What is the need of applying principles of interpretation of law for interpreting a tax- treaty (DTAA), briefly describe the objective behind such…

The interpretation of DTAAs require a different approach than the interpretation of domestic tax laws as the latter is based on interpretative principles set out by the national courts, whereas the DTAAs are an international agreement between the government of two countries. The treaties are interpreted in light of the customary principles set out under the Vienna Convention of the Law of treaties (VCLT). VCLT is a multilateral treaty signed and ratified by several countries, which codifies the customary international law for interpretation of tax treaties. Principles or rules of interpretation of a tax treaty would be relevant only where terms or words used in treaties are ambiguous, vague or are such that different meanings are possible. If words are clear or unambiguous, then there is no need to resort to different rules for interpretation.