The end of this decade leaves us with a scenario bare of any justification. There was not only the pursuit of certain logic for immediate profits but also the global aim to turn taxes (both local and international) into profits. Arbitrage was aimed to take advantage of differences in prices, and tax arbitrage went a step further aiming to turn the tax advantage into price. The aim was not solely to minimize the tax impact but also to add financial profits to the tax profit, which then became a source of income. The general principle against tax evasion establishes the restriction of any abusive practice in tax arbitrage. The double taxation principle needs the correlation of taxation, at least, in one place. One of the means used to avoid it was the use of financial hybrids and other hybrid forms. The Bank for International Settlements, Basel I, and the increasing role of credit rating agencies contributed substantially to the massive development of financial and tax arbitrage, both at local and international levels. We are in a position to know what triggered the financial markets crisis, but surprisingly enough, neither the financial law nor tax law has yet reacted. Scholars, regulations, and precedents provide sufficient basis for such a reaction!
Intertax