Burden of Proof in International Tax Litigation

When a dispute goes to court, one side is generally required to prove its case, which is known as the burden of proof. In simple terms, the burden of proof determines who is responsible for proving what, and how much evidence they need to provide to win.

In international tax disputes, the burden of proof is a critical procedural question. It decides which party is required to present evidence, how strong that evidence needs to be, and what happens when the evidence on both sides is unclear or equally balanced.

U.S. federal tax litigation distinguishes two related concepts:

• Burden of production — the duty to introduce enough credible evidence to create a genuine factual issue for the court. Failure to meet this burden can result in a ruling against the party without a full trial.
• Burden of persuasion — Burden of persuasion is the obligation to convince the court that your position on a factual issue is correct. It primarily focuses on the issue of fact as against the issue of law under the burden of production.

In civil tax cases, the standard is the preponderance of the evidence, meaning the party must show that its position is more likely than not correct. This applies across all federal forums.

In International tax litigation, the legal standard for the burden of proof varies by jurisdiction and the type of action. Let’s explore the principle of the burden of proof in the following forum.