Freedom of Contract and Tax Clause: A Study of International Business Contracts

Abstract

Business contracts bring taxation burden to a person who gains revenue from these contracts. Contracting parties especially in an international contract always seek new methods in order to relieve from such duty by transferring it to another party. The principle of a freedom of contract allows contracting parties to create a tax clause (la clause fiscale) in order to achieve the above-mentioned objectives, but not to obstruct a State from its revenue. However, the most significant problems of the international contracts are conflict of laws, conflict of jurisdictions and alternative dispute resolutions. When contracting parties concluded an applicable law clause to the international business contract, a question is will a court enforce the chosen law to a tax clause likewish he applies such law to others clauses. Will the court accept the alternative dispute resolutions such as the institutional arbitration? By denying the arbitration, the court will face the enforcement of judgments issues. When the enforcement of foreign judgments in civil and commercial matters are hard to achieve, how Thai courts would confront with these issues? remains to be seen.