Rationale of Retrospective Taxation
Retrospective taxation refers to the practice of imposing tax laws on transactions or earnings that occurred before the enactment of the laws. The rationale behind such taxation primarily includes the following:
Problems in Cancellation of Retrospective Taxation Laws
Therefore, although retrospective taxation can solve the present fiscal requirements and fill the legal loopholes, the repeal of such statutes raises questions concerning revenue, legal issues, investor confidence, and international relations. This is why it is important to consider all these factors to achieve a stable and fair taxation system.
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