Rule against foreign revenue enforcement

The rule against foreign revenue enforcement, often abbreviated to the revenue rule, is a general legal principle that the courts of one country will not enforce the tax laws of another country.[1][2][3] The rule is part of the conflict of laws rules developed at common law, and forms part of the act of state doctrine.

In State of Colorado v. Harbeck, 133 N.E. 357, 360 (N.Y. 1921) the court referred to

The ... well-settled principle of private international law which precludes one state from acting as a collector of taxes for a sister state and from enforcing its penal or revenue laws as such. The rule is universally recognized that the revenue laws of one state have no force in another.[4]

In England, Lord Denning MR said in Att-Gen of New Zealand v Ortiz [1984] AC 1 at 20:

No one has ever doubted that our courts will not entertain a suit brought by a foreign sovereign, directly or indirectly, to enforce the penal or revenue laws of that foreign state. We do not sit to collect taxes for another country or to inflict punishments for it.[5]

The rule has been repeatedly applied in the United Kingdom,[6] the United States,[7] Canada,[8] Australia,[9] Ireland,[10] Singapore,[11] and other countries.[12][13] It has also been codified into statute in various countries.[14]

  1. ^ Mallinak, Brenda (2006). "The Revenue Rule: A Common Law Doctrine for the Twenty First Century". Duke Journal of Comparative & International Law. 16 (1): 79–124. Retrieved 16 August 2017.
  2. ^ Curl, Joseph (2010). "A purposive approach to the rule against foreign revenue enforcement" (PDF). International Corporate Rescue. 7 (2): 137–139. Retrieved 17 August 2017.
  3. ^ A.N. Sack (1933). "(Non-)Enforcement of Foreign Revenue Laws, in International Law and Practice". University of Pennsylvania Law Review. 82 (5): 559–585. doi:10.2307/3308175. JSTOR 3308175. S2CID 154023631. Retrieved 17 August 2017.
  4. ^ "Colorado v. Harbeck". Uniset. Retrieved 18 August 2017.
  5. ^ Cited with approval in Iran v Barakat Galleries Ltd [2007] EWCA Civ 1374 at para [104].
  6. ^ Government of India v Taylor [1955] AC 491
  7. ^ Moore v. Mitchell, 30 F.2d 600, 600 (2d Cir. 1929)
  8. ^ United States v. Harden [1963] SCR 366
  9. ^ Jamieson v Commissioner for Internal Revenue [2007] NSWSC 324
  10. ^ Peter Buchanan Ltd v McVey [1954] Ir 89
  11. ^ Relfo Limited v Varsani [2008] SGHC 105
  12. ^ "Court Clarifies Treatment of Foreign Tax Liabilities in Bankruptcy". Maples and Calder. 7 May 2014. Retrieved 17 August 2017.
  13. ^ Webb v Webb [2020] UKPC 22 (Cook Islands)
  14. ^ "Foreign Judgments (Reciprocal Enforcement) Act 1933, section 1(2)(b)". Retrieved 14 August 2017.

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