The Belt and Road Initiative (BRI) and International Tax Law: A Winter Note on Law-making and Dispute Resolution Issues Raised by the BRI

By Diego Mejía-Lemos

This note is part of a series of invited contributions which will appear each season of the year. Their aim is to explore various issues of international tax law, from the perspective of general international law and dispute resolution. Given the paucity of space, the overview of issues explored is brief, and the potential avenues for further research into them are merely suggested tentatively.

The Belt and Road Initiative, also known as One Belt, One Road (“一带一路”; Yī dài Yī lù) (BRI) is a People’s Republic of China (PRC) governmental initiative which chiefly draws inspiration from the ancient Silk Road. The BRI is often described as the largest matrix of infrastructure projects in the decades to come. The BRI, which principally seeks to strengthen international cooperation and growth through greater connectivity, comprises a myriad of projects to be implemented in the territories of 64 BRI participating states, in Northern Africa, Asia, Eastern Europe and the Middle East (Mao et al (2017)). The impact of the BRI is (and will likely remain for some time) an evolving subject: while, on one hand, the BRI has been addressed uncritically and even praised, on the other hand, skepticism over the BRI has also been raised, most notably in light of doubts over its long-term sustainability and potential debt issues (Organisation for Economic Cooperation and Development (OECD) (2018) 79-80).

The BRI raises questions of international law generally, both in its private (see contributions to Sooksripaisarnkit & Garimella (2018), ia) and public spheres. Turning to the latter, various questions concerning the BRI have been discussed in the growing scholarly literature on the BRI, including general issues such as the international governance and rule of law implications of the BRI (see the various contributions to Zhao (2018), including Shi (2018), addressing the BRI from a “public goods perspective”), as well as more abstract areas, such as the BRI’s impact on sovereignty (Seppänen (2018)) and the common heritage of mankind (Zou & Qiu (2018)). Other areas of public international law addressed include environmental law, financial integration (with a particular focus on the ASEAN region, for instance), and trade (see relevant contributions to Zhao (2018)). Other scholars have analyzed those aspects from an even more inter-disciplinary approach, addressing the wider economic and political framework (see various contributions to Chaisse & Górski (2018)). Notwithstanding their value and novelty, the above scholarly analyses of public international law issues raised by the BRI have been largely theoretical in their approach, showing that a doctrinal treatment of the BRI is still absent. While, acknowledgedly, some of the issues raised by the BRI may not be amenable to an assessment de lege lata, and other may be clearly de lege ferenda, an analysis from a legal perspective could greatly contribute to the proper understanding of the BRI. Furthermore, while the BRI has a clear regional connotation, most of the scholars who have published on the topic hail from the region, indicating the need for views from outside the region, particularly from outside East Asia (eg, most of the scholars contributing to Zhao (2018) are from East Asia), and for comparative approaches, identifying whether and to what extent the BRI differs from any other comparable initiatives. The need for doctrinal, general (and, thus, not necessarily regionally-oriented) and comparative approaches on the BRI is further evidenced by the need for greater cross-systemic engagement, in order to meet the various challenges posed by the BRI (including in terms of the provision of legal services, legal education and cooperation).

Various issues arise at the intersection of the BRI, foreign direct investment (FDI) and the regulation of taxation and investment, particularly where FDI made in connection with the BRI and settlement of any disputes arising in this particular connection are involved. The scholarship on the BRI has addressed international investment law aspects raised by the BRI (see various contributions to Shan et al (2018) and Zhao (2018)). Those issues have given rise to a demand for greater knowledge as to the international law on investment and tax by prospective economic actors involve in the making of incoming and outward FDI in and from China (among other economic activities, as discussed in Wei et al (2018)). Those issues have already been identified by governments (including the Chinese tax administration), and attracted the attention of scholars (eg the Belt and Road Initiative Tax Cooperation Conference, convened by the International Bureau of Fiscal Documentation (IBFD), and held in Kazakhstan in 2018; and the International Tax Forum on The Belt And Road Initiative (BRI), held in Vienna, Austria, in April 2018).

