GAAR (General Anti-Avoidance Rule)

A statutory or judicial doctrine under which a country's tax authority may disregard a transaction or structure whose principal purpose is to obtain a tax advantage and that lacks genuine commercial substance. Variations exist across jurisdictions: India's GAAR (Income Tax Act §95-102, in force 2017) is among the strictest; the UK's GAAR (Finance Act 2013) operates alongside more targeted anti-avoidance rules; Canada's GAAR predates most others (1988); most EU member states have implemented GAAR-type provisions transposing the EU Anti-Tax Avoidance Directive. GAARs operate as a backstop above specific anti-avoidance rules; the OECD's BEPS project Action 6 promoted Principal Purpose Tests (PPT) in tax-treaty contexts that function similarly. Practical effect: structuring decisions that survived domestic specific rules may still be challenged on GAAR grounds if the substance / purpose tests fail.