governmental information exchange, tax authorities worldwide are aggressively scrutinising international transactions. At Shift by MLegal, we help clients proactively assess, prepare for, and defend against potential tax authority challenges — across India, the UAE, the UK, Europe, the US, and more.
Whether it’s a transfer pricing adjustment, a dispute over treaty benefits, Permanent Establishment allegations, or unexplained overseas assets — we stand by your side with a 360° risk mitigation and defence strategy.
Why Proactive Tax Risk Management is Essential
- Global tax reporting (CRS, FATCA, BEPS) has made international transactions fully visible to authorities
- Increasing focus on economic substance, beneficial ownership, and treaty abuse
- Information-sharing agreements between tax departments across countries
- Complex tax frameworks like GAAR (General Anti-Avoidance Rule), BEPS, and domestic anti-evasion laws
- Rise in cross-border audits, inspections, and requests for documentation
Waiting for a tax notice is no longer an option. Proactive preparation is key.
Typical Triggers for Tax Authority Challenges
| Trigger Scenario |
Tax Risk Involved |
| Use of offshore entities |
Suspicions around round-tripping, treaty shopping, shell companies |
| Cross-border intra-group pricing |
Transfer pricing adjustments or ALP re-characterisation |
| Sudden capital inflows or outflows |
Scrutiny under FEMA, black money laws, or unexplained credits |
| Royalties & licensing to related parties |
Excessive deductions or disguised equity |
| Lack of economic substance |
Risk of denial of tax residency or treaty benefits |
| Treaty misuse or LOB failure |
Withholding tax denial or capital gains exposure |
Our Tax Risk Management Services
| Service Area |
What We Offer |
| Pre-Audit Risk Review |
Comprehensive audit of your structures, returns, filings, and documentation |
| Defensive Structuring |
Building substance, beneficial ownership, and legal justification upfront |
| Regulatory Readiness |
Ensuring compliance with reporting under FATCA, CRS, FEMA, OECD, etc. |
| Litigation Strategy |
Handling notices, assessments, appeals, and tax tribunal representation |
| MAP & APA Representation |
Mutual Agreement Procedure and Advance Pricing Agreements in treaty cases |
| Voluntary Disclosure Support |
Confidential rectification under local tax schemes or amnesty windows |
Jurisdictions Where We Defend Clients
- India – ITAT, CIT(A), DRP, High Court, GAAR Panel
- UAE – Federal Tax Authority, ESR compliance panels
- UK – HMRC tax investigations, tribunal representation
- Singapore, 🇺🇸 USA, 🇪🇺 EU states – via local counsel coordination and treaty-based MAPs
Key Anti-Avoidance Provisions We Manage
- General Anti-Avoidance Rule (GAAR)
- BEPS Action Plans 6 & 7 (Treaty Abuse, PE Avoidance)
- Significant Economic Presence (SEP) in India
- FEMA – Overseas investments, remittance violations
- CRS/FATCA – Global disclosure frameworks
- Transfer Pricing Adjustments under Sections 92–92F (India)
Case Examples
| Situation |
Outcome Achieved |
| Indian Promoter with UAE SPV |
Avoided GAAR trigger by proving business rationale and BO compliance |
| UK Subsidiary of Indian Parent |
Fended off PE challenge by HMRC through documented functional split |
| SaaS Company (India ↔ Singapore) |
Avoided FTS re-characterisation, upheld service income classification |
| HNI under black money scrutiny |
Cleaned overseas disclosures via voluntary compliance programme |
The Shift by MLegal Advantage
- Proactive approach — we audit before the authorities do
- Comprehensive documentation — we build the legal and economic story
- Defensive structuring that holds up under cross-examination
- Direct representation before Indian tax authorities and global cooperation via local counsel
- Integrated with international tax, immigration, and business strategy