As for law-making, it must be noted that, as of 2016, the PRC had concluded 54 double taxation avoidance (DTA) agreements with BRI participating states. In this vein, the BRI appears to have mixed, seemingly contradictory, implications: indeed, the BRI has been perceived as both creating opportunities for facilitating the implementation of international tax law (various contributions to Lang & Owens (2018)), whereas, at the same time, the BRI would pose specific challenges as a leading alternative to, or even a factor undermining, the existing international tax law and policy (various contributions to Lang & Owens (2018)), particularly as formulated by the OECD (Hearson & Prichard (2018)). Despite the PRC government’s professed commitment to ‘facilitate international tax coordination and cooperation, contribute to eliminating discrimination in tax policy making and implementation, while encouraging more countries to participate in the BEPS (Base Erosion and Profit shifting) project’ (Statement of the Chinese Ministry of Finance of 7 March 2018), the BRI arguably poses a wider challenge, among other aspects of China’s rise, to global economic governance (Hearson & Prichard (2018)).

As for dispute resolution, it is anticipated that, like any major set of infrastructure projects, many disputes are likely to arise out of BRI projects and to be submitted to international arbitration. Expecting an increased demand for dispute resolution services, various arbitral institutions have updated, or are in the process of updating, their arbitration rules, and adopted specific guidelines (eg the various initiatives of the China International Economic and Trade Arbitration Commission (CIETAC), the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC)). The PRC government has also sought to address that demand, by establishing a Chinese domestic forum for the settlement of BRI disputes, in the form of international commercial courts, two of which were inaugurated in June 2018 by PRC’s Supreme People’s Court, the apex of the PRC state judicial branch (as reported in Xinhua news and discussed in other international legal media outlets). With particular reference to tax disputes, international arbitration may prove useful, in order to address some of the limitations of existing tax dispute resolution mechanisms, such as negotiation between tax authorities (also known as the “mutual agreement procedure” (MAP)) (for a discussion of the benefits (vel non) of international arbitration over the MAP in the context of PRC-ASEAN tax disputes, see Xu (2018) 4 et sq).


  • Julien Chaisse and Jędrzej Górski (eds), The Belt and Road Initiative: Law, Economics, and Politics (Brill, 2018)
  • Martin Hearson and Wilson Prichard, ‘China’s challenge to international tax rules and the implications for global economic governance’ (2018) 94(6) International Affairs 1287
  • Michael Lang and  Jeffrey Owens (eds), Removing Tax Barriers to China’s Belt and Road Initiative (Kluwer Law International, 2018)
  • Mao Jiguang, A Dhanalakshmi, Hui Xu, ‘A Study on the “Belt and Road” Initiative: An Annotated Bibliography’ (2017) 22(7) IOSR Journal of Humanities and Social Science 1
  • OECD, OECD Business and Finance Outlook 2018 (OECD 2018)
  • Samuli Seppänen, ‘Performative Uses of Sovereignty in the Belt and Road Initiative’ in Zhao (2018) 32
  • Wenhua Shan, Kimmo Nuotio, Kangle Zhang (eds.), Normative Readings of the Belt and Road Initiative: Road to New Paradigms (Springer, 2018)
  • Jingxia Shi, ‘The Belt and Road Initiative and International Law: An International Public Goods Perspective’ in Zhao (2018) 9
  • Poomintr Sooksripaisarnkit, Sai Ramani Garimella (eds), China’s One Belt One Road Initiative and Private International Law (1st Ed, Routledge, 2018)
  • Shuang Wei, Minghui Zhang, Rui Gao, Yihe Zhou and Yue Zhang, ‘One Belt One Road—Tax Issues for Chinese Going-out Companies’ (2018) Proceedings of the International Conference on Economic Management Science and Financial Innovation 317
  • Diheng Xu, ‘A step forward for tax dispute resolution between China and ASEAN countries under the Belt and Road Initiative’ (SMU-TA Centre for Excellence in Taxation 2018)
  • Yun Zhao (ed), International Governance and the Rule of Law in China under the Belt and Road Initiative (Cambridge University Press, 2018)
  • Keyuan Zou and Wenxian Qiu, ‘The Belt and Road Initiative and the Common Heritage of Mankind: Some Preliminary Observations’ (2018) 17(3) Chinese Journal of International Law 749