Title: Immunity or exemption: what are the consequences for sovereign wealth funds with respect to sovereign immunity vis-à-vis tax exemptions?

Authors: Sally-Ann Joseph

Addresses: Centre for Law and Business, Faculty of Law, National University of Singapore, Singapore

Abstract: Sovereign wealth funds are generally afforded tax relief either via immunity or tax exemption. Often considered synonyms, these terms are disparate in a taxation context. While differences in definition are subtle, they are more marked when one considers their basis, legal system, institutional process and how they are derived. Notwithstanding the outcome of granting immunity and total exemption is identical, in that no tax liability arises, their impacts and effects on institutions, processes and policies differ. Assessing the effects of immunity and exemptions against tax principles has mixed results. Neither immunity nor exemption is manifestly superior with respect to efficiency and simplicity whereas an exemption is clearly preferable when equity and certainty are considered. A balanced assessment therefore favours the provision of a tax exemption over the granting of immunity. However, if immunity is to be granted, it is recommended that government interference be minimised and the process is transparent.

Keywords: sovereign wealth funds; tax policy; sovereign immunity; immunity; tax exemptions; tax principles; tax relief; investment income.

DOI: 10.1504/IJPLAP.2017.085604

International Journal of Public Law and Policy, 2017 Vol.6 No.1, pp.39 - 53

Received: 15 Mar 2016
Accepted: 19 Jan 2017
Published online: 01 Aug 2017 *

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